PAYMENTS AND THE NEXT EVOLUTION: WHAT LIES BEYOND THE HORIZON? Panelists: 

Ignatius Ong (CEO, TNG Digital) 

Khairuan Abdul Rahman (Director, Retail Payment Services, PayNet (Payments Network Malaysia)) 

David Mann (Chief Economist, Asia Pacific and Middle East Africa, Mastercard Economics Institute ,  Mastercard) 

Lead Discussant:  

Mark McKenzie (Senior Financial Sector Specialist, The SEACEN Centre) 

• Lead Discussant Mark McKenzie opened with a definition of digital payments, i.e. a digital  payment is any transfer of value using a digital device. He then asked the panel to especially  explore trends in digital payments – competition, interoperability, cross-border payments – and also risks, challenges to policy regarding the area of digital payments. 
• Mastercard representative David Mann touched on two key trends in digital  payments: 

1) COVID’s impact on digital payments has been to create a surge in this form of  payment in practically every country in the world. 

2) The trend for e-commerce has also been on the up – it has now gone across all  sectors and is ratcheting usage figures much higher than ever before. It has this  “stickiness” because users have become convinced of their safety and  convenience. 

He raised the recent massive investments in technology made by JP Morgan as an  event with significance for the entire sector. Investment in technology is a must-do  for all players but cautions that these investments need to be carefully chosen so  that they will not get outdated or redundant too soon. 

• Khairuan of PayNet touched on COVID having put financial services into the midst of  transformation. He said that 2020 saw over 70% growth in FDX, and, significantly,  there is evidence that banking is changing – 95% of sub-districts have access to  financial services – with the banks’ hold on traditional accounts eroding.
• Ignatius Ong of TNG Digital raised the issue that the acceptance of e-wallets has  begun to visibly leave cash behind. This is, in no small way, attributable to the  manner in which e-wallets also empower the way in which SMEs conduct business,  citing that the effective use of QR codes in such places as stalls, wet markets, etc. is  very much due to the benefits of safety, convenience and secure receipt of  payments that the technology provides. 

In this respect, one of his toughest challenges was to bring the “Mom & Pop” shops  into the fold – they also use the cash they collect to pay their suppliers and the  solution was to encapsulate the entire ecosystem, including the supplier to the  “Mom & Pop”. 

He cited that his platform now has over one million retail partners and some 16  million users. In future, the trend will be for technologies such as his to offer users  the ability to save, invest and borrow – all on the same app. 

• How critical it is for industry players to diversify? David Mann of Mastercard replied  that offers of more services or products must be done in a manner that fully  complies with regulations, including international regulations. If one is to diversify,  one has to do everything well. If one is to be a “one-trick pony”, then join with  partners who have the tech you don’t. 
• Ignatius Ong of TNG provided an example of how their digital link to a pay-direct  system helped solve a customer pain point – i.e. not enough locations where one  could top up a TNG card. When TNG links the pay-direct system to its card, the TNG  card then becomes the conduit for the customer to pay, but because the money now  comes directly from the e-wallet, there is no need to top up the card. He provided  an example related to greater inclusion : foreign workers in Malaysia find it hard to  open a bank account as it cost the bank more to accept the foreign worker than not.  With the TNG e-wallet, the foreign worker benefits from not having to search  everywhere for a Western Union and also from his employer being able to pay his  salary into the e-wallet. 
• To the issue of rural area penetration, Khairuan of PayNet said that financial  education which enabled rural folk to understand better was the way in which more  of the underserved could be reached. 
• Regarding a rapid increase in industry players, David Mann said that: 

1) With more systems out there, these many systems must be made able to talk to  each other. 

2) Regulations are needed so that there will be no crisis even where there are more  players.

• As for greater inclusion, Ignatius Ong of TNG said that infrastructure is key – digital  payments need at least 4G infrastructure – and the authorities need to ensure all  infrastructure is put into place. 

DISRUPTION OR TRANSFORMATION: INTO THE FUTURE WITH DIGITAL INSURANCE Panelists: 

Rohit Nambiar (Group Chief Executive Officer, Tune Protect Group) 

George Kesselman (Head of Commercial, Zhong An Tech) 

Lim Eng Seong (Chief Executive Officer, Prudential Assurance Malaysia) 

Lead Discussant: 

Lau Chin Ching (Director, Insurance Development, Bank Negara Malaysia (Central Bank of Malaysia) 

• Lead discussant Lau Chin Ching opened with the thought that insurance is increasingly being bought on e-commerce or app platforms. Today’s buyers, she said, want a seamless user experience; flexible, on-demand protection; convenience and transparency. A paradigm  

shift is already happening – she asked the panel to explore how the industry will deal with  this. 

• George Kesselman of Zhong An Tech provided a sense of what was happening on the insurance scene:

- Zhong An, a pioneer in digital insurance, has experienced growth in its China  market of some US$3 billion in premiums, the biggest in the world. 

- A huge trend over the last few years is how platforms like Klook, Grab, etc. are  looking to include insurance into their product as they find insurance fills in some  of the gaps in their offer. 

• Rohit Nambiar of Tune Protect raised the issue that there is too much emphasis on technology when it should be an emphasis on customer simplicity and customer value that are more vital. He cited these examples: 

- Vietnam: when the flight is delayed, insurance pays direct to your account – travel ticketing is such a low-involvement function, ease of engagement is vital. 

- Recent floods saw Tune Protect inspect and provide approval within three days,  and in future, this process will get even faster. 

- The millennial view on insurance is “too complex, costly and not clear enough”.  To counter this, Tune Protect adapted the Air Asia/Amazon concept and came up  with the proposition that Tune would provide the cheapest rate in the market –

but if the customer wanted additional features, they could just click on the  screen to obtain them at additional cost. 

• In answering the question of what Prudential’s business strategy looks like in the face of new technology, CEO Lim Eng Seong emphasized that the Prudential business model is founded on responsibility, and their approach to digitalisation is to take an  inside-out approach where no one is left out and the digital interface is developed to  involve both customer and vendor. He mentioned these key issues: 

- Commitment to stay on the journey, given that there is a long gap in time  between what is set in to start with, and the time it actually starts running. 

- Agility of mindset – to ensure that Prudential’s people are ready to embrace  change and transform. 

• On who will take the lead to enhance penetration in the property, general liability, etc sectors?

- Rohit Nambiar of Tune Protect cited two issues - penetration and  underinsurance. We cannot assume that all the under-penetrated are in the B40 – there are also the group of consumers who are able to buy, but do not because  they feel it is too costly, or they buy but then lapse their policy. 

- George Kesselman of Zhong An said that digital insurers will have a positive  effect on the industry. New technology will allow access to new consumers.  Digital insurers have a role as other companies use their technology as a base to  start. 

- Incumbents will not disappear but merge. Introduction of good innovation will  create new propositions - the pressure to change will grow and provide more  benefits for insurers and customers alike. 

• On whether regulators are a help or a stumbling block: 

- Rohit Nambiar said that regulators are going through their own change journey.  He raised the issue of risk culture, noting that cyber attacks will happen in this  new world/era. There is a need to create a level playing field and it is important  to keep conversations going as the industry and regulators are on the journey together. 

• On leveraging digital insurance to achieve Inclusion, Competition, Effectiveness (ICE),  George Kesselman noted that:

- There is a need to provide the right framework that would not stifle innovation. - Regulators must find ways to help insurers to overcome initial hurdles. • The Lead Discussant Lau Chin Ching noted that in the future, the industry will see  more collaborations among players, more consumer-centric solutions, continued  education of which financial literacy is key, and regulator support in infrastructure  and data arena. 

• George Kesselman rounded up by emphasising that this is a significant stage of  change that is still accelerating and an omni-channelled landscape. 
• Rohit Nambiar envisioned that insurance will become somewhat like an electric bill  or credit card where consumers pay only what they consume. 

EMPOWERING CONSUMERS THROUGH DATA ANALYTICS 

Keynote Tech Talk by: Kevin Hartman, Chief Analytics Evangelist, Google 

• Presenter explores how businesses use data analytics to create better and more rewarding relations with its customers.
• He began by asking if the viewer knew just how much their customers’ data was worth. Beyond nominal values, the underlying data in a customer databank is the key that provides business with insights that drive business performance and informs it how to market, how to  deal with customers, etc. in order to create more profitable relations with their customers.  Digitalisation creates data and good data drives good business decisions and good  performance. 
• The challenge in a post-privacy world, he said, is that consumers are now aware their data is being collected and used. When the system is not transparent, the result can be detrimental to the consumer. The issue for business is then to create an environment where consumers  have greater understanding of their data without sacrificing business performance. 
• He added that the mobile phone is now ubiquitous and this has generated views into customer behaviour like never before, just as it has provided customers with greater access to information like never before. This has seen developments like finance market growth  worth US$7.8 trillion and crowdinvesting worth US$7.1 billion in 2021. At its root are the  connected consumers of today, consumers who live their lives 100% connected. 
• Unfortunate incidents such as data breaches, Cambridge Analytics scandal, etc. open the eyes of consumers to how data is collected and, while this may have thrown a wrench into digital marketing, it is, in his opinion, a good thing as consumers should know and consent to  their data being used. 
• TRUST is the all-important issue. Business must find ways to collect data in the way customers trust. When customers don’t trust the way you collect data, they walk away, adding that half of all global customers walk away when the find they no longer trust in the  way their data is collected.
• The solution to balancing trust with performance is technology:

- Invest in collection of first-party data that goes directly to the business from the  customer. The customer must know that when they provide data, they gain value from  providing this information - for example, a more personalised approach to their financial  needs. 

- Advertise via automation. Consumers will see the ads and the technology allows you to  find customers that are the correct fit for your business. 

- Modernise measurement. Technology like AI provides more accurate access to  customer behaviour and helps better anticipate customer needs and access  performance. 

FUTURE OF JOBS AND RE-SKILLING THE WORKFORCE 

Panelists: 

Mohd Khairil Abdullah (CEO, Axiata Digital Services) 

Vic Sithasanan (Managing Director, Seek Asia) 

Samir Bedi, Partner, Asean Workforce Advisory Leader, Ernst & Young Advisory  

Lead discussant: 

Dr. Yasodhan Ghorpade (Senior Economist, Social Protection and Jobs, The World Bank) 

• Lead discussant Dr Yasodhan opened with a look at the megatrends in the world of work: 

1) An emphasis on digital skills, interpersonal skills, automation. These aspects hold much  opportunity for young people but they also carry the risk of jobs being lost, especially  routine/manual jobs. Strong foundational skills are required to benefit from these  trends, e.g. the ability to converse in different languages, ability to learn well,  proficiency in problem-solving, etc. 

2) Increase in non-standard employment and work-from-home (WFH) has seen more  women able to enter the workforce. But WFH doesn’t benefit everyone, i.e. those who  can’t work from home because of lack of space or internet issues. Furthermore, such  access is related to income – the rich have access, the poor do not. 

3) The constant need to upskill and re-skill that is faced by organisations and their people.  This concept challenges the traditional path of school-university-job-retirement as  nowadays, it is really all about constantly upskilling and re-skilling.

To the question of how people are coping with WFH, Vic Sithasanan of Seek Asia said: 

- Flexibility is the make-or-break element in WFH – e.g. in the U.S.A., the great resignation  of 4% of the workforce was a result of them having to go back into the office. - The trend of remote work has resulted in employers looking for people with different  skill sets – they no long look for leaders who can drive work teams forward but instead  look for people who are good with tools. 

• Khairil of Axiata shared his view that, as an employer, hiring is proving a real challenge as the  quality of the Malaysian candidate is poor. He believes the foundational elements of  education in Malaysia need to be strengthened and pointed out that, in a global skills report,  Malaysia ranks a lowly 46 and that neighbouring countries were far ahead of Malaysia. He  further elaborated that if he wanted to develop an app, he can go worldwide on the Web to  find an outsource, with the consequence that this opportunity for realo-job learning and  experience is lost to Malaysians. 
• Samir Bedi of EY shared these learnings from the EY Megatrends Report: 

- Technology is the reason why today’s employees have short attention spans. - Work-life integration is now key as one can no longer distinguish between these  separate aspects of life. 

- Businesses must offer flexibility, a key focus going forward . 

- Various “pillars” needed to work in tandem to achieve skilling, including: government to  create the infrastructure, enterprise to drive it as the “schools of tomorrow”, employees  believing that learning will help them, etc. 

• On tips to manage employees in a full remote working situation: 

1) Vic of Seek Asia emphasised: clear communication, whether via Zoom or otherwise;  clear accountability; clear task; and do not contact your staff if its after work hours. 

2) Samir of EY said that in the future, the office will not be so much a physical place but a  place that will act as a “magnet” for certain aspects of work, e.g. brainstorming, etc. 

3) The Lead Discussant Dr. Yashodhan added that WFH is different for mena dn for women  (who have more of the burden of care). 

Dr. Yasodhan asked for concluding reflections: 

- He himself emphasised that, for any framework to be effective, multi-stakeholder  involvement is crucial as it is not just about the government or training institute doing it. 

- Vic of Seek Asia cited communication skills as most important for the future 

- Samir Bedi of EY talked of skills that will remain in the future: technical skills, greening  skills, skills around stakeholder management, inclusive practices, etc. 

- Khairil of Axiata identified three things he looks for in new hires, namely: an active  learning strategy, intellectual agility and problem solving skills. Everything else, he says,  a machine can do for him.

A NEW ERA FOR DIGITAL BANKING 

Panelists: 

Tauriq Keraan (CEO, TymeBank) 

Simon Loong (Founder and Group CEO, WeLab) 

YBhg Dato’ Sri Abdul Farid Alias (Group President & Chief Executive Officer, Malayan Banking Berhad  (Maybank) 

Lead Discussant: Shankar Kanabiran (Partner, Financial Services Consulting Leader, Ernst & Young  Consulting) 

• Lead discussant Shankar Kanabiran said that the world is seeing the issuance of many digital  banking licenses. In Malaysia, 29 have applied last year and are now awaiting the news. This  trend is seen in this region, including Singapore, Hong Kong, Taiwan and Indonesia. Digital  Banking is touted for its potential to reach the under-served the unserved. Its fast growth  also raises concern for the need for regulation.  
• On the issue of the move of TymeBank from South Africa to Asia, the question was posed:  what are the key considerations for the move?  
• Tauriq Keraan of TymeBank said that it is fully digital but with physical infrastructure with till  points for cash in and cash out, plus cutting-edge kiosk technology to on-board customers in  5 minutes in a digital fashion experience. Some of the criterion for consideration of another  market are: 

- Have structural attributes that accept their operating model  

- Have a strong retail infrastructure 

- Strong income dynamics 

The Philippines fit the bill, with large market. 

• Lead discussant Shankar asked Simon Loong of WeLab to describe his journey to become the  first virtual bank in Hong Kong and what he would have done differently as they expand to  different markets taking into consideration the recent acquisition of Bank Jasa Jakarta. 
• Simon replied that WeLab was founded in 2013 with focus on online lending and in 2018,  they developed tech which theyu licensed to banks. In 2020 WeLab launched their second  digital bank in Asia ie Jakarta. WeLab offers a slew of financial services developed with  customer needs in mind. They plan to roll out the same services to Asia.

It took them 12-15 months to build the bank in Hong Kong and they are looking at rolling out  a second and third in Asia in the shortest time as 80% of the tech structure will be leveraged  on Hong Kong’s tech and taking into consideration language, product, user experience and  needs of individuals. 

• Dato Farid of MayBank said that maybank is a legacy , e.g. personal loans, credit cards, etc.  The challenge is to transform the data to be more customer-centric. In monetising the data,  it is emphasised that MayBank does not sell or share customer’s data except with regulators  or by law. In their journey, they ended up using data scientists who used data to launch  loans to SMEs, considered a risky segment. From its launch in 2000 till 2021, they have  created RM1 billion loans. 
• Lead discussant Shankar asked why 80% of TymeBank’s accounts were opened at retail store  or kiosks instead of online?  
• Tauriq replied that TymeBank uses a more human and personalised approach that is  convenient to customers. At supermarkets or stores, TymeBank ambassadors approach  potential customers to explain about online banking and are then ushered to a physical kiosk  where they can bank in money which clears in real time. This method provides a gateway to  usher customers from a physical world to a digital world especially in developing economies  where customers are not so digitally savvy. 

The majority of their customers earn less than USD 10 per day and 50% are aged 35 years  and older. Despite the challenge, the bank has grown rapidly especially in schools because of  their digital banking model appeals to the majority. 

• In supporting Inclusion, WeLab reached out to Hong Kong’s young people. No one taught  this segment how to save and grow their wealth. With digital technology, this education can  be done on a mobile phone at a very low cost. Done completely online, they can set their  goals, save money and it allows them to invest following their risk appetite. This same  pattern can be applied to local and international markets. 
• Dato’ Farid said that MayBank’s digital story is similar to WeLab, but Maybank targets SMEs. 

CeFi vs DeFi : WHICH WILL BE DOMINANT IN THE FINANCIAL LANDSCAPE OF THE FUTURE? 

Panelists: 

Jan Metzger (Managing Director,  

Head of Asia Pacific Banking, Capital Markets and Advisory, Citi) 

Lead Discussant:  

Daniel Eidan, Advisor and Solution Architect, Bank for International Settlements (BIS) Innovation Hub,  Hong Kong Centre)

• The Lead discussant Daniel Eidan offered these definitions to start with: 

- Decentralised Finance (DeFi) is fully distributed, e.g. layer 1 blockchain platforms like  Ethereum. 

- Centralised Finance (DeFi) are layers on top of DeFi, e.g. a company like Coinbase. 

• Jan Metzer touched on the significance of these two technologies in so much as they  spotlight the way finance will evolve. In the future, there will be many forms of finance  working together and a high likelihood that traditional banks will partner DeFi-based  solution providers. 
• Responding to the comment that Central Banks are looking at blockchain/Distributed Ledger  Technology (DLT) as potential new systems to roll out within their jurisdictions, Jan said that  many still do not understand the benefits of the technology – i.e. clearer, more transparent,  simpler and more cost-effective. They also do not realise the technology’s potential  

application in fields like land registry transactions, vehicle registration, digital CVs backed by  blockchain, etc. 

• On the issue of hurdles to adoption, there has never been any worry of the underlying  technology itself, which is robust, but rather issues on operational details – such as how to  KYC (Know Your Customer), how regulators are working together, how one can ensure  liquidity, among others. 
• On the issue of Trust, Daniel Eidan asked whether the statement “DeFi is automating trust”  is over-hype, Jan responded by saying that it is the potential for miscommunication that  causes a lack of trust. Smart contracts, because they encode everything inside, provide a  high level of trust. 
• On whether regulatory authorities are striking the right balance, Jan said that while in earlier  days fintech was visibly against regulators, today everybody agrees that regulation is a good  thing and that society needs and benefits from having clarity. Indeed, clever, smart, sensible  regulations are not just welcome but considered essential to progress. 
• On the issue of Opportunity Areas, Jan said: 

- Asia is 12 years ahead of the West 

- E-commerce penetration is higher than in the West 

- Asia is far ahead in telemedicine and volume of payments 

• On the issue of Threat Areas, Jan said: 

- Ensure the regulatory framework is there and that companies are operating within it - Trust, as any cyber attack negatively impacts trust 

- The pain of restructuring, while the technology cuts away the role and share of the  “middlemen” involved in business transactions 

- Tech literacy problem 

• On the issue of scams in DeFi space and the safeguards that will separate good from bad:

- Look at the total transaction iovlume 

- Look at who is backing this platform 

- Look at what ecosystem they have created and how successful they have been - Look at how many real economic uses that it has, e.g. gold as an example, where even if  one were to remove its use as a store of value, golf will still be sought after for other  uses – such as a superconductor, and therefore will always have a price/value 

• On the issue of the valuation of companies with a CeFi or DeFi endeavour, Jan responded  that building that financial model is complicated. Sometimes, it is useful for the company  not to be profitable for a long time, which creates problems as most valuations are anchored  in cash flow projections. He suggested that a better way to value CeFi and DeFi companies  would be to use “revenue multiples” as the proxy to estimate what value it will hold in the  future. Jan added that large amounts of private equity have been invested into all kinds of  categories where DeFi/CeFi technology is involved, from stablecoin to asset management,  capital raising, NFTs and more 
• Daniel Eidan concluded the session with the remark that, as far as CeFi and DeFi are  concerned, the world is only seeing but the first part of a very long game.