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Tuesday, April 16, 2024

Cashless courage


SMEs in South East Asia are understandably jittery about going cashless. Jasmin Ng, Group Head of Cash Product Management at DBS Bank, explains what it’s doing to calm their nerves


In the past two years, global ecommerce and, consequently, fintech, has been eyeing the South East Asian markets with hunger.

Ecommerce in the region has experienced explosive growth but, compared to elsewhere, the payments ecosystem that enables it is distinctly different in the way it has been built and adopted. That’s been seen in the way digital is promoted and supported by the Association of South East Asian Nation’s (ASEAN’s) respective governments; the hybrid growth of payment solutions; how establishing trust in financial institutions has been a key challenge and how delayed funds clearance and settlements added to the lack of it.

Then there is the way in which QR technology took on a life of its own and customers strongly favour cash-on-delivery over other payment strategies for buying online. In short, if you already have experience of trading in the West, South East Asian markets need their own, customised strategies.

In Singapore, a city state that has made a commitment to smart tech and a cashless future, banks’ attention has focussed on the business customers who make up 99 per cent of the corporate community – the small and medium sized enterprises – as a way of accelerating digital payments adoption among consumers.

DBS Bank, for example, recognised that if the region was to follow through on its cashless promise, then its fragmented payments market must come together to enable SMEs and retailers to transition away from cash. DBS understood that the financial infrastructure requires the simplest of all systems and its users need compelling value-based reasons to go cashless.

Jasmin Ng, the bank’s group head of cash product management, is dedicated to designing strategies to move SMEs away from cash management and cheque collection, employing a variety of initiatives and leveraging partnerships.

She says: “Because SME outfits are small, cashflow is very important for them, and one of their key challenges is the ability
to get the kind of liquidity, working capital, that can balance between their sales versus their expenses. So, as a bank, we are constantly looking at how we can innovate to help them optimise their working capital, how we can facilitate their collections as well as payables.”

Ng explains how developing capabilities that promote faster cashflows for these businesses – real-time transactions, faster cross-border settlements, QR technology and other similar infrastructure – leads to opportunities that help the bank grow along with its customers. DBS has proactively built a number of payment infrastructure adjustments to achieve speedy transactions, including the adoption of SWIFT gpi when it was launched, while at the same time building its own real-time intra-bank transfer system with a customer app called IDEAL. Linked to its internet banking infrastructure, IDEAL allows account holders to track payments in the system.

“When SWIFT gpi was introduced, DBS was one of the first banks in Asia to embark on it. Today, six of our core markets are on gpi, which offers the traceability, transparency and speed for transactions outside of our DBS network,” says Ng.

Adopting SWIFT gpi allows customers to check every detail about the status of a transaction – where it is, when it gets credited and, if cross-border, at what FX rate.

“In addition to gpi, DBS also offers PriorityPay, as a value-add service to our customers who do cross-border transactions within the DBS network, so they get cross-border transactions happening almost instantly in Asia,” Ng adds.

An IDEAL solution

To ensure the accuracy of the status information around online transactions, IDEAL attempts to capture relevant and accurate information and instruction from the users, and validate them at every stage.

“The validation capabilities on that platform help to minimise any form of failure for transactions that go downstream or across to the beneficiary banks,” Ng explains. “The bank’s cross-border payment services today offer different capabilities that the client can enjoy both within and outside of the DBS network.”

DBS is also partnering with various South East Asian entities, including government-supported ones, on working towards a cashless society. Together with the Singapore government-run Info-communications Media Development Authority (IMDA) and leading communications technology group, Singtel, DBS created an ecosystem that can help their SMEs to go digital.

Called 99%SMEs, it currently operates as a business-to-consumer site that works as an ecommerce platform, primarily for retailers looking for an online presence. But the 99%SME ecosystem is designed to facilitate every aspect of digitising SME operations, expanding across borders and handholding during the transformation process. There are now plans to bolt on a
B2B marketplace to the 99%SMEs portal.

“Our SMEs can use the platform to advertise their merchandise and services. It’s a way to both promote them and help them adopt digital technology; to show that the sales model can be omnichannel and customers can buy online through that marketplace. When it comes to delivery, customers can visit the store to collect – that’s the offline bit. And, at that point, merchants can take the opportunity to do some cross-selling,” explains Ng. “We see the marketplace as a way of taking the nerves out of going digital for SMEs. At the same time, they can see this is the beginning of an expanding sales model.”

DBS has extended this concept into the property arena, where it partnered with property listing companies to post around 100,000 homes on the DBS Property Marketplace. Applying the ecosystem model, it introduces those looking to rent or buy a home to SMEs in the domain that are providing auxiliary services likely to be of interest to them, such as electricity, plumbing and internet providers.

Meanwhile, DBS Max, the bank’s merchant app, simplifies payment collection by using QR code technology facilitated by the PayNow system that’s being adopted by more and more banks in South East Asia. DBS Max allows for direct transfer of payments between bank accounts that participate in the PayNow network. It also leverages QR; customers simply download the app, get a user ID by registering as a corporate client with DBS, set up the app on their mobile following a simple process, and use it like any wallet system. Apart from simplifying collection, DBS MAX provides other forms of benefits, explains Ng.

“We can track their sales collection from the app itself; they can set up refunds if there’s an error with the sales collection and, at the end of the day, the system automatically sweeps the funds. What we tried to do through the app is digitise the whole journey of how an SME does its collection (offline).”

Pushing a growing economy and fast developing markets from traditional to cashless involves, above all, a willing change in user behaviour. Governments as well as financial entities in the South East Asian region understand that this will entail building sustainable systems together and should be based on user trust and mutual benefit. Only then will Singapore have the courage to go cashless.



This article was published in The Fintech Finance Magazine: Issue #12, Page 60.

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