Active support and initiatives by financial regulators such as the Monetary Authority of Singapore, Bank Negara Malaysia and Bank Indonesia has enabled the Asia-Pacific Fintech ecosystem to grow significantly in 2017.
New innovations are expected to radically transform the way consumers shop, pay perform banking transactions and purchase insurance. The wave of new Fintech technologies is also changing customer behavior and interactions today.
Frost & Sullivan presented its annual Fintech Outlook at The Swissôtel, The Stamford in Singapore on 8 February. The event was attended by over 70 senior management and C-suite executives, marking the start of an exciting year ahead for the industry.
The Fintech industry in the Asia-Pacific region is expected to grow at a CAGR of 72.5% from 2015 to 2020, reaching US$72 billion. The positive outlook is fuelled by growth in digital payments such as increasing adoption of cashless payments by small and medium sized enterprises. There is also more widespread awareness of the viability of using P2P financing as well as new methods of crowd funding using Blockchain, which will lead to growth in the personal and business financing segment.
Key analysts from Frost & Sullivan’s ICT practice and its Fintech program presented the top predictions for the industry in 2018.
Emerging Trends in Fintech
Spike Choo, Consulting Director at Frost & Sullivan’s ICT Asia-Pacific practice discussed the emerging trends in Fintech for 2018. In line with Singapore government’s push to develop a cashless society, more initiatives will be launched to encourage more consumers and enterprises to adopt digital payments technologies.
He also expects to see more innovative Fintech services being launched in the areas of financial investments and advisory services as well as insurance due to advances in Big Data Analytics, Artificial Intelligence and Blockchain. However, the sustainability of these Fintech services would depend on how well they are able to address the wide-ranging consumers’ investment and insurance needs while ensuring the business model is sustainable without compromising the customer experience.
Future of Cashless Payments in Singapore
According to Quah Mei Lee, Industry Principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth US$1.4 billion in 2017. The market is still small but is growing fast. There are many supportive regional and local regulations and initiatives that will help Singapore move towards a cashless Society.
Singapore already has an optimal number of complementary mobile payment solutions to drive acceptance on the island state. Despite this, more and more "me too" solutions are entering the market. With only limited partnerships underway and a local first mentality, the market risks not achieving its full potential. Mei Lee stresses that mobile payments of the future needs to be global first, inter-operable and secure. Global alignment will be critical to mobile payments going mainstream.
Fintech in Singapore’s SME Landscape
In the wake of the global Fintech boom, disruptive market innovations have forced a radical shift of business models in the Financial Services industry, notably within the P2P Lending segment. Frost & Sullivan believes that leading banks and financial institutions are driven to be lean and agile on multiple fronts, including but not limited to new digital services, elevated customer experiences and innovative technological solutions.
Mr. Shuvro Mainuddin, Consultant, Banking & Financial Services, Asia-Pacific at Frost & Sullivan noted that the SME clients have been traditionally neglected by existing banks which has opened up a huge market for alternative financing providers to potentially fill in.
No longer just a channel, ‘digitalization’ is the new paradigm for leading banks and financial institutions in Southeast Asia to cater to the increasingly important SME client base. Such widespread adoption of Fintech will continue to reshape the financial services industry, making it more customer-focused than ever.
Customer Experience in BFSI industry
With increasing number of digital touchpoints, managing customer experience would require revisiting customer journeys to provide a seamless experience. The CX strategy would need to ensure that there is greater personalization of services coupled with proactive engagement.
According to Nishchal Khorana, Consulting Director, ICT, Asia-Pacific at Frost & Sullivan highlighted that a successful CX strategy would be based on an integrated approach to people, processes and technology in the digital era.
Analytics and Artificial Intelligence related technologies will also be fundamental to raising the bar for customer experience. On one hand, analytics will aid in developing a predictive approach to address customer needs, while on the other hand, Virtual assistants and Chatbots will drive greater operational efficiencies and standardization.