A digital revolution and a reality check

Singapore

FANS of the digital revolution can point to some success that technology has had in democratising finance in parts of South-east Asia, where the majority still have no banking account.

But imaginations for the potential of technology and Big Data must be brought down to reality, with data privacy, infrastructure demands, cost and regulations, being key concerns for technology players who spoke at the Mobile World Congress in Shanghai this month.

The have-nots have found favour among digital outfits, because there is a clear need for banking services. For Globe Banko, Philippines' first mobile bank, it means reaching out to the three in four Filipinos aged 15 years and above with no bank accounts, said John Rubio, Banko's chief executive. Consequently, 40 per cent of consumer lending is provided by the grey market. At the same time, Filipinos have reportedly been drawn into pyramid scams that promise huge returns on their investments.

Banko - a venture for Philippines' second-largest telco, its third-largest bank, and a large homegrown conglomerate - allows its customers to transfer funds and take up loans using their mobile phones, taking advantage of the surge in mobile penetration in the country, as has been the case in many parts of the region.

Without a "robust credit agency" and no national identification system, the bank uses data from Facebook to assess a customers' credit standing for certain unsecured loans, said Mr Rubio. One way of assessment would be to check if a potential customer is a close friend of a delinquent borrower.

There are no clear details on the approval rate of such loans - which are capped at 2,500 Philippine peso (S$75) - though the bank decides within 24 hours if a potential customer qualifies as a borrower.

Another similar bank-telco partnership has taken off in Cambodia. Known as Wing Money, a former ANZ mobile-payments venture before it was sold off to a Cambodian businessman, it sits pretty in a market where just about 10 per cent of residents hold a banking account.

It has scaled up quickly since its beginning in 2008, chalking up US$4.5 billion in transaction volume last year, reports showed. For perspective, that's over a quarter of the country's gross domestic product.

The initial idea was simply to allow companies to administer payroll to Wing customers, said Anthony Perkins, CEO of Wing. Today, customers can transfer money cheaply through SMS (short message service), overturning the traditional way of hiring a driver to send money home to villages.

Such financial inclusion is a long, hard slog, with Mr Perkins admitting to many "failures". It was only this year that Wing secured a licence to allow it to pay interest on the account balance held by Wing customers. Wing also had to partner several telco operators in Cambodia to build a network, as it worked on an "awkward, middle ground" of being neither a bank, nor a telco, he said.

And the picture is less rosy when regulations are taken into account, said Karan Ponnudurai, chief digital services officer of Malaysia's telco Axiata, noting that the company "seriously underestimated the regulatory impediments" tied to its ventures with banks in the mobile payments space. It launched a mobile wallet service in 2013.

"When you move into financial services, you've got a new demon to slay," he added.

Meanwhile, companies are testing how far technology can go in creating more seamless services. Visa unveiled a work-in-progress service that would allow drivers to make in-car purchases on a monitor screen. This means a dinner order made at the start of a drive and processed by Visa can be fulfilled by the time the customer shows up at the restaurant.

Samsung expects all of its products to be able to send data and communicate with users through technologies such as sensors, in five years, said Alfred Boediman, vice-president, R&D centre, at Samsung Electronics.

This would add to the growing number of smart home-appliances already available that include fridges, vacuum cleaners, lighting and security systems - a trend known as the "Internet of things".

But there are open questions about whether the network can support the jump in data use. At it is, the world creates 2.5 quintillion bytes of data a day, with 90 per cent of today's data having been created in the last two years alone, IBM said.

Singapore's own smart nation ambitions is also hampered by very traditional issues. Government agencies still have silo views, said Oh Choon Ong, assistant director, Infocomm Development Authority of Singapore. Healthcare institutions in Singapore are very protective of their patients' data, which also lack anonymity, he added.

Meanwhile, the "Internet of silly things" has created some disillusionment over the real benefits of this digital wave, said Tony Poulos, market strategist at WeDo Technologies. A quick check on the Internet brings up some such inventions, such as a sensor-packed cup that detects the liquid that a person pours in. Being absent-minded has never been more convenient.

Then there remains the perennial issue of data privacy. "Data has been referred to as the new crude oil. When it's distilled and refined, it produces a lot of value," said Mr Poulos. "I think data will be a new currency: People will be trading data. It's a little controversial, and how are we going to be able to control that? I don't know. The regulators are going to be interested in what we're doing."