Join us as Arnold Chan, the general manager of Asia at Airwallex, shares his insights into the evolving payments sector. Discover how COVID has reshaped consumer and merchant behaviour in Southeast Asia and Hong Kong, learn about the growing importance of online payments in today’s market, explore the impact of cross-border business expansion and the key trends to watch in the payments industry.
What developments do you see happening in the payments sector in the next five to 10 years?
In Southeast Asia and the Hong Kong region, which I’m most familiar with, we’ve seen how COVID has changed how we see consumer and merchant behaviour. Before COVID, SMEs and merchants were used to offline payments—or what we would call more traditional payment methods—like cash or even cheques with B2B payments.
COVID however, sped up the adoption of ecommerce and has also changed consumers’ purchasing behaviour. Now we see a lot of traditional offline merchants. Not only are they using new payment methods, but they are also extending their market with ecommerce. So, we are seeing quite a big boom with commerce across the region. More people are shopping online, meaning merchants need to offer online payments.
Another observation we’re seeing are the growing ambitions for startups to expand beyond their home countries. This trend has risen partly because of COVID, but also because the countries in the region are working together more. The ease of technology allows many merchants, even those with a very technical infrastructure, to do business overseas.
We are also seeing companies procuring services from overseas, such as website developers, which a startup might not be able to find locally. These companies need to be able to make payments to overseas businesses.
All these trends are boosting cross-border payment needs. How businesses procure globally and sell globally, will be the biggest thing to watch out for.
What are the strengths of the fintech sector in Asia?
Fintech companies went through a very challenging period, globally, last year. Soaring inflation, rising interest rates and the volatile macroenvironment was a challenging backdrop for growth. In Asia however, I think we’ve bucked the trend a little and are continuing to see growth opportunities. Singapore is increasingly becoming a key hub in the region to drive fintech adoption.
Singapore is home to a lot of tech startups, and a lot of VCs are here, so there’s plenty of talent going into this space. This is beneficial to us as a fintech company, as we work with a lot of early-stage companies. As these companies can expand quite quickly, they are more willing than a traditional enterprise to adopt fintech platforms.
The government has also played an important role; it has put in place a lot of initiatives to support smaller companies. As a result, many companies use Singapore as a hub for the region.
What role is embedded finance playing in the industry now? What impact will it have in the future?
It’s an important part of the payment landscape, especially as more startups appear in the region that try to serve their customers end-to-end. For instance, we have seen lendtechs that want to lend to startups or ecommerce sellers on an end-to-end platform. These companies need to work with a licensed payments provider, like Airwallex, so we can help them with a white labelled payment solution, to embed into their platform.
There is a very vibrant tech ecosystem in Singapore, so we are seeing more platforms that want to include payments as part of their end-to-end offering to their customers. This explains the need for embedded finance and why we are investing quite a bit into this area as well.
In Southeast Asia there are a lot of different countries, so you need a provider that covers these different countries. It’s easier to work with one company that can provide everything you need across the region.
As the general manager for Hong Kong and Southeast Asia, are there any countries that you are focusing on?
Right now, we are licensed in Hong Kong, Malaysia and Singapore. We are looking to increase the connectivity across Southeast Asia, whether it’s pay-in, pay-out, collecting customer payments or disbursement to clients, we want to increase our payment infrastructure in the region. So, no matter where you are based, you can make payments across the region in a convenient and efficient way.
And if we go back to the mission of the company, another thing we are focusing on is how we serve businesses of all sizes, end-to-end, especially when they want to go global. We will help them with their transfers, issuing corporate cards, cross-border payments and managing their finances. A lot of these companies will have employees spread over a region, so they’ll need help with an expense management platform, which we can provide.
So you are focusing on new products and services, as well as new markets?
We want to provide end-to-end financial solutions to companies of all sizes. One phenomenon we have seen in Hong Kong and Singapore, is that a lot of merchants use us as a primary business account, meaning that Airwallex is their operating account. We are trying to increase our functionality and payment scope so that more businesses will be willing to use us as a primary operating account.
What made you enter and sponsor the Asia FinTech Awards?
For us, we are one of the biggest fintechs in the world. We are a leading player in the industry, especially in payments. That’s why we want to increase our presence in Singapore and Asia through awards like this. I do think we are one of the few fintechs that has global coverage across all the major markets. We have around 1,400 employees globally across 20 locations, are licensed in major financial markets, and also have banking partners that connect us to allow merchants to pay in close to 100 countries.
We see ourselves as an industry leader, which is why we like to work with other fintech players to boost the community, as well.