OBJECTIVES

1. Understand Fintech, and the electronic payment sector and why China is suitable to allow electronic payments to grow.

2. Recognise Ant Financial and WeChat as strong leaders of the electronic payment and Fintech industry, and why they are global game changers.

3. Identifying the ways Singapore has and will be affected by e-payments.

4. Suggest Singapore's responses to innovations and changes in e-payment landscape.

THE GENESIS OF FINTECH

WHAT IS FINTECH?

Financial Technology

Fintech describes an emerging financial services sector in the 21st century, including technological innovations in the financial sector.

IT ONLY GETS BETTER

Investment in Fintech around the world has increased dramatically from US$1 billion in 2008 to more than US$12 billion by early 2015.

Global deal volume has also increased exponentially.

In Q3 2017 alone, global investment in Fintech companies hit US$8.2 billion.

A 'DISRUPTION'

Represents technologies that disrupt traditional financial services. This poses a serious threat to traditional financial institutions in terms of market share, revenue and strategic and operational models.

FINTECH SECTORS

ELECTRONIC PAYMENTS

What are electronic payments (e-payments)?

E-payments are any kind of non-cash payment that doesn't involve a paper check, made directly to the payee from your bank accounts using security features over the Internet to process the transactions.

Benefits for the consumer

Convenience: Enter your information only once.
Simplicity

Benefits for companies and businesses

Reduce costs: The more payments they can process electronically, the less they spend on paper and postage.
Customer retention: Customers are more likely to return to the same e-commerce site where their information has already been entered and stored
Creativity

Why is it important?

Globalisation and e-Commerce
Changes the world

KEY PLAYERS

WHAT DO THE CHINESE LIKE?

Cashless, Cardless. Why?

Security concerns
Low demand
Smartphones

E-PAYMENTS IN CHINA

Favourable Environment

High mobile Internet penetration
High e-commerce penetration
Underdeveloped traditional financial market

Alipay

Taobao tried to solve the biggest pain point in e-commerce in China, the trust between seller and buyer. Alipay was introduced as a 3rd party to temporarily hold the money paid by the buyer, and would not release the money to the seller until the buyer confirms that the product was received and in good condition.

Alipay also uses Quick Response (QR) codes that are scanned at the point of sales which link to the customer’s bank account.

WeChat

In early 2014, for Chinese New Year, China’s largest social platform WeChat launched a new feature whereby users could send each other money in the form of digital red envelopes by linking its WeChat Payments platform with its social/messaging platform.

Works Cited

Choi, A., & Chan, C. FinTech Challenges Traditional Financial Sector. CBRE. Retrieved from https://www.cbre.com.sg/global/research-and-reports/2017-apac-twj-reports/fintech-challenges-traditional-financial-sector

Elmblad, S. (2018, February 24). Benefits of Electronic Payments. The Balance. Retrieved from https://www.thebalance.com/what-are-electronic-payments-in-financial-software-1293681

Fintech. Investopedia. Retrieved from https://www.investopedia.com/terms/f/fintech.asp

Gulamhuseinwala, I., Hatch, M., & Lloyd, J. (2017). EY FinTech Adoption Index 2017. EY. Retrieved from https://www.ey.com/gl/en/industries/financial-services/ey-fintech-adoption-index

Hord, J. How Electronic Payment Works. HowStuffWorks. Retrieved from https://money.howstuffworks.com/personal-finance/online-banking/electronic-payment1.htm

Heggestuen, J. (2014, Feb 6). Low Credit Card Usage Means Carrier Billing Could Catch On In Emerging Markets. Business Insider Australia. Retrieved from https://www.businessinsider.com.au/three-developing-economies-where-direct-carrier-billing-could-catch-on-2014-2

Luk, G. (2017, December 11). Why aren’t credit cards popular in China, the world's second largest economy?. Quora. Retrieved from https://www.quora.com/Why-aren’t-credit-cards-popular-in-China-the-worlds-second-largest-economy

Marr, B. (2017, February 10). The Complete Beginner's Guide To FinTech Everyone Can Understand. Forbes. Retrieved from https://www.forbes.com/sites/bernardmarr/2017/02/10/a-complete-beginners-guide-to-fintech-in-2017/

Millward, S. (2017, August 10). China’s newest fad: workout pods in the middle of the street. Tech in Asia. Retrieved from https://www.techinasia.com/china-gym-sharing-startup

Ng, K. (2017, September 29). The Big Read: How e-payment ended the long reign of cash in Beijing, and the lessons for S'pore. TODAY Online. Retrieved from https://www.todayonline.com/singapore/big-read-beijing-cash-not-king-and-mobile-payment-reigns-supreme

Skan, J., Dickerson, J., & Masood, S. (2015). The Future of Fintech and Banking: Digitally disrupted or reimagined?. Accenture, 5.

Xiao, E. (2017, April 20). How WeChat Pay became Alipay’s largest rival. Tech in Asia. Retrieved from https://www.techinasia.com/wechat-pay-vs-alipay

(2016, February 24). Mobile market hotting up for payments and money transfer. CTMfile. Retrieved from https://ctmfile.com/story/mobile-market-hotting-up-for-payments-and-money-transfer

(2017, May 6). The Pulse of Fintech Q3 2017. KPMG, 4.

(2018). Number of mobile phone internet users in China from 2015 to 2022 (in millions). Statista. Retrieved from https://www.statista.com/statistics/558731/number-of-mobile-internet-user-in-china/

(2018, January 17). The Mobile Payments Race: Why China Is Leading the Pack — for Now. Knowledge@Wharton. Retrieved from http://knowledge.wharton.upenn.edu/article/how-will-chinas-overseas-mobile-payment-systems-fare/

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