These 2 themes have been circulating in my mind for the last few weeks. I see them as new megatrends that are unrolling before us which will have a huge impact on whatever we do in the near future. How can I translate them into actionable plans for my benefit remains to be seen as I ponder over them for a while longer.
In late Oct, I attended an Asia Pacific Microfinance Forum as part of my Myanma bank consultancy role with the CEO. We wanted to reach out to potential lenders who might be attending and connect with them. In the previous one we attended earlier this year in BKK, it resulted in many warm leads which helped us achieve new funding facilities over the course of this year.
This forum was a bit unusual this time. Surprisingly, there were more than the regular representation of FinTech related companies in attendance. Over the 2 days, a light bulb was turned on for me. Fintech firms have been trying to change the world via technology innovation. Their success rate had been patchy as it is tricky for them to manoeuvre within the organization of the global banks. They are more likely to die a slow death as they are integrated into the acquiring bank due to red tape and the silo mentality within banks.
On the other hand, microfinance companies are also trying to reach out to the unbanked, to help elevate the less fortunate out of the poverty trap. Most of what they do is labour intensive and requires a lot of credit reviews which are static in nature. While there are always clients out there, the firm may not be able to handle the increased workload.
Our Myanmar company had discussed about a Digital Transformation strategy blueprint this year which may allow us to experience a quantum leap in our portfolio through technology. We believe that by optimizing new technology, we will be able to service a much bigger group of clients without sacrificing service standards while keeping the portfolio risk profile low.
This is why FinTech and MFI (Microfinance Institutions) are ideal partners. Both have the noble goal of making the world a better place for everyone. Both want to help change the way things are currently being done to boost productivity. Both have limited resources to utilize and hence need to optimize each and every asset they may have. We also attended another talk which our CEO had participated. It was to discuss how FinTech can help Agriculture related problems.
Things begin to click for me as I realise that these 2 parties of MFI and FinTech have so much in common and to offer to each other. The payout may be in various ways which the world has yet to discover. Dynamic credit scoring using Artificial Intelligence/Machine Learning is one topic that comes to mind. Using a chatbot with AI to interact with customers through their smartphones is another. Using eWallets to transfer cash instead of using physical money will help reduce fraud. There are many possibilities which can be explored.
The recognition of both these sectors to want to create a symbiotic relationship will certainly be an exciting initiative in the near future. I am lucky to be able to participate in this transformation in my small way via our MFI.
The next thing that made me excited was the announcement by Alibaba on their introduction of the Alipay Tour Pass which WeChat followed soon after https://www.ttgasia.com/2019/11/21/alipay-wechat-pay-now-open-to-international-tourists/ Nationwide, China had been able to go cashless because of Alipay and WeChat, using QR codes to do everything. They are way ahead of any country in the world in this area and 400 million of their citizens are already buying things on the internet.
But in order to ensure the integrity of the system, they have tightened the process to allow only recognized real persons to use the ecosystem. Onshore bank accounts or phone numbers have to be used to open an eWallet account with them. Therefore foreigners are literally unable to get into this ecosystem to benefit from the ease of use.
The other problem is also that only RMB is allowed in this system. I am sure that both companies have been trying to go global by allowing other currencies to be used. But it is highly unlikely that the Fed or ECB would allow them to use USD or Euro in a Chinese controlled system.
This brilliant masterstroke of allowing foreigners a 90 days access will basically solve the above 2 problems I have stated above. Having the ease of using an eWallet, I would gladly sign up for temporary access into their ecosystem. It is almost like internationalizing of the RMB.
Very soon, everyone in the world will have an RMB eWallet which is convenient, as most places around the world (eg. S’pore’s 711 convenience stores, airport tax refunds in Korea) already currently accept Alipay payments. That will be another barrier removed and the Chinese internet companies can now go and conquer the world. For the rest of us outsiders, once we get a peek into the super App and the ecosystem inside, we might not want to ever leave it.
The Alipay Tour pass is now for only 90 days and any balance left will be auto-credited back to your card. It has a limit of RMB 2,000 cap at the moment. But once this gets popular, the 2 restrictions can easily be changed. Then RMB will have a chance to replace the USD as the preferred currency of choice to travel the world instead. Most Chinese tourists travelling overseas are already doing so, using Alipay for most of their purchases.
The above 2 trends are likely to have a big impact on how things are currently being done. They will innovate and revolutionize existing methods and jump-start many interesting by-products and new job roles.
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