Emerging Tech Creates a Win-Win for Bankers and Customers Alike

Digital inclusion — providing equal access to information and communication tech, regardless of socioeconomic status — underpins a multitude of new trends. When today’s businesses give everyday users what they want and need, opportunities abound.

Over 70% of Southeast Asia’s population remains unbanked. But thanks to the acceleration of emerging technologies — with artificial intelligence leading the charge — that figure is poised to diminish rapidly.

Given SEA’s unsatiable thirst for mobile Internet, fully digital banks are a modern-day solution to outdated business practices. As the region’s $100 billion Internet economy continues to expand, brick-and-mortar banks find themselves thrust into a sink or swim scenario.

You see, SEA’s netizens are becoming increasingly comfortable with online purchases. From ordering takeout to streaming music and booking travel arrangements, tasks take place from the comfort and familiarity of omnipresent smartphones.

Now, you may be familiar with ‘online’ banking, but that’s not the topic here. On that (bank)note, let’s clarify the difference between online and digital banking.

Ancient History

Long before the Internet, or any form of digital communication for that matter, banks have been go-to locations for storing excess net worth. The oldest bank still in existence — Italy’s Banca Monte dei Paschi di Siena — opened in 1472.

Image credit: Euractiv.com

Small amounts of cash, precious metals, and jewelry and typically safe to keep on-person or in-house. But when personal or corporate bankrolls swell to the point of causing sleepless nights, banks become literal safe-keepers.

Now, banks’ inability to hold 100% of customer deposits in reserve, along with their underhanded greed in interest made from those deposits, are topics for another day.

Bitcoin and its crypto successors aim to dethrone central banks’ stranglehold on transmittable value. But until additional, stabilized blockchain infrastructure comes online, we all rely on fiat offramps and onramps.

The Digital Migration

Online banking services have a high adoption rate among the globe’s banked citizens. And by definition of ‘digital bank,’ also known as a ‘neobank,’ that’s where the similarities end.

Neobanks, unlike their traditional counterparts, are mostly code-driven

Neighboring Singapore’s central banking authority, MAS, intends to issue five digital bank licenses by the middle of 2020. Successful applicants gain the right to offer purely digital banking services. Products include savings, loans, bill payments, investments, and more.

Unsurprisingly, the licensing competition is fierce. Unicorn ride-hailing service, Grab, has formed a consortium with Singtel, Singapore’s largest telco, in a bid to ‘grab’ a license.

As of early this month, 21 contenders are in the running, including ByteDance — the Chinese outfit powering the TikTok social app.

Especially intriguing is how licenses to operate virtual banks are available to non-banking entities. Sure, banking industry players also want a piece of the action. But MAS, for a juicy licensing fee, no doubt, is heeding the call of its citizens.

Digital banks and digital inclusion are perfect partners.

While online banking begins with an offline relationship, digital banking means there are no local branches to visit. All transactions occur through smartphone applications, with accompanying debit cards for regions lacking cashless societies.

And with this digital transition comes gains for all players.

Banker’s Boon

In comparison to traditional banking, virtual banks can look forward to contracting as well as expanding,

MAS regulations state only one central branch, per license, is permittable. With such limited infrastructure, there’s only a single building to maintain and far fewer employees to hire.

Processes and errors decline right alongside costs of operation — and reduced expenditures rollover to customers via lower fees and stronger perks. For virtual bankers, efficiencies and profits both follow an upward trajectory.

Customer’s Comeuppance

On the customer’s side of the coin are a full stack of benefits.

The entire system runs on AI-empowered automation. Opening and using an account is simple and available from the mobile Internet — exactly where Southeast Asians spend increasing amounts of time. Customers are also privy to a full range of banking services.

Vietnam isn’t without these neobanks, either. The first to crop up in this country was Timo.vn. Although Singapore’s regulation states only one physical location per license, that’s not the case here.

Timo does involve brick-and-mortar, but locations are more like small coffee shops where new account holders pick up their debit cards.

Final Thoughts

While Singapore’s MAS is taking a decided step towards digital inclusion, there’s no denying that it’s still a central bank. And if there’s anything that 2008’s financial crisis proved, it’s that central banks don’t have their depositors’ best interests at heart.

Nonetheless, fostering the creation of virtual banks is a progressive activity within the alternative financial ecosystem. Only time can tell us who obtains the licenses. But an organization like Grab — already catering to the needs of digital-first consumers — is a welcome winner because they align with our values.

Emerging tech powers everything we do here at RedFOX Labs. For example, we’re now creating a series of AI-powered cashback and rewards apps.

RedFOX is partnered with MYMEDIA and Misfit Technologies to produce cashback apps

Beginning with Myanmar and headed to Vietnam as well as the Phillippines, RedFOX is creating consumer-focused gateways for Southeast Asians entering the digital economy.

In addition, our mobile crypto wallet is right around the corner. Digital wallets foster digital inclusion by providing a means of value storage and transfer outside the walls of an exclusive, antiquated banking system

For traditional banks, rising with the swelling tide of SEA’s digital spending means catering to depositor demands. However, because central banking is one of the planet’s most deeply-rooted institutions, change is often unwelcome and downright terrifying.

But the pivot to digitization brings potent benefits that financiers can no longer ignore. In other words, banks can still fatten their bottom lines while putting smiles on customers’ faces.

Ultimately, those smiling faces are what digital inclusion is all about.


Would you use a neobank? Or do you prefer the ability to visit local branches?

Share your thoughts in the comments section below!