MONEY has come a long way, from a barter system in which commodities ranging from livestock and jewellery were exchanged, to the use of a currency system first involving metals such as copper, silver and gold followed by currency notes and coins. And now, centuries later, digital technology has transformed the way we transact — rather than dig into pockets for physical bank notes, more people are enjoying greater convenience with digital payment methods. However, while domestic payments are largely seamless today, cross-border payments still lag behind in terms of cost, speed and convenience.
From an alternative to a necessity
We live in an on-demand world, with the internet providing instant, convenient and seamless services – be it for entertainment, health or financial services. For example, Grab has built a super app that provides services with the convenience of making payments digitally, and companies such as Touch ‘n Go have integrated e-wallet services into their digital payment infrastructure.
Thanks in part to regulatory support from the government, the fintech industry has experienced rapid growth and advancement in domestic banking. However, there is still much to be done especially in the area of remittances. Indeed, in Malaysia, a recent survey commissioned by Wise found that high costs and long wait times continue to be the top challenges when it comes to sending remittance.
These challenges with cross-border payments persist today largely because the historic financial system was built with a focus on domestic needs. Thus, sending money to another country means having to move funds through a number of intermediary banks – a highly inefficient arrangement which results in delays and high fees.
The way forward – driving cross-border transactions through innovation
Digital payments have been accelerating globally, and this growth trajectory in Asia is massive. E-wallet penetration rates here are also much higher than those in other regions.
The path ahead for the cross-border industry will lie in the ability to innovate for the changing needs of customers and provide services that are low cost, convenient and secure.
Convenient
Gone are the days of long queues at the banks or having to go to a physical remittance branch to send money. Consumers want to transact money online and on the move with their smartphones.
Fast
The speed of transfers is a key consideration for many consumers, with 61% of Malaysians saying it was an important factor when choosing an online remittance service. The same survey also shows that slow transfers, particularly the long time spent waiting for remittances to reach their recipient, is a huge concern for 57% of Malaysians.
Cheap
A whopping 50% of Malaysians find the high costs associated with remittances to be a challenge, pointing to a crucial need for cheaper, more transparent options. The conventional way of sending money abroad through traditional financial institutions typically involves high charges and hidden fees. Often, the total costs do not become evident until the transaction is completed largely due to murkiness around remittance fee structures, a problem that fintech companies like Wise are solving for.
Secure
As digital transactions evolve, so do cases of cybercrime.
Malaysian Digital Economy Corp has made this one of its focus areas, collaborating with ecosystem players to ramp up security solutions.
These are exciting times as the fintech sector advances, especially in the payments space where we’re seeing the emergence of players solving for diverse needs and a concerted effort by the government to facilitate industry growth through real-time payment initiatives like DuitNow.
Backed by innovation, the industry is at the forefront of a payments revolution that is only just beginning to give consumers the level of experience they deserve.
This article was contributed by Wise Malaysia country manager Lim Paik Wan.
