BigPay wants to bridge financial inclusion gaps
- Since financial inclusion is the end goal, BigPay believes it can be achieved by serving customers who are typically neglected by traditional financial institutions.
- The digital and financial technology arm is also keeping their eyes on the open banking and embedded finance trend.
For countries within South and Southeast Asia, the young and vibrant economies are the rising stars in the development of the respective digital economy. The region has become the emerging “next wave” presenting enormous opportunities in digital life adoption. For that, BigPay, Malaysia homegrown fintech company providing digital financial services, has a mission of becoming the region’s leading challenger bank.”
For starters, few factors that have pushed the region on such pedestal is its sizable younger population, large number of unbanked and underbanked population, and the high mobile penetration rate. Therefore, BigPay’s CEO Salim Dhanani believes that financial technologies or fintechs is the solution that can help bridge the financial inclusion gap.
Being among the consortiums that have submitted an application for one of the five digital banking licenses in Malaysia, Dhanani told Tech Wire Asia (TWA) that the goal is to solve real world money problems for millions of people by empowering them, and providing a simple interface for users to send, receive and track their money.
“We’ve seen some really innovative reforms to broad policies across the region – such as digital banking – and we’ve also seen it around the more nuanced policies around compliance, from both large banks to fintech, eKYC is a great example of this. These policies have the power to change what customers expect and how quickly the industry moves as a whole,” he said.
Dhanani further discussed with TWA on how digital services can be used to bridge financial services access within this region, especially in Malaysia where the group is based, while ensuring compliant and transparent processes. The interview has been condensed and edited for clarity.
Is Fintech really increasing financial inclusion?
Yes, without a doubt, fintech is driving financial inclusion. Fintech is not just about putting these products on an app – it’s about leveraging data and technology to make these products smart and more accessible and intuitive. Many people turn to digital products and services because of convenience first, but they stay because high-value products such as personal loans, insurance and investments are presented quickly and transparently.
Let’s take credit as an example here – there are a lot more financial products that are going through this type of digital transformation. If you wanted a loan in the past, you would have to physically walk into a bank branch during their operating hours to apply and be assessed.
With fintech, we have access to a wide variety of data and have developed better algorithms to be able to assess eligibility for credit – and this is all done in a very regulated way to ensure consumer data is protected and used in a responsible way.
What are the risks of fintech to financial inclusion?
The biggest risk lies in fintech’s ability to sustain the access to such low-cost products for the underserved market in the long run. While fintech operates at a lower cost margin and are able to bring customers alternatives to traditional financial services, many fintech companies are not profitable in their early years – which is completely fine.
But there does need to be a strong path to profitability. We definitely see this moving in the right direction across the whole industry as business models become more mature and capital becomes more selective. As we scale the business across Southeast Asia, BigPay remains committed to driving financial inclusion whilst placing a strong focus on having a strong and sustainable business model.
We are in it for the long run and we have a number of competitive advantages – from being a technology first organization, to the agility of the organization that guides the way we build products and manage risk.
Could you perhaps outline some big trends in fintech?
The pandemic has shown the importance of technology’s role in bridging financial services and we expect consumers to place a greater priority in a digital-first and personalized experience moving forward. For us, data has always been a key enabler when we’re looking at customer behavior, how they are using our products within the greater AirAsia ecosystem.
Whether it’s payment, flights, telco, food delivery, we’re able to draw insightful conclusions around these behaviors which constantly evolve as they spend with BigPay. As a result, we’re able to learn from their spending patterns and delve deeper to innovate new products and services personalized to their financial needs.
Over the next two years, the level of digital innovation will propel to a new height as financial institutions evolve with the fintech trend and make financial services more accessible, and tailor them based on data, AI and machine learning. In the short term, banks are not necessarily serving all these segments that digital banks are going after. But over time, banks will adapt with new technologies and focus on efficiency.
Digital players on the other hand will also step up and we are definitely expecting new players to enter the market with different use cases. In BigPay’s case, we understand that there are a lot of people across the country that don’t have access to financial services which can improve their financial health.
Whether they are freelancers, students, or foreigners, we want to be there to give them access to simple and intuitive debit accounts, to affordable loans and to saving products – regardless of how much capital they have or whether they have an extensive credit history.
Financial inclusion is our end goal and we want to serve these customers who are typically neglected by traditional financial institutions for high-value products in a more efficient and transparent way.
Ultimately, the end-consumers will reap the benefits with greater product offerings tailored to meet their individual financial needs and we want to move them up the value chain – whether that is getting access to a responsible personal loan, saving or investing for their future.
What is the next aim for BigPay?
Open banking and embedded finance is also another trend we are keeping our eyes on. In the Southeast Asia region, regulatory bodies in Malaysia and Singapore are taking the first steps to make this a reality. It was already a hot topic before, but we expect that the pandemic would shed new light on the critical role the system can play to further financial inclusion in the region.
As digital players and banks streamline and optimize their digital services that focus on the customer experience, open banking will allow them to leverage connectivity platforms to increase their speed of innovation in ASEAN.
This way, not only are they able to unlock commercial opportunities, they will be able to operate in a more efficient manner that ensures profitability and sustainability in the long run. We are excited to see more regulatory bodies in the region champion for the system to promote economic growth.
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