The next frontier in Asia payments
Reet Chaudhuri, Jacob Dahl, Bharath Sattanathan, Joydeep Sengupta – McKinsey & Company
Heading into 2020, numerous trends had set a clear path for continued payments growth across Asia. Chief among these was the rapidly expanding number of connected and digitally active consumers, with booming e-commerce markets reinforcing the need for digital solutions. The competitive landscape was simultaneously heating up, with the entry of formidable new players—including telecommunications firms, fintechs, “big techs,” and other conglomerates—spurring incumbents to step up their own innovation efforts. Meanwhile, regulators sought to standardize infrastructure while encouraging competition, fostering the introduction of real-time payments, digital know your customer (KYC), and various local payment schemes.
COVID-19 then upended expectations with a generational economic shock affecting both supply and demand, resulting in an unprecedented drop in discretionary spending, shifts in spending patterns for remaining outlays, lower trade volumes, the loss of foreign-exchange revenues, and a suppressed interest-rate environment.
The payments industry was quick to respond to these challenges, offering immediate economic relief in the form of faster settlement times, customer-fee waivers, and short-term funding support. Players stepped up with educational resources on managing disruption and public service activities such as fund-raising support. Banks forged partnerships with specialized fintech providers to launch new platforms to help merchants establish an essential online presence (e.g., Shopify’s alliance with OCBC in Singapore) and created incentive programs to foster online shifts. Governments also played a vital role, waiving or reducing some charges related to electronic payments (e.g., UPI payments in India), increasing digital-transaction limits, and providing funding to small and medium-size enterprises (SMEs) to support digital commerce
Follow the link below to read the full McKinsey & Company article anticipating that COVID-19’s impacts will ultimately serve to accelerate several of Asia’s established payments trends.