The Next Wave of Payment Apps Will Be Bank-Led

June 17, 2019

Much of our everyday life is transactional in nature – and that is perhaps why payment players have taken our world by storm.

For the longest time, traditional banks have acted as an effective custodian of one of our two primary albeit scarce resources – time and money – and it was enough for them to a good steward of money alone.

However, the times they are a-changing. With the introduction of fintech comes a new world order and the old adage now seems to ring true – time is indeed money.

The modern conveniences brought on by tech platforms catering to our wide spectrum of daily needs – from communication to transport and food delivery– have provided a perfect entry point for these “super apps” to extend their interaction with their captive mass user base to the realm of digital and mobile payments.

On top of having these fintech and tech players giving the banks a run for their money, the open banking revolution is set to challenge the traditional banks’ dominance over consumer finance. This “share-of-wallet” battle will only intensify with more digital apps and platforms serving different consumer sectors (such as airlines and ride-hailing platforms) expected to join the war in mobile payments.

In particular, we can expect big players in the B2C space such as airlines and telecommunications, which command sizeable customer bases on their own, to monetise their consumer engagement and expand into the payments space with even more offerings.


Advances in payment technologies with the introduction of near-field communication (NFC) and quick response (QR) codes have significantly reduced the cost barrier in digital payments – and with that, a new breed of payment solutions providers has enjoyed the first mover advantage.

However, the traditional financial institutions haven’t been resting on their laurels. By building their own digital and mobile banking platforms, banks have in effect taken all their brick-and-mortar operations and digitised them in the form of mobile applications. This is just the beginning for a paradigm shift in the world of retail banking.

The payments space is just scratching the surface of what can be realised in the world of digital finance. Banks can utilise their existing digital platforms not only for processing payment transactions but as a means of engagement to extend their offerings in other areas. These include their core offerings making up the value chain – credit cards, loans and wealth management products such as savings and insurance. At the end of the day, digital financial services are not just about payments.

Case in point: virtual banking is now a reality in Asia with Hong Kong issuing licenses to eight digital-only operators in a sector shake-up[1], and the Monetary Authority of Singapore reported to be mulling over how digital-only banks with a "non-bank" parentage can offer value to the established ecosystem in Singapore, while keeping potential risks at bay[2]. In China, five of its tech giants have already been operating virtual banks since 2014[1].

What is even more notable is that out of the eight virtual new entrants to Hong Kong’s highly guarded and intensely competitive global financial centre, four are joint ventures formed by established tech players and financial institutions.

  • Infinium is a joint venture between Tencent, Industrial and Commercial Bank of China, a unit of Chinese banking giant ICBC, Hong Kong Exchanges and Clearing (HKEX), and Hillhouse Capital.
  • Livi VB is a joint venture between Bank of China (Hong Kong), JD Digits (formerly JD Finance), and one of Asia’s largest conglomerates, Jardines.
  • SC Digital is a joint venture between Standard Chartered with PCCW Limited, Hong Kong Telecom (HKT) and Ctrip Hong Kong.
  • Insight Fintech is a joint venture between Xiaomi and AMTD Group, a non-bank financial institution which provides capital markets advisory, asset management, insurance brokerage, and strategic investment services.

Two others (Zhong An Virtual Finance and PingAn One Connect) hail from China’s insurance giants – Zhong An and Ping An – whilst the remaining two were pure fintech plays – Ant Financial’s Ant SME and Hong Kong’s homegrown fintech WeLab (operator of WeLend in Hong Kong, Wolaidai (我来贷) in Mainland China and Maucash in Indonesia).


Financial institutions have spent decades investing and building their distribution channels, technology, data security, operations, compliance and risk management, which tech players are not able to replicate overnight. They also have established brand loyalty, an established track record of proven financial expertise and, most importantly, financial muscle.

Non-banking financial institutions operating within the highly-competitive payment space will need to expand their offerings across the financial services value chain to attain profitability or stay competitive. Even well-capitalised big tech players will need to extend their offerings into other areas of digital finance – digital lending, insurance, money management – and build their own product that are not built on solutions provided by other banks to make their financial services business line viable in the long run.

The ultimate winners in the payment race will be those who are able to provide end-to-end financial services as well as those who manage to stay in the game by bring further value to the customer on top of generating sheer transaction volume offering digital utilities for daily mass consumption such as telecommunications, transportation and social messaging platforms.

Taking a leaf out of Hong Kong’s virtual banking playbook, it looks like the optimal scenario is a strategic alliance between the two to harness digitalisation to modernise financial services and deliver substantive value to the customer through collaboration and partnership.

What this means for the payments space, which will soon merge with other areas of consumer finance over time, is that the next wave of payment apps will be led by the banks as the tech behemoths are finding it easier to team up with the financial industry’s experts well-tuned to how the highly-regulated sector operates. Big tech may have disrupted the eco-system, but it is up to the banks to re-define how their futures look like and they have all the resources needed at their disposal.



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