ASEAN World Economic Forum celebrates the digital age
Martin Frick, Managing Director of APAC, shares key findings from World the Economic Forum’s ASEAN meeting 4.0: Entrepreneurship and the Fourth Industrial Revolution.
Those like me, honored to have attended last week’s World Economic Forum’s ASEAN meeting 4.0: Entrepreneurship and the Fourth Industrial Revolution, spent a very constructive two-and-a-half days in Hanoi discussing how the region can best prepare for the future. It was informative, creative, intense and very upbeat.
The ASEAN region is unlike any other. Its countries – Indonesia, Thailand, Vietnam, Singapore, Malaysia, Philippines, Myanmar, Cambodia, Laos and Brunei – are home to 639 million people and together their collective GDP amounts to $2.5 trillion – about the same as India’s.
The region includes some of the world’s most dynamic economies as well as some of the smallest and least developed. Similarly, its members are hugely diverse culturally, politically, educationally and linguistically. But even in their diversity they face similar challenges, including the speed of change brought on by technology.
One of the key themes at the conference was the rapid spread of digital technologies and their impact – on jobs, social and gender equality, the environment and social structures. But rather than seeing it as a threat, the overriding impression given by the delegates was one of optimism, of how technology is a force for good, creating opportunities for collaboration, for economic growth and for greater stability. More broadly, digitisation was seen as one of the principal vectors that will enable greater regional economic integration – by expanding commerce and the exchange and sharing of knowledge.
The digital revolution is already well underway across ASEAN member states and further into Asia Pacific, touching every aspect of life. From shopping to transport, public services to banking, these countries, even the poorest, are embracing digital.
Just six years ago, 8 per cent of the population in Myanmar had a mobile phone, for example. Only North Korea had fewer. Today, penetration has reached 90 percent, of a high proportion are smartphones. Rather than be blindsided by this dramatic shift, Myanmar welcomes it on the grounds that it will help the country catch up with the rest of the world after years of economic isolation and minimal infrastructure investment. The government sees that mobile phones can help improve inclusion and facilitate commerce to create wealth.
Such swift adoption is partly down to Myanmar’s young population. Indeed, across the ASEAN region 60 percent are under 35 years old. Tech savvy, they are keen to share in the benefits brought by successive years of economic growth – and their demands are driving change. Just look at the rapid rise of mega e-commerce platform Shopee since its launch in Singapore in 2016. Active today in seven ASEAN countries, it has grown in just two years from being a local C2C marketplace to become the leading player in Southeast Asia and Taiwan for C2C and B2C commerce.
With developments like these and the rapid adoption of digital payment apps such as WeChat Pay and Alipay, banks in the region are perhaps under greater pressure to become digital to the core in order to thrive than in any other part of the world. The Economist Intelligence Unit’s recent research with Temenos predicted that “changing customer demand will have the biggest impact on retail banking in the next three years”.
This pressure can also be noted in responses to our recent survey with Forbes – AI and the Modern Wealth Manager. The study found that when it comes to artificial intelligence, for example, 70 percent of APAC wealth managers believe digitization is essential for them to do their job and help them enhance the client experience. This compares with 63 percent in Europe and an average of 52 percent globally.
But it’s not just in retail banking and wealth management that transformation is seen as a necessary and positive development. Increasingly, it is recognised that digital banking helps SMEs develop faster because providers can tailor their services cheaply and effectively to SMEs’ specific needs.
Mobile banking, instant payments and e-commerce also make cross-border trade and economic relationships easier. Together with reforms to cross-border digital regulation – such as those affecting data management – they will empower SMEs to go international. That’s growth in a region where SMEs account for some 60 percent of GDP and employ 80 percent of the working population.
A great example of how digital banking can be used to this end is Australia’s Judo Capital. This brand new challenger bank is deploying the Temenos core banking platform to help it provide relationship banking for its target SME market. By using the analytics, adaptability, speed and power of digital, Judo Capital believes it can help Australian SMEs (which employ 70 percent of the country’s workforce) to grow better (with less risk) and faster. While Australia is not an ASEAN member, Judo’s mission had huge resonance with the delegates last week.
Looking at the Judo digital banking model, some smaller economies such as Sri Lanka, highly reliant on one or two industries, saw how digital banking could help their small businesses develop, increase efficiency and aid economic diversification.
Technology is opening up a world of opportunity across the ASEAN region that will help the poorest catch up, and those creating innovative new products and services to thrive. It’s an opportunity not just for the banks but also for the population as a whole. In Hanoi last week, it was an opportunity that focused everyone’s minds.