In a digital world where the internet, social media and personal banking applications are only a click away, it’s only natural that the next step is instant payments for corporates. We take a deep dive into the various innovations in payments, and explain how Asia is leading the way.

Asia is considered the most dynamic economic region in the world by the IMF, although the COVID-19 pandemic is causing a downturn projection for south Asia. However, the continent also contains the top three countries for unbanked populations globally (China, India and Pakistan), and a significant proportion of those people rely on cash and cheques, as opposed to electronic fund transfers, cards and other payment methods.

Asia’s rapid progression

For Honnus Cheung, Co-founder of fintech Mojodomo, Asian countries are ahead in certain aspects of digitalisation, owing to the widespread acceptance of technology within the countries as a whole – not just in treasury. “We use mobile phones for everything now. So we prefer to conclude an entire transaction experience by mobile phone, rather than using computers,” she explains. In this sense, the consumer is driving the upgrades to the digital payment experience.

“If you’re a B2C business, it is necessary to have online payment channels or QR codes for scanning payments. Otherwise, you probably can’t do business in Asia – especially China or other countries where they are very mobile-savvy,” she says. Indeed, China’s rapid adoption of mobile payments through the likes of WeChat Pay and Alipay has been largely driven by the lack of card payments in the country – getting a credit card from a Chinese bank is a lengthy process, and there has long been a de facto ban on foreign payment service providers unless they issued co-branded cards with a domestic provider such as UnionPay (however, in February 2019 Mastercard secured Chinese government approval to enter the country’s electronic payment services market). Combined with the explosion of smartphone adoption, this meant that mobile payments were able to leapfrog traditional methods seen in countries such as the UK and US.

Fintechs to the rescue?

Of course, with more technology come bigger cyber-security risks. For real-time payments, a large amount of concern focuses on anti-money laundering (AML) and know your customer (KYC) checks, as fraudsters could seek to take advantage of any delay. The rapid and irreversible nature of faster payments means that suspicious activities may only be discovered after the funds have been sent, so businesses need to ensure that these checks are either done in advance or that the system is able to conduct necessary screenings in real time.

Speedy AML and KYC checks are most likely achievable through intelligence-based analytic tools, and Cheung believes this is where fintechs really show their value. “Banks are proactively looking for fintechs to fill these gaps to provide a seamless digital customer journey to both B2C and B2B clients,” she explains. “[The banks] know they’re giant and can’t respond to the market quickly, so fintechs can help digitalise treasury systems in a much faster, cost efficient and timely manner around the globe, whilst also meeting cross-border AML requirements.”

Real-time is here to stay

Cheung believes that it’s no coincidence that this shift to real-time is coming as Gen Z and millennials begin to make up more of the workforce. “Millennials and Gen Z use their mobile phones for everything in their personal life, and they’re now using them for work as well,” she explains. It’s only natural that the people who have grown up with fast internet speeds and instant access to almost everything also want instant payments.

Of course, it’s not just those generations driving the change, as people of all ages have mobile phones and are becoming more impatient as a result of faster networks speeds. Treasurers have to critically re-look at their technology and digital strategy going forward, to be able to truly translate the benefits of these major shifts in payments into returns.

A deeper exploration of this topic is featured in the July/August edition of Treasury Today Asia.