Dennis Khoo, UOB – Managing Director & Regional Head of Digital Banking
"Singapore has a highly developed financial system, underpinned by advance technology and is already moving rapidly towards a cashless nation but along a different path from China’s"
Dennis is responsible for the strategy, growth and delivery of UOB’s retail digital banking business, including customer experience and cashless payments. He unpacks the hype around going cashless and shares lessons from China’s success.
How far away are we from cashless kopitiams?
The precise timeframe is unclear. It has a lot to do with the actual context and situation where the cash is used. Using cashless payment to pay for your meal at a hawker centre is a challenge because the hawker is paying his suppliers using cash – so we need to solve this issue first. Good news is we are working on it. If you take another scenario, for example, management of condominium properties where conservancy fees are collected in cheques – here cashless is easier to adopt and offers an immediate benefit. For example, HiLife offers a solution for this already.
In terms of infrastructure, what more is needed for the region to go cashless?
Going cashless is ecosystem based, and across ASEAN. Currently, the infrastructure is not standardised so it is very hard to introduce something that doesn’t integrate into the entire fabric of how commerce happens across the community. This is why you can see different developments in different countries. You’ve got Singapore that has a high penetration of Near Field Communication (NFC) terminals, but if you go to Vietnam you are unlikely to find any NFC terminals. The reality is more to do with specific use cases and how you’re going to resolve the friction around each cashless use case on a granular level, taking each country’s cashless ecosystem one at a time. There are countries in the region that don’t have the terminal infrastructure and banking penetration rates are much lower: where mobile–based solutions will be used as a leapfrog strategy.
What can we learn from China?
China went down the path of using QR codes to push payments between buyers and sellers – this worked well given the size and scale of China and that there is no physical infrastructure involved. China also didn’t have the market proliferation of cards, contactless and online banking systems that we see in Singapore enabling Alipay and WeChat to sweep through many parts of the ecosystem in one go. This is not going to happen in Singapore. On the surface you may not see people using their phones to make payments on the street like they do in China but if you look deeper, Singapore has a highly developed financial system, underpinned by advanced technology and is already moving rapidly towards a cashless nation – but along a different path from China’s.
Why is there so much buzz around cashless payments? Is it all just hype?
There’s a large volume of data suggesting that even taking early steps towards cashless can add 0.5% to 1% of GDP to an economy. Why? There are a lot of steps and time needed to process cash-based transactions – you must count, account for, deposit and withdraw cash – all these take time and resources, not to mention the costs of printing and moving money from point A to B. Here there are real efficiencies in cashless. Of course, that doesn’t mean every cashless initiative is needed or is going to succeed – in each case you need to look at the efficiencies and the value-add of new technology.
What is the role of FinTech companies in helping to move towards the cashless revolution?
The real advantage of FinTech start-ups is their ability to specialise and to explore technologies on a granular level. A lot of FinTech and cashless advances are going to be made incrementally from a very small scale. That’s where I see the greatest value and opportunity today – not so much the everyday activities such as E-wallets and cash transfers but in specialised solutions. For example, I’ve been mentoring Paykey – a portfolio company of The FinLab that integrates a key on your mobile keyboard that allows you to make transactions with one touch. As it is integrated with the keyboard it doesn’t matter what platform you are using – Whatsapp, Facebook, WeChat – the innovation is at a deeper level. This isn’t a space many others have looked at and this is the value of FinTech start-ups.