How fintechs are tackling innovation in Asia
Asia’s ability to leapfrog other markets on innovation goes beyond its lack of legacy systems and demographics, rather it is the region’s “dynamic” approach to delivering on customer solutions.
Speaking on a panel at Sibos 2018 on Thursday, JD Finance vice president James Ma (pictured second from left) spoke about how the Chinese-based fintech is delivering solutions to segments of China’s population.
“For our business, innovation is about creating commercially sustainable models for example in the area of financial inclusion,” Ma said.
Here, he provided an example of where JD Finance provided real time loans to the “old-fashioned” business of chicken farming. These farmers would traditionally get access to low-interest loans from the government.
However, while these rates were attractive, there was a mismatch between the provision of these loans with the longer cycle it took to breed chickens, hence farmers often had to fork out more to service these loans.
JD’s real time provision of loans, while twice the interest rate on the government loans, provided farmers with faster access to funds and the ability to repay their loans.
Paytm chief financial officer Madhur Deora (pictured left) said the payments provider is continuously pushed to think of new solutions given the diversity of the region.
For example, in the US, all major cities include a Starbucks which makes it easier to roll out a payment platform given the consistency of businesses across the country.
However, in India, Deora says there is no “such organised retail” model.
“Once you move beyond the 40 big cities in India, you have to be truly innovative in the way you deliver payment solutions. It is not about choosing the right technology or riding the next technology wave. It is also about having a culture that has taught you to make the fast decisions. It is also about listening to your customers,” Deora said.
Paytm now has 400 million users since it began six years ago. “We don’t’ choose our customers, they choose us. Therefore, we have to be where our customer wants us to be,” Deora said.
Underpinning this aim is financial inclusion as Paytm aims to services India’s vast unbanked population. “If you want to borrow $100 or save on dollar you are welcome at Paytm.”
On KPMG partner Oliver Kirby-Johnson’s numbers (pictured right), innovation in Asia continues to accelerate.
Getting things done
Quoting industry data, Kirby-Johnson highlighted that Australia, Singapore, Korea and China are among the top 20 countries for innovation.
Another report revealed that the Asia Pacific region now accounts for 40 per cent of total global innovation, up 15 per cent from last year.
For Standard Chartered global head of transaction banking Lisa Robins, a lack of legacy systems is not the only factor that support’s the regions successful approach to innovation.
“Regulation such as India’s demonitisation has led to new payment systems like Paytm. On the other hand, the private sector has driven innovation in China through the rise of platforms such as Tencent and AliPay.
“As a 160-year old business we are eager to co-create with these platforms. We see our business playing in this ecosystem, Robins said.
She added that mobile payments also remain ubiquitous in the region, highlighting a recent example where she saw a goat farmer in a rural part of India making a payment on a mobile phone – probably through Paytm, she quipped.
“There seems to be this desire change rapidly and work together to get things done.”
Australian Securities Exchange deputy CEO Peter Hiom (pictured left of Robins), said that legacy systems also bring challenges that make it difficult for the culture of an organisation to transform into newer business model.
According to Hiom, the ASX, however, is well positioned to capitalize on new technologies such as blockchain. The business has adopted distributed ledger technology to replace its CHESS system.
“A marketplace infrastructure like us, is well placed to transform our business models. We are vertically integrated and have the advantage of understanding our full value chain. This allows us to take advantage of innovation,” Hiom said.
For JD Finance’s Ma, Asia also also has a culture of “serial entrepreneurs” that continues to support its rapid ability to innovate.
“Venture capitalists are always willing to support people with a good idea. As long as you have a good idea, you will get support for funding,” Ma said.