“Cash? No we don’t accept that here,” said the market grocer with disdain as my friend pulled out notes from her purse.
This isn’t a conversation imagined in the future. This happened during Chinese New Year in Shanghai when my friend returned to the city after a three year absence. She wanted to buy some apples at a market stall and assumed cash would be the go-to. She was wrong.
Cash is over…
Now it is China’s WeChat Pay that is the default.
WeChat Pay is used by hundreds of million of people to make payments every day in
China, from small purchases, like fruit, through to larger purchases and transferring money to friends. It is now one of the most popular payment methods in China and is quickly spreading throughout the world.
That’s just the first sign.
At this year’s Money 20/20 Asia conference in Singapore, the clear message was that the biggest threat to traditional finance like Australia’s big banks was from companies that had nothing to do with money. Think Facebooke, Apple or even Uber.
Here’s a few more examples of what you might expect to see in Australia very soon.
Do you want a loan with your ride-share?
Targeting the millions who are not served or “under-served” by traditional banking institutions in South-east Asia, be they small business owners, micro-entrepreneurs or consumers, Grab is bringing lending products to its driver and customer base.
Grab is well-placed to meet the needs of the unbanked, with more than 86 million users and 2.6 million drivers across its network and the kicker is that Grab knows these people better than most financial institutions.
Chat and… bank
Messaging app KaKaoTalk is as popular in South Korea as WeChat in China, with 42 million unique monthly visitors representing 97 per cent of the entire smartphone user population.
KaKaoTalk launched a banking app, KaKaoBank, in July 2017 and had 300,000 users within 24 hours, 1.5 million users within a week and 3 million users within a month.
After just four days, the mobile-first bank had lent out KRW 260 billion (A$310 million) and accepted KRW 275 billion (A$328 million) in deposits.
It is now less than eight months old and has over 5 million account holders. It has an incredibly seamless experience and takes just five minutes to sign up.
Let’s compare that to Australia’s largest bank CBA. In 2017 it had 16.6 million customers but just 6.2 million using digital channels.
It’s been a fundamental part of the Australian financial services industry for more than 100 years, but new Asian players are rapidly eclipsing its services.
The scale and velocity with which new finance and tech companies are developing in Asia is nothing short of remarkable. So will Australia keep up?
We hope so! Australia has a generally stable economy, a history of early adoption and desire to continue driving Australia forward. If we don’t we’ll all risk being caught out like my poor friend in Shanghai.