EXCLUSIVE: “Nimble and SaaS-y: SE Asia’s mobile money” – Terry Paleologos, BPC in ‘The Fintech Magazine’

Payments technology company BPC is at the heart of the region’s growing wallet economy. Its MD for APAC Terry Paleologos explains why startups and established players alike are adopting a software-as-a-service strategy to service it

Back in 2018, a smartphone loaded with payment options powered the winner of this magazine’s South East Asia Payments Race across the finish line. At the time, we observed that the region would become ‘a honeypot for app-driven mobile finance services’.

A lot has happened in the South East Asia fintech landscape since. But, without wanting to sound too self-satisfied, we were right. A slew of smart banks have been drawn to that honeypot, riding on an improved digital payments infrastructure, including cross-border rails, such as the Monetary Authority of Singapore and the central bank of Malaysia’s recently announced cross-border QR code payment link between the two countries.

The Philippines’ first virtual bank, Tonik, received its banking licence in January 2020. Cake by VP Bank emerged in Vietnam, onboarded a sweet four million customers in three years and picked up a bunch of awards in 2023. And GX Bank will be the first to take advantage of Malaysia’s digital banking licences this year.

And that’s just a tiny sample.

In December, Jonathan Bautista head of the Pre-Sales Group for APAC at payments technology company BPC forecast a ‘transformative shift in the Asia-Pacific financial landscape, with mobile commerce driving digital wallets as the premier choice for online payments and widespread QR code adoption signalling a unified and efficient payment ecosystem in 2024’.

The company, which has had a foothold in the region since 2003, quotes research that suggests digital wallets will account for 65.4 per cent of APAC e-commerce payment methods this year – a trend that’s led by prominent regional providers such as Alipay, GCash, Gojek, GoTo, Grab (a partner in GXBank), MoMo, and PhonePe.

BPC has not only been involved as a technology partner in launching many neobanks in the past six years, but it’s also been instrumental in building the national digital architectures that support them, from Nepal’s electronic payment system to Singapore’s NETS. As such, it has a broad view of the technology, regulation and market players driving change. So far, they’ve mainly been fintechs who have pulled themselves up by the bootstraps. They needed cost-effective, fast solutions, coupled with experienced support, to get a foothold before others, with bigger resources, muscled in, says BPC’s managing director for Asia Pacific, Terry Paleologos.

“Typically, smaller players like fintechs and non-banks, were looking to issue single products quickly, and Cloud-based capability gave them speed to market and reduced infrastructure management cost,” he says. “This is creating a bottom-up trend where smaller players are getting to market quickly and mid-tier operators are now seeing other advantages, like being able to scale in multiple locations.

“Now, that upper echelon of large infrastructure banks is also starting to not just test the waters, but develop roadmaps that say ‘in the next two or three years, we want to be able to do this or that’.”

Recently recognised by Celent as one of the world’s best global digital banking providers, BPC has been evolving its own business model towards providing Cloud-based, software as a service to all of them. It also acts as a ‘critical friend’ to providers, whatever their size.

“Banks are moving from the big infrastructure role they played, outsourcing those capabilities, to become more flexible and scalable,” says Paleologos.

“Because we are very established in certain markets, we take the role of being a trusted voice and helping with two- or three-year forward planning very seriously.

“As there’s a lot of transformation taking place, it’s important for us to be able to impart knowledge, and to be much more of a solution provider than simply selling
software,” he adds. “It’s important that we’re able to problem solve, and we’re moving from having implementation engineers and developers, to having proper solution architects that help the customer understand what their problems are, then ensure our solutions are solving those problems as they go forward.”

He believes use of SaaS will become even more widespread over the coming years.

“I think it will be fairly ubiquitous. There have always been challenges in some markets, with regulations around being locally hosted, but some players want to scale in multiple countries, and doing implementations market-by-market can be time-consuming,” he adds. “So, I think everyone will have some component they offer as SaaS. A lot more dedicated instances will start to flourish.”

“Because we are very established in certain markets, we take the role of being a trusted voice”

An example of innovations that BPC is generating to cater for this trend includes its BPC Processing service, focussed on delivering next-gen payments. It was designed to cope with the ‘proliferation of new means of payment and the growing popularity of mobile wallets and wearables, which is adding complexity to the payment ecosystem’. It enables users to cater for multiple types of provider via one platform, offering end-to-end omnichannel payment processing, encompassing issuing, as well as online and popular alternative payment methods.

Users can also experiment with new check-out experiences like instalment payments and third-party financing for purchases. The service is a key tenet of BPC’s strategic shift towards SaaS in order to mirror its clients’ evolving requirements. In 2023, the company’s senior VP Peter Theunis wrote: “It’s clear SaaS models will stand as a cornerstone of innovation in the financial sector. Its ability to provide flexible, scalable, and cost-effective solutions makes it an indispensable tool for financial institutions looking to stay competitive in a rapidly changing landscape.

Three years ago, the company established a SaaS processing centre in Pakistan through a PCI DSS-certified local Cloud data centre, to serve the growing demand for local Cloud-based services from banks, fintechs and payment service providers (PSPs).

With its 220 million-strong population, many of those people owning smartphones, Pakistan is a prime example of a SE Asian country that has seen significant growth in digital payment value and volume. BPC recognised that the advent of the digital economy and an explosion in neobanks, wallet companies, digital-only banks, smart city and buy-now-pay-later services in markets like this meant that ‘future growth could be guaranteed only by adopting a Cloud delivery model’ that caters for the growing storage needs involved.

This has led to BPC adopting Oracle Cloud Infrastructure (OCI) and decommissioning its on-premise data centre, migrating its SmartVista payments platform to always-on operator OCI, allowing new clients to provision it ‘in just a few clicks’.

According to Oracle’s website: ’‘The elasticity of OCI means that SmartVista can accommodate top-tier banks running 2,000 transactions per second as well as rapid consumer growth among neobanks, fintechs, wallets and BNPL players, such as Cake in Vietnam, for whom time to market is the essential ingredient for success.”

Paleologos concludes: “With transformation accelerating in Asia in the past two or three years, our focus is on understanding and leading some of the trends. We’ve seen a great spurt of innovation, most recently in Malaysia, where six new banking licences were issued in 2023. That not only results in new entities and innovation, but also makes older, more established players start to reimagine how they do business, what systems they use, what transformation they need to do, how they can be more flexible and competitive and how they can reduce costs.”

CASE STUDY

The payment ingredient in Vietnam’s Cake

Cake is a collaboration between VP Bank, one of Vietnam’s leading banks, and the financial arm of Be Group, an on-demand platform (principally delivery and ridehailing) in SE Asia.

Aimed at improving access to financial services for Gen Z and Millennial Vietnamese specifically, Cake chose Mambu as its core banking partner and BPC for its payments technology, both providing flexible solutions, which could deliver rapid time to market for new products and services.

BPC’s SmartVista platform helped Cake to open up a wide range of digital services to a market of around 90 million people. The bank was able to issue Visa credit cards in less than two minutes using SmartVista Card Management and Card Issuance, while SmartVista Fraud Management means 360-degree transaction monitoring with AI, machine learning, and customer behavioural profiling.

Cake has grown rapidly and its services now include money transfers, payments, savings, investments, consumer loans, and credit cards. Over the past 12 months, it’s partnered with Vietnamese corporations with huge consumer bases, including financial ecosystem Viettel Money, state-owned telco VNPT, and car maker VinFast, and it has launched a co-branded card with the streaming app VieON.

This article was published in The Fintech Magazine Issue 31, Page 56-57