"The Next Wave" Emerging digital life in South and Southeast Asia This report is produced by Deloitte in partnership with the INCLUSION Fintech Conference. With the inaugural three-day event held in September 2020, INCLUSION aims to bring together members of the technology and financial communities, to foster a global dialogue on building a more inclusive, green, and sustainable world through digital technology. "The Next Wave" Emerging digital life in South and Southeast Asia | Contents

Executive Summary 1 Chapter I The Rise of Digital Life 5 Trends and characteristics of digital life 5 Large populations and young demographics 5 Digital life boosted by social media 6 Factors driving the rise of digital payment 7 Demographic advantage 8 Rapid penetration and adoption of smartphones 8 In contrast with the lack of inclusiveness of traditional finance, 10 digital payment reduces the time and cost of transactions Strong policy support for the digital economy 10 Digital payment the key enabler for digital life 11 Digital payment has boundless potential 11 Mobile e-commerce has become the cornerstone of digital life 13 Interconnecting digital finance 14 Accelerated adoption of "zero contact" digital payment 14 since the pandemic 14 Chapter II Digital Life Consumer Portraits 18 Characteristics of Digital Life 18 Regional differences in digital payment 19 The attractions of digital payment 19 Petty payments dominate 20 Digital Life Habits 21 Mobile APPs actively used in different scenarios 21 Diversified modes of digital entertainment 21 Popularity of online shopping but concerns remain 22 Surge in the use of digital services since the pandemic 24 "The Next Wave" Emerging digital life in South and Southeast Asia | Contents

Chapter III Unique Digital Life in South and Southeast Asia 26 Digital Life "Leaders" 28 Singapore: Exemplary digital model for 28 developed countries 28 Indonesia: perfect payment pattern, boundless 32 online shopping prospects Malaysia: Advanced digital application scenarios 34 Digital Life "Followers" 36 Thailand: Street-based digital economy 36 Philippines: Tech-driven digital age 38 Digital Life "Prospects" 42 India: Digital life from a small perspective 42 Digital Life "Challengers" 44 Bangladesh: Inclusive digital finance for low income people 44 Pakistan: Every area of digital life needs to developed 47 Chapter IV Unleashing the Potential of Digital Life 50 Continuous promotion of digital communication infrastructure 50 Encourage and develop consumer and merchant adoption of 50 digital payment Grasp opportunities to serve those with inadequate access to 51 financial services Building an information security mechanism "trinity" 51 Collaboration and communication to reduce business risks 52 Encourage localized digital innovation 52 Actively cultivate digital talent 53 "The Next Wave" Emerging digital life in South and Southeast Asia | Executive Summary

Executive Summary

Young and vibrant economies in digital financial services accessible findings show that young adults aged South and Southeast Asia are rising via smartphones, which further 21-40 are the leading force enabling stars in the development of the digital promotes the adoption of digital the rapid adoption of a digital life in economy. The region has become payment; the region in the post Covid-19 world, the emerging "next wave" presenting with 78% of those surveyed in the age • Third, with a high mobile penetration enormous opportunities in digital life group indicating they have increased rate in the region, consumers are adoption. their use of digital services. more inclined to opt for m-commerce than those in developed economies; Digital payment as a key enabler is There are four factors behind the rapid and creating and connecting digital life for rise of digital consumption in South consumers, making a fundamental and Southeast Asia: • Fourth, most governments in South shift in social interactions, financial and Southeast Asian countries have • First, the population in the region is services, digital entertainment, daily introduced supportive policies to huge in size and young in age, with life services and shopping habits. boost development of the digital digital lives boosted by social media; The survey also uncovered regional economy and digital infrastructure. trends in the digital lives of people in • Second, the large number of We surveyed people across age groups South and Southeast Asia, which are unbanked and underbanked in eight countries (Singapore, Malaysia, summarized below. population in the region has spurred Thailand, Indonesia, the Philippines, the growth and fast adoption of India, Bangladesh and Pakistan). The

Chart 1: Portrait of Digital Payment in South and Southeast Asia

Top 3 scenarios of digital payment Petty payment in dominance

e-commerce / For of consumers, the value of 70% 67% m-commerce each transaction is less than $30 peer-to-peer 69% 33% transfer 29% in-store 62% purchase 5%

Less than $1 $1~$10 $11~$30

After the pandemic Top 3 reasons for use of digital payment

78% of consumers have increased 1. convenience their use of digital services 2. contactless 3. value-added benefits and promotions Source: Deloitte Research

1 "The Next Wave" Emerging digital life in South and Southeast Asia | Executive Summary

• Digital payment: The top three most • Most frequently used mobile APPs in the most frequently used daily common daily life scenarios where South and Southeast Asia life services; consumers choose to use digital – Mobile banking and digital payment – The top three reasons payment include e-commerce / are the two most used functions in for consumers to choose m-commerce, peer-to-peer transfer financial services APPs; e-commerce/m-commerce are and in-store purchase, of which the – Films or video streaming, social convenience, product variety majority are of smaller value. Users media and music streaming are and low prices; choose digital payment mainly the three most popular modes of – Since the pandemic, the use of because it is convenient, contactless digital entertainment; digital services has surged. and offers extra benefits and – Ride-hailing, news and books, discounts. and workplace collaboration are

Chart 2: Four Main Digital Payment Scenarios in South and Southeast Asia

Financial service Digital entertainment Highest frequency of use Most favored by youths 1. mobile banking 1. films and video streaming 2. digital payment 2. social media 3. music streaming

Daily life service E-commerce Highest frequency of use Three reasons 1. ride-hailing 1. convenience 2. news and books 2. product variety 3. workplace collaboration 3. low prices

The survey also uses indicators to The Philippines, while having room challenges such as slow internet measure the seven dimensions of to grow its mobile penetration, has a speed and consumers' preference digital life in each country. Overall, unique leading edge in digital peer-to- for cash payment. This puts it behind Singapore and Malaysia are the peer transfers, live e-sports broadcasts other "follower" nations in the seven "leaders", with top performance in and other segments of digital life. indicators. every digital life indicator. Although they are not yet equal to the "leaders" in their richness of digital life Bangladesh and Pakistan in South Asia However, there are several "follower" scenarios, these "follower" countries have the farthest to catch up in digital countries that are poised to catch are set for rapid expansions in their life. Their lower levels of social and up soon. Thailand is a model in this digital economies and are set to catch economic development have resulted category. Its high per capita income up rapidly with the leaders through in a large gap with other countries has led to greater smartphone their good digital foundations and in digital infrastructure and mobile penetration. Thailand performs effective policy impetus. penetration rates. strongly by virtue of having vigorous social media and online shopping In South Asia, India is doing well in activity and a mature digital payment cybersecurity. However, because segment. of a wide income gap, it still faces

2 "The Next Wave" Emerging digital life in South and Southeast Asia | Executive Summary

Chart 3: Digital Life Leaders in South and Southeast Asia

Digital life scenarios High

Digital Life Prospects Digital Life Leaders

Singapore

Malaysia

India Indonesia

Digital Thailand infrastructure ow High

Philippines Bangladesh Pakistan

Digital Life Challengers ow Digital Life Followers

The size of the circle represents the scale of digital economy.

Digital infrastructure: mobile internet speed, mobile phone penetration, government policies Digital life scenarios: social media, e-commerce activities, digital payment Source: Surfshark, Google & TEMASEK, GSMA, Statista, Globalweb Index, Deloitte Research

Digital payment is the key enabler (3) Differences in per capita income and offline scenarios; digital payment enabler of digital life. Compared with result in variations in smartphone in these countries will advance quickly mature models of digital payment in penetration; the various modes of towards more widespread, faster and other countries and regions, South digital payment adopted by countries more secure use. and Southeast Asian countries range from PIN codes and QR codes to have demonstrated the following biometrics; Although South and Southeast Asian characteristics: countries are poised for digitalization, (4) Governments can play a strong role they still need to catch up in various (1) For various reasons, e.g. consumer in promoting digital life by setting up areas, with particularly large room habits including a continued a uniform standard for identification for improvement in the construction preference for cash, digital payment in and electronic payment, determining of their digital foundations, fostering many of these countries relies more and supervising a uniform payment consumer involvement, information on the e-wallet model, which enables standard, and using policy tools to security and policy coordination, ready exchange for cash; drive the popularization of digital before they can unleash their huge payment. Looking to the future, the potential. We believe the richness of (2) These countries need to rely on governments of many countries will digital life in South and Southeast Asia offline channels such as convenient construct basic payment platforms will be unprecedented and contribute store networks to connect consumers and facilities; third-party platforms to the economies and comprehensive due to wide gaps in the availability of will continuously innovate their potential of countries in both regions. traditional finance and weak binding technologies and services and relationships between digital payment, comprehensively promote digital bankcards and bank accounts; payment models in multiple online

3 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

4 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Chapter I The Rise of Digital Life

Asia is accelerating its digitalization. Southeast Asia digital consumption: promotion of digital infrastructure. In addition to the overall growth of 1) The populations of South and This is why South and Southeast Asia, regional economies, the relatively slow Southeast Asia are large in size and as emerging regions, are expected to development of the traditional Internet young in age. Especially noteworthy become the engine that drives global is an important driver. This has caused is the fact that their large numbers digital life into a new era. regions whose digital economies were of people with no bank accounts or relatively less developed to skip the all- insufficient access to banking services Trends and characteristics of round popularization of the traditional have propelled the rapid growth of digital life Internet and jump straight into the digital payment; their young populations Large population base and young mobile Internet era. Consequently, became "digital natives" long ago and it is demographics mobile phones have become the these groups that are boosting digital life As of 2019, the Asian population is six major route through which consumers and consumption through demographic times that of Europe and 12 times that in Asian countries gain access to the dividends; of North America. The total population Internet and, more importantly, are 2) The high penetration of smartphones of Southeast Asia is now about 660 the most important carrier of mobile and extensive use of mobile applications million. Including the populations e-commerce, digital payment and have become the core of local digital life; of India, Pakistan and Bangladesh digital life. 3) The penetration of smartphones has in South Asia, the total population advanced the use of mobile applications, exceeds 2.5 billion, nearly double that Against the backdrop of maturing e.g. social media, live webcasts, mobile of China. This huge population brings mobile digital ecosystems in China, phone games, e-commerce and digital boundless potential for digital life. Japan and South Korea, manufacturers payment, with users more inclined to of mobile phones and mobile use mobile e-commerce than their peers applications have already turned to in developed economies; and emerging markets, with Southeast 4) Most countries in the two regions Asia and parts of South Asia close to came to see the importance of the digital East Asia becoming one of the most economy long ago and have introduced eye-catching regions. There are four policies that support its development elements behind the rise of South and and facilitate the construction and

Chart 4: Demographics of ASEAN and South Asia (2019, 100 million people)

China 14.3

Asia 46 South Asia 19.2 Southeast Asia 6.6

Asia South Asia China Southeast Asia

Source: World Bank

5 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

The proportions of young people compared with just 46.8% and 52.1% the Asian Internet will benefit from in South and Southeast Asia are in Europe and North America. "Digital this demographic dividend. The "next much higher than they are in natives" born after the 1990s are more wave" of South and Southeast Asia Europe and America. In Asia, the familiar with the Internet and digital life, represent the future development proportion of people aged <40 is with a higher acceptance of Internet- direction of digital life. 62.5%, rising as high as 65.4% and related advances and a faster learning 70.2% in South and Southeast Asia, curve. The future development of

Chart 5: Comparison of population structure

Chart: Chart: Chart: Chart: Proportion of people aged Proportion of people aged Proportion of people aged Proportion of people aged 0 in Southeast Asia 0 in South Asia 0 in Europe 0 in North America

6. 0.2 6. 2.

Source: World Bank

Digital life boosted by social media new business paradigms, including media users in India, with Pakistan Most users of mobile Internet social media + e-commerce, social and Bangladesh also maintaining applications are young people, and media + games and social media + rapid increases. In Southeast Asia, those using social media are the largest advertising. Malaysia has the highest social cohort. The "content + platform" model media penetration rate, social media has realized precise matching between The penetration rate of social media has almost reached saturation in the content loved by young users in Southeast Asia is much higher Singapore, and social media users and their hobbies, including games, than it is in South Asia. Although in The Philippines and Indonesia are cartoons, celebrities, exercise, fashion the penetration rate of social media increasing rapidly. and beauty and new technology. This remains low in South Asia, 2019/20 model has also continuously derived still saw an increase of 48% in social

Chart 6: Social media users, growth rate and penetration rate in South and Southeast Asia in 2020

5.0 100%

4.5 90% 4.0 80% 3.5 70% 6 3.0 60% 2.5 50% 2.0 40% 1.5 30% 2 1.0 22 20% 0.5 10% 0 0% Indonesia Philippines Thailand Malaysia Singapore India Pakistan Bangladesh Social media users (100 million) Increase in users in 2019/20 (right axis) Penetration rate

Source:Datareportal 6 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

The Philippines, Thailand and Indonesia have the keenest social media users. In Southeast Asia, average daily use of social media rose steadily from 2012 to 2019 and then leveled out. In the Philippines, people's daily use of social networking is the longest in the region, at 3 hours and 53 minutes, compared with 3 hours and 26 minutes in Indonesia and 2 hours and 55 minutes in Thailand. Social media use is shortest in Singapore.

Chart 7: Average daily use of social media in South and Southeast Asia (hours)

4h19min 3h53min 3h50min 3h26min 3h21min 2h55min 2h45min 2h52min 2h24min 2h24min 2h08min 1h55min 1h26min 57min 28min 0min Philippines Indonesia Thailand Malaysia India Singapore

Source: Globalweb Index

Social media has become a driving 2) The high degree of smartphone 4) Most countries realized the force in visits to shopping websites. penetration and extensive choice of importance of the digital economy long Constantly increasing user flow and mobile applications have contributed ago and have introduced a series of activity have made social networking to highly active social media, live policies that support its development the major media to attract customer webcasting, gaming, e-commerce and and facilitate the development and groups. "Consumption" tends to be digital payment, making users in South promotion of digital infrastructure. bound together with social interaction. and Southeast Asia more inclined to When sharing a commodity with family use mobile e-commerce than those in members, classmates and friends, developed economies; young consumers are more likely to be stimulated and influenced by sharing 3) South and Southeast Asia that lack to shop more, a phenomenon known inclusiveness in traditional finance, as "grass planting". Shopping is often have lower availability of traditional followed by sharing, and together they financial services and relatively form a cycle of "sharing-purchase- less developed infrastructure have sharing-purchase". generated large numbers of people with no bank account (the unbanked) Factors driving the rise of digital or insufficient access to banking (the payment underbanked). However, smartphones There are four aspects behind the and digital payment can help these rapid rise of digitalized consumption in people access financial services quickly South and Southeast Asia: and conveniently, reducing the time 1) The population in South and and cost of transactions, and thereby Southeast Asia is huge in size and boost growth in digital payment; young in structure;

7 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Chart 8: Factors driving the rise of digital payment

Demographic advantage High degree of smartphone In South and Southeast Asia, the penetration population is huge in size and young This has laid the foundations for in structure the extensive availability of mobile applications

Traditional finance Policy support lacks inclusiveness The importance of the digital economy Constrains access to regular financial has prompted every country to introduce services; there is less developed policies that boost its development infrastructure and a high proportion and support the construction of digital of unbanked or underbanked people infrastructure.

Rapid penetration and adoption of smartphones, the growth of digital life telecommunications infrastructure smartphones in Southeast Asia countries is not to be and need to enhance the quality, Asia has the largest number of mobile underestimated. penetration rate and degree of phone users in the world, with two- acceptance of the digital economy. thirds of its people using mobile Thanks to the reduction of charges However, these regions have services. South and Southeast Asia for mobile data and the improvement enormous potential and their future have the fastest growth rates. With a of network connectivity, the number growth rates will be the fastest in Asia. digital economy second only to that of people using the mobile Internet in In the next five years, the proportions of the United States, China boasts South and Southeast Asia is constantly of mobile service users are expected the most advanced digital life in Asia. growing, making them among the to increase by 3 percentage points Northeast Asia (Japan and South world's fastest growing regions in in Southeast Asia and 6 percentage Korea) also maintain leading positions mobile Internet penetration rate. In points in South Asia. in digital life. With the dissemination South Asia, India, Bangladesh and of the Internet and infiltration of Pakistan are relatively behind in

Chart 9: Ratio of mobile service users

100%

90% 84% 82% 78% 79% 80% 69% 72% 70% 57% 60% 51% 50% 40% 30% 20% 10% 0% China Northeast Asia Southeast Asia South Asia

2019 2025

Source: GSMA

8 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

In South and Southeast Asia, Singapore has the highest penetration rate of smartphones, followed by Malaysia and Thailand. In the Philippines, the mobile phone connection rate increased by as much as 28% in 2019/20; in Pakistan and Bangladesh, although the penetration rate of smartphones is lower, annual growth rates of 6.2% and 4.5% are faster than in other South and Southeast Asian countries.

Chart 10: Smartphone penetration in Southeast Asia and South Asia in 2020 and increase in mobile phone connections in 2019/2020

100% 30% 87% 90% 83% 75% 25% 80% 70% 70% 64% 20% 60% 51% 49% 15% 50% 40% 40% 10% 30% 5% 20% 0% 10% 0% -5% Singapore Malaysia Thailand Indonesia Philippines India Pakistan Bangladesh

Penetration rate of smartphones Growth rate in 2019/20 (right axis)

Source: GSMA, Datareportal

It is expected that by 2025, three 2025, India will have nearly 1 billion consumption of mobile data in Asia will large markets for smartphones will and Indonesia nearly 351 million increase more than three-fold. arise in Asia: China, India (South Asia) smartphone users. Additionally, and Indonesia (Southeast Asia). By between 2019 and 2025, the

Chart 10: Consumption of mobile data (GB per month per user)

9.2 28.9 2019 3X 2025

Source: GSMA

9 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

In contrast with the lack of especially in rural areas. Rural youths of those providing only traditional inclusiveness of traditional who work in cities do not remit the payment channels. finance,digital payment reduces wages they earn back home, instead the time and cost of transactions asking passing truck drivers to take Strong government support for the In general, with the exception of the money back. This approach is not digital economy Singapore, financial systems are only inefficient, but also highly risky. In today’ s world, the digital technology undeveloped and regular financial Digital payment can overcome these has become the most important services are in short supply in Southeast problems by reducing the time and foundation for industrial, business Asia and South Asia. cost of transactions to provide low- and economic models. Digital In Southeast Asia, 60% of the population cost services for the lowest earners. technology is becoming the dominant has no bank account. In Indonesia and In Singapore, banks are very popular, engine of economic development the Philippines, the ownership of credit with over 90% of the population for every country. Developing the cards is lower than 2%. In India, 60% of holding a bank account, and nearly digital economy has become an commercial orders are paid for in cash, 80% of people using credit cards important means of responding to and although there are 800 million bank for payment. But even in Singapore, fierce international competition and accounts, only 250-300 million people some street vendors do not collect seizing strategic advantage. Most Asian actually use them1. payments through credit cards, as they countries came to see the importance are unwilling to pay the high merchant of the digital economy long ago, and In Bangladesh, traditional financial charges. Digital payment has become have introduced a series of policies to services are even more scarce, such a better choice for small enterprises support its development. that people have to pay USD 0.12 to to lower transaction costs. According open bank accounts, a high amount to the latest analysis from GSMA, the for many low income people. More trading volume of merchants using importantly, banks are not popular, digital payment is three times that

Table: Policies in South and Southeast Asia to promote the digital economy

Country Policy

2015: Digital India India 2018: National Digital Communication Policy 2020: Google announced establishment of “India Digitization Fund”

2015: Toward a digital vision in 2020 plan Indonesia 2016: E-commerce Roadmap

Pakistan 2018: 1st Policy for Digital Pakistan support plan

Bangladesh 2015: National ICT Strategy

2016: 2016-2020 E-Commerce Roadmap Philippines 2019: Digitalization Transformation Strategy (2022)

Thailand 2016: Thailand 4.0

2019: Vision of Shared Prosperity in 2030 Malaysia 2019: Exposure Draft for Framework of Digital Banking License

Singapore 2018: Blueprint for Digitalization Readiness

Source: Deloitte Research

1Observation Group of Digital Finance Research Center, Beijing University, Observation Report on the Financial Technology of Four Asian Countries

10 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Digital payment the key enabler level. Because of their large population Overall, with the exception of enabler of digital life bases, India and Indonesia have Singapore, South and Southeast Asia Digital payment has boundless reached the second echelon in digital feature underdeveloped financial potential payment volume. systems and an insufficient supply of In just two years from 2017 to 2019, traditional financial services, which global users of electronic wallets However, across South and Southeast together with their huge gaps in skyrocketed from 500 million to 2.1 Asia, this trend is still at an initial urban-rural Internet development billion, with developing countries stage. In these two regions with create large space for increasing the accounting for the lion’ s share of the largest populations and most popularity of digital payment. But, in the increase, and China and India vigorous economies in the world, a very positive development, several having a combined 70% of all users. everywhere except Singapore, with national governments have launched In 2019, digital payment developed its fairly mature digital payment basic digital hardware projects to at an unprecedented speed. Mobile landscape, still have much room to accommodate 4G and 5G networks, currency was initially a product grow. In Malaysia, the Philippines and creating broad prospects for the for a small number of specific Thailand, the business model of digital financial technology sector in South markets. It has now become a global payment is in its initial stage but there and Southeast Asia, and setting the phenomenon and shown surprising has been a rapid increase in digital stage for increases in digital payment growth in emerging markets, payment transactions. In Pakistan and volume. This also highlights the fact benefiting an extensive group of users. Bangladesh, where digital payment that numerous needs have not yet China, Japan and South Korea hold a started late and had a lower level of been met. If these needs are met, safe lead in terms of the quantity and development due to less advanced the massive potential of South and scale of digital payment use. In China, financial technology, the digital Southeast Asian digital finance will be the proportion of digital payment is payment growth rate is strong and the unleashed. as high as 86% and its popularity is number of users is increasing much about three times the average global faster than it is in Southeast Asia.

Chart 12: Digital payment users in South and Southeast Asia (2020, 100 million people)

Indonesia 1.3 0.4 Bangladesh

Pakistan 0.7 0.4 Philippines

Thailand Singapore 0.3 Malaysia China 9.0 India 5.9 0.1

China India Indonesia Pakistan Bangladesh Philippines Thailand Malaysia Singapore

Source: Statista

11 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Chart 13: Value of digital payment in South and Southeast Asia (USD million) and expected 2020-2024 annual CAGR(%)

India 69,168 .

Indonesia 35,513 .

Singapore 14,938 .

Malaysia 11,904 0.

Philippines 10,009 .

Thailand 8,963 .

Pakistan 6,141 .

Bangladesh 3,951 .2

Source: Statista

Digital payment the new conduit portion of fund flows for the first time digital products into the hands of low- for flow and value. With the sharp in 2019, and the flow of new funds income users makes it vital to ensure rise in Internet and smartphone into digital payment is inexorable. For these are user-centric, relevant and popularity, maturing digital payment customers, this marks a shift from able to meet real needs. operability, lower transaction costs and traditional payment using cash to greater convenience, digital payment digital payment; for the digital payment transactions accounted for a large sector, the constant entrance of more

Chart 14: Digital payment preferences in Southeast Asia

100% 90% 80% 68% 70% 60% 50% 46% 40% 34% 29% 30% 29% 26% 30% 25% 23% 23% 20% 20% 17% 20% 15% 14% 14% 10% 7% 7% 10% 5% 0% India Thailand Indonesia Singapore Malaysia

Digital wallet (%) Fund transfer (%) Credit card payment (%) Cash (%)

Source: JPMorgan

12 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Mobile e-commerce has become online shopping and consumers' (5th) and India (8th), and four of the the cornerstone of digital life. reinforced payment capability, the top 10 e-commerce growth rates: the Asia leads the world in term of region's spending on e-commerce Philippines (25.0%), Malaysia (23.0%), popularity and growth of e-commerce, will continue to achieve double-digit India (21.0%) and South Korea (19.5%)2 . with billions of people already growth in coming decade. Asia has shopping online. Driven by Southeast four countries in the 2020 global top Asia's increasing number of Internet 10 for e-commerce retail volume: users, growing familiarity with China (1st), Japan (4th), South Korea

CHart 15:Top 10 countries by e-commerce retail growth Top 10 forecasted countries in e-commerce retail sales in 2020

Percentage Billion 2019 2020F Philippines 2.0 increase Malaysia 2.0 China 1801.53 2089.78 16.00% Spain 22.9% United States 601.65 709.78 18.00% Netherlands 21.9% United Kingdom 133.92 153.61 14.70% ndia 2.0

Japan 123.45 130.61 5.80% Mexico 20.9%

Korea 87.08 104.06 19.50% Canada 20.7%

Germany 79.47 92.33 16.20% Italy 20.5%

France 66.00 77.27 17.10% Russia 20.5%

India 42.58 51.52 21.00% Korea .

Canada 32.49 39.22 20.70% Global 16.5%

Spain 26.77 32.89 22.90%

Source: eMarketer

Users in emerging Asian markets economies of Asia-Pacific show a 2020, with mobile phone e-commerce are much more inclined to use different pattern: In Japan, only 46.2% accounting for as much as 78%. It mobile e-commerce than their of e-commerce takes place via mobile is estimated that, by 2024, sales in counterparts in developed phones and in Hong Kong it is only Asia will exceed USD4 trillion and economies. As of 2020, 81.5% 41.6%. These figures are closer to account for 65.9% of the global market. of e-commerce activity in China those of the United States (44.3%), the This will benefit the development is through mobile devices. This is UK (50.8%) and Germany (41.5%). of an e-commerce ecosystem. Asia because most consumers first came also leads the world in number of into contact with e-commerce through Asia has the world's highest e-commerce users, growth rate, mobile devices. The proportion of proportion of mobile phone penetration rate, total sales, sales e-commerce through mobile devices e-commerce. Asia's USD2.448 trillion of mobile e-commerce and social is 80% in India, 75.3% in Thailand and of e-commerce retail sales are set to e-commerce. 64% in Indonesia. But the developed account for 62.6% of the global total in

2Global Ecommerce 2020, Emarketer

13 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Chart 16: Global e-commerce sales (USD billion) in 2020; mobile phone e-commerce as proportion of total e-commerce

Asia 2,448.33 .0

North America 749.00 .

Western Europe 498.32 .

Central and Eastern Europe 92.91 .

Latin America 83.63 .2

Central and East Africa 41.56 6.

Source: eMarketer

Interconnecting digital finance and development. The operation Southeast Asia. Digital payment is shifting assets models, service models and even the In Southeast Asia, COVID-19 changed towards digitalization, which will entire ecology of traditional financial the traditional consumer mindset that strengthen financial inclusion and services will be transformed. Payment "only money in the hand is real". Zero leverage technology to achieve + digital finance + services via technical contact payment became essential interconnection in digital finance. enablement exemplifies this trend. to fighting the epidemic and proved A digital wallet is a tool for storage Fintech uses mobile terminals and big indispensable for a wide range of and management of private keys. data analysis to provide tens and even purposes, e.g. online shopping, Its most fundamental function is hundreds of millions of customers payment of utility bills and ordering the management of digital assets. with services including payment, takeout food. Continuous innovations In addition to their basic payment investment, insurance and loans, have been made in zero contact functions, digital wallets are now bringing unprecedented change to the payment platforms to provide more deploying value-added functions, financial industry. services during the epidemic, including involving banking, financial wage payment, donations and management, payment, insurance, Accelerated adoption of "zero entertainment. credit inquiries, consumer finance, contact" digital payment since the loans and funds. For the digital pandemic In Malaysia, Thailand, Indonesia and payment industry, "payment as When the COVID-19 crisis emerged, the Philippines, local users showed a platform" is encouraging the digital payment showed benefits their care for others by making zero digitalization of more financial asset including the avoidance of contact contact donations of more than and causing business models to with currency to ensure safety USD600,000. Through public welfare diversify. and hygiene. Its penetration rate organizations, these online donations quickened and triggered a sharp rise provided instant help to disadvantaged Digital finance is the strongest engine in digital payment. When people had groups, including for purchases of of the new economy. It is a new to stay at home to fight against the food, masks and other protective financial paradigm created from the pandemic, "zero contact" payment clothing. In India and Indonesia, participation of technologies including helped address their difficulties and nearly 50 million people a day used Internet+, big data, cloud computing improve quality of life. The practices their electronic wallets to read about and artificial intelligence (AI) in financial used during its extensive application developments in the pandemic industry processes, evidencing the in China in February and March is now without the need to go out and buy a future direction of financial innovation being copied and quickly adopted in newspaper3.

3Moneycompass, Contactless innovations keep the world moving amid COVID-19, April 2020

14 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Chart 17: Application of e-wallets during the epidemic

Malaysia Philippines Malaysia Thailand Indonesia Thailand Indonesia Zero contact entertainment Zero contact information Zero contact donations Electronic wallet offers a News about the pandemic via No need to go to a temple; content platform for electronic wallets; no need to USD600,000 donated schooling, cooking and go out to buy a newspaper through mobile phones keeping fit, and encourages Read by 50 million people to stay at home people a day 100,000 views

Meanwhile, more consumption has moved from offline to online platforms, causing a sharp rise in online consumption and digital payment use.

Chart 18: Respondents aged 16-64 who said online consumption has increased since the pandemic (July 2020)

100%

90%

80%

70% 59% 60% 55% 50% 49% 50% 44% 40% 29% 30% 23% 20%

10%

0% India China Philippines Global average Singapore Australia Japan

Source: Datareportal

15 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

Increases were chalked up in nearly all types of e-commerce transactions compared to before COVID-19, with sports equipment and supermarkets registering particularly strong growth.

Chart 19: Impact of pandemic on categories of e-commerce in South and Southeast Asia

Exercise equipment 83.4% Supermarkets 66.5% Retail technology 45.9% Furniture and DI 41.8% Cosmetics 41.6% Media 30.7% Banking and insurance 25.9% Luxury goods 22.6% Fashion 19.7% Jewelry and wristwatches 17.1% Communications 13.6% Medical retail 1.8% -30% Tourism

-40% -20% 0% 20% 40% 60% 80% 100%

Source: Datareportal

16 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

17 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

Chapter II Digital life consumer portraits

Characteristics of Digital Life Singapore), we found that young adults connecting digital life for consumers, Through our survey of people across aged 21-40 lead the richest digital making a fundamental shift in social age groups in the eight countries lives in terms of the variety of digital interactions, financial services, digital (India, Indonesia, Malaysia, Thailand, life use scenarios. Digital payment entertainment, daily life services and Philippines, Bangladesh, Pakistan and as a key enabler is creating and shopping habits.

Chart 20: Portrait of digital payment in South and Southeast Asia

Top 3 scenarios of digital payment Petty payment in dominance

e-commerce / For 67% of consumers, the value of 70% m-commerce each transaction is less than $30 peer-to-peer 69% 33% transfer 29% in-store 62% purchase 5%

Less than $1 $1~$10 $11~$30

After the pandemic Top 3 reasons for use of digital payment

78% of consumers have increased 1. convenience their use of digital services 2. contactless 3. value-added benefits and promotions Source: Deloitte Research

18 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

The survey also uncovered regional low product quality and 52% the online shopping scenes. In Pakistan, trends in the digital lives of people in reliability of online merchants; overall digital life is less developed, as South and Southeast Asia, which are shown by its highest proportions of • The use of digital services has summarized below: people who have never shopped online increased since the pandemic. and retail shops that do not accept • E-commerce/m-commerce, Since the pandemic, about 78% of digital payment. peer-to-peer transfers and in- the respondents have increased their store purchase are the top three use of digital services, including 41% The attractions of digital payment digital payment scenarios. 70% of who have increased it substantially; e-commerce/m-commerce, peer- respondents use a digital wallet for • Films and videos, social to-peer transfers and in-store e-commerce/m-commerce shopping; media and music streaming purchase are top three digital 69% for money transfers between are the most popular digital payment scenarios friends; and 62% for payment in entertainment. Some 79% of The developing countries of South offline retail shops; respondents opted for films and and Southeast Asia have high mobile • Digital wallet use is driven videos as their most favored mode phone usage and connectivity, but low by its nature of convenience, of digital entertainment, followed bank penetration rates. This makes contactless and encouraged by social media (76%) and music digital payment hugely attractive. by value-added benefits and streaming (59%). Each month, 42% Since only a small number of people promotions. The main reasons spend USD10 or less on digital hold bank accounts in these countries, for choosing a digital wallet: 77% of entertainment and 38% spend financial technology companies have respondents use digital wallets due USD11-USD30; a great opportunity to use digital to convenience; 69% to avoid contact • APPs for social media, platforms to provide financial services with banknotes; and 9% for the e-commerce and daily life that are reasonably priced and additional discounts available; services are the three most convenient. E-commerce/m-commerce, • Small payments dominate. For common mobile phone APPs. peer-to-peer transfers and in-store 67% of consumers, the value of each Social media is favored by 79% of purchase are the top three scenarios transaction is less than USD30. It respondents, 74% use e-commerce for digital wallet use. Payment for travel ranges from USD1-USD10 for 33% APPs regularly and 59% use daily life and public services remains at an and from USD11-USD30 for 29%; service APPs; exploratory stage, with a low number of payments and small user scale. • For those who shop online Regional differences in digital frequently, quality and merchant payment reliability are the main concerns. Singapore, the Philippines and Indonesia 52% of consumers are worried about are the three countries with most vibrant

Chart 21: The top three countries' most common application scenarios

E-commerce/m-commerce Peer-to-peer transfer n-store purchase

100% 81% 81% 80% 83% 78% 79% 77% 75% 80% 76% 60%

40%

20%

0% Philippines Singapore India Thailand Bangladesh Philippines India Thailand Singapore

Source: Deloitte Research

19 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

Petty payments dominate contactless payment is encouraging become the "access point" for people's Individual digital payments range its growing use in convenience stores, participation in digital life. from USD1-USD10 or USD11-USD30 for travel, adding game minutes and for 33% and 29% of respondents among roadside vendors seen across respectively. The convenience of the eight countries. These have

Chart 22: Single digital payment amounts (USD)

5 8

less than 1 31-50 33 1 1-10 51-100 11-30 100

29

Source: Deloitte Research

Reasons for choosing a digital GCash in the Philippines, Easypaisa in Acceptance by retailers is also key to wallet Pakistan and bKash in Bangladesh all the adoption of digital wallets. The The top three reasons South and helped the local governments issue survey found that in Indonesia, digital Southeast Asia citizens use a digital welfare payments. wallets can be used extensively in retail wallet are convenience, contactless shops, but in Pakistan they can be and additional value-add benefits. used only in a few shops.

Chart 23: Popularity of electronic wallets in retail shops

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Indonesia Singapore Thailand India Malaysia Philippines Pakistan Bangladesh

Highly popular; mobile payment can be used in most shops Mobile payment can be used in some shops Mobile payment can be used in a small number of shops

Source: Deloitte Research

20 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

Digital Life Habits e-commerce, daily life services, videos In 2020, amid the impact of the Mobile APPs actively used in and music, and financial services. pandemic, the "home economy" different scenarios Increasing user flow rates and activity witnessed explosive growth. The most popular mobile phone have made social networking the major APPs are those for social media, channel for attracting customers.

Chart 24: The five most popular APP categories

100% 90% 79% 80% 74% 70% 59% 60% 50% 50% 45% 40% 30% 20% 10% 0% Social media E-commerce Daily life services ideos/music streaming Financial services

Source: Deloitte Research

Diversified modes of digital service economy have caused content will show an even more entertainment digital entertainment consumption obvious trend toward diversification Films and videos, social media and to surge. Further development of and use by everyone; digital payment music streaming are most favored digital technology will lead to its consumption patterns will take shape; modes of digital entertainment deeper integration with traditional market development will become among young people entertainment and the continuous increasingly standardized and mature. The rapid development of digital expansion of the digital entertainment technology and emergence of the industry. Digital entertainment

Chart 25: The top three countries' most popular modes of digital entertainment

Films and video streaming Social media Music streaming

100% 100% 88% 85% 83% 80% 80% 72% 70% 66% 65% 60%

40%

20%

0% India Philippines Bangladesh Singapore Malaysia Philippines Philippines India Thailand

Source: Deloitte Research

21 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

Monthly expenditure on digital entertainment is less than USD10 for 42% of respondents and USD10-USD30 for 38%, showing the dominant position of small payments. This trend has infiltrated daily life including eating, clothing, accommodation and travel.

Chart 26: Monthly expenditure on digital entertainment (USD)

3% 2%

14

42 Less than 10 51-100 11-30 100 31-50 38

Source: Deloitte Research

Dedication to online shopping Pakistan has the largest proportion penetration rates were lower, garners momentum, but concerns of people who have never done any spurring consumer groups with great remain online shopping, accounting for 25% development potential. Southeast Most respondents will shop online of the population. In 2019, people Asia presents huge opportunities for only when they need to. In Singapore, saw e-commerce enterprises start to e-commerce, but still faces challenges Indonesia and Philippines, a large expand from large cities to tier-2 cities including logistics, payment, product proportion of people shop online. and rural areas where e-commerce quality and user services.

Chart 27: Attitudes towards online shopping in South and Southeast Asia

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Indonesia Singapore Philippines Thailand Malaysia Bangladesh India Pakistan

Shop online only when they need to Constantly browsing Do not often shop online unless there are sales promotions Usually shop offline rather than online

Source: Deloitte Survey

22 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

Convenience and speed, extensive product offerings and lower prices are the top three reasons people shop online. Convenient and easy interaction, more extensive product choices and better prices due to competition are clearly what makes online shopping most appealing to consumers.

Chart 28: Reasons for shopping online in South and Southeast Asia

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% India Thailand Bangladesh Singapore Philippines Malaysia Pakistan Indonesia

Convenience and speed Extensive product offerings Lower prices Offline retail shops lack the commodities I like

Online shopping is cool

Source: Deloitte Research

As for people's reluctance to shop online, respondents in most countries cite the low quality of products and the reliability of online merchants as major adverse factors Personal data security and the reliability of logistics are other common reasons.

Chart 28: Reasons not to shop online

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Thailand Singapore Indonesia Bangladesh Malaysia Pakistan Philippines India

Low quality of products Reliability of online merchants Security of personal data Reliability of logistics

Source: Deloitte Research

23 The Net Wave Emerging digital life in South and Southeast Asia Chapter II Digital Life Consumer Portraits

Surge in the use of digital services the most people cited a substantial since the pandemic increase. Under quarantine, people Some 78% of respondents said their experienced an unprecedented use of digital services has increased expansion of their digital worlds, with since the pandemic, with 41% saying a marked rise in demand for TV shows, this has increased substantially, and online games, e-commerce, social 37% saying it has increased somewhat. networking, online office access and Bangladesh, the Philippines and online education. Indonesia were the countries in which

Chart 30: Changes in use of digital services since the pandemic

ncreased substantially ncreased somewhat

100%

80% 60% 60% 50% 49% 53% 44% 40%

20%

0% Bangladesh Philippines Indonesia India Singapore

Changes in digital services after the epidemic

3%

1

8

Increased Unchanged Declined

Source: Deloitte Survey

24 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

25 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Chapter III Unique Digital Life in South and Southeast Asia

We have developed seven indicators of digital life: mobile phone penetration, mobile Internet speed, digital payment maturity, online shopping maturity, social media activity and policy support. The figure below shows each country's performance in these indicators.

Figure 31: South and Southeast Asia's leaders in digital life

Digital life scenarios High

Digital Life Leaders Digital Life Prospects

Singapore

Malaysia

India Indonesia

Digital Thailand infrastructure ow High

Philippines Bangladesh Pakistan

Digital Life Followers Digital Life Challengers ow

The size of the circle represents the scale of digital economy.

Digital infrastructure: mobile internet speed, mobile phone penetration, government policies Digital life scenarios: social media, ecommerce activities, digital payment Source: Surfshark, Google & TEMASEK, GSMA, Statista, Globalweb Index, Deloitte Research

Singapore and Malaysia have become capita income is relatively high, which as rich as in leading countries, the digital life "leaders". Judging from leads to high smartphone penetration. digital economies in follower countries various indicators, they are leading It therefore has excellent social media are on the verge of expansion. With participants in the digital economy, activity, maturity of online shopping good digital foundations and effective driven by strong government support, and digital payment indicators. The policy promotion, they are rapidly broad public participation and good penetration rate of mobile phones in approaching the leading countries. infrastructure. the Philippines needs to be improved, but it has strong advantages in India has outstanding achievements There are a group of "following" digital money transfer, e-sports live in some indicators, especially network countries that are poised to catch up. broadcasts and other segments. security. However, due to its large gap Thailand is a good example. Its per Although digital applications are not between the rich and the poor, India

26 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

still faces some practical problems, Bangladesh and Pakistan in South Bangladesh's inclusive digital finance, such as slow Internet speed and a Asia's are the countries with the which is committed to serving low- preference for cash payment, which farthest to catch up in digital income people, and Pakistan's B2B and means its indicators are low compared life. Due to slower social and B2C e-commerce models, have great to the follower countries. However, economic development, their digital vitality. As their digital infrastructure India's sound digital payment system infrastructure and mobile phone improves, and amid the influence of and recently issued "decreasing penetration rates are some way China and other leading countries in paper money" policy evidence its behind those of other countries. But the digital economy, these "challenger" great potential. After improving its this does not mean they are digital life countries will become a new and digital payment acceptance and "deserts". On the contrary, some of the huge potential market for the digital infrastructure, India can become the digital services rooted in their national economy in Southeast and South Asia. next digital power. conditions have become vigorous sources of economic development.

Figure 32: Digital life segmentation indicators for South and Southeast Asia countries

Digital life leaders Digital life followers Digital life prospects Digital life challengers

Singapore Thailand ndia Pakistan Mobile phone Mobile phone Mobile phone Mobile phone penetration penetration penetration penetration 10 7 5 4 Digital 8 6 Digital s 4 6 Mobile Internet Digital 5 Mobile Internet Mobile Internet Digital 3 Mobile Internet security 4 ecurity 3 4 speed security 3 speed 2 speed security 2 speed 2 2 1 1 1 0 0 0 Policy 0 Maturity of Policy Maturity of Policy Maturity of Policy Maturity of support digital payment support digital payment support digital payment support digital payment

Social media Maturity of Social media Maturity of Social media Maturity of Social media Maturity of activity online shopping activity online shopping activity online shopping activity online shopping

Malaysia Philippines Bangladesh Mobile phone Mobile phone Mobile phone penetration penetration penetration 10 10 2 Digital Digital 8 Mobile Internet Digital 8 Mobile Internet 1.5 Mobile Internet 6 6 security 1 security speed security 4 speed speed 4 0.5 2 2 0 0 0 Policy Maturity of Policy Maturity of Policy Maturity of support digital payment support digital payment support digital payment

Social media Maturity of Social media Maturity of Social media Maturity of online shopping online shopping online shopping activity activity activity

ndonesia Mobile phone penetration 8 6 Digital Mobile Internet 4 security speed 2 0 Policy Maturity of support digital payment

Social media Maturity of activity online shopping

Source: Deloitte analysis

27 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Digital Life "Leaders" Powerful banking system backs applications is the most common Singapore: Exemplary digital digital payment method of use. Digital applications model for developed countries Singapore has a high penetration rate do not serve the function of topping As a developed country in Southeast of banks and bank cards. Local and up and saving, but instead build in Asia, Singapore is a well-known overseas banks provide services in payment platforms to save users international financial center. Its Singapore, with 3.3 bank cards per the time of swiping their card and 4 economic development has been at capita . In such a developed banking the risk of disclosing information. the forefront in Asia, and it is known and financial system, cards were the The advantage of this kind of digital as one of the four "Asian Tigers". most typical payment method before payment is that all kinds of emerging This economic strength makes it an the advent of digitalization. All kinds electronic financial instruments can Asia Pacific digital life "leader". From of bank cards have good user bases, be backed by bank credit, reducing the perfection of its infrastructure, which has made the implementation the risk of nefarious behavior and plethora of applications, and of bank-based digital payment non-performing loans. Each e-wallet penetration of various facilities and extremely smooth. can use the money in a bank account equipment, to its digital life richness for payment, so long as it is connected and participation rate, Singapore is at Demand for digital payment among to payment platforms at home and the forefront in Southeast Asia, and Singapore consumers, and hence the abroad. This simple bank card- remains on a strong trajectory. digital payment sector, covers three centered payment mode reduces the categories: financial services, mobile risk of default and bankruptcy, and money transfer and consumption. makes supervision easier. Binding bank cards to mobile

4Overseas Local Payment, State of Payment in Singapore, 11 June 2020

28 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 33: Singapore's bank-centered digital payment system

Bank card as carrier

Mobile banking APPs mainly used for saving funds or foreign Consumer Financial service exchange, e.g. DBS Bank's PayLah!

Mobile banking Only supports APR use rate of mobile terminal banking from a single bank

Offline: Transfer accounts Led by banking association, supports SGQR QR code inter-bank transfer among nine large Paynow banks, and accounts are bound with an ID card or mobile phone number. Online: Penetration rate has reached 70% ECP gateway Grab is the most widely used online car hailing and meal delivery APP in GrabPay Singapore. 77% of users use GrabPay for payment

Inductive payment covering all All kinds of E-wallet transportation facilities in Singapore, businesses EZ traffic card which can be recharged using bank cards and used for convenience stores and fast food restaurants

Headquartered in Singapore, is the fastest growing 020 trading platform Fave in Southeast Asia, supporting small payments for catering, beauty and fitness

Source: Deloitte analysis

29 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

First country to launch unified electronic wallet GrabPay built-in, and Internet penetration rate. E-commerce QR code with multiple other 77% of users choose to use it to pay is very important to its national achievements in digital life directly. This pattern makes Grab very economy. During the second quarter In payment, Singapore is at the global popular among consumers. It is also of 2020, Shopee was the most visited forefront. In 2018, SGQR (Singapore very popular in China, ranking 15th in e-commerce website in Singapore, Quick Response Code), the world's the list of Hurun's Unicorn enterprises with about 32.6 million visits6. Shopee first unified payment QR code, was in 2019. is the first mobile centered online launched by the Monetary Authority market in Southeast Asia. It was of Singapore and the Infocomm Media In transportation, almost all originally a market where retailers Development Authority. The QR code Singaporeans will use EZ card, which sold goods through a unified platform. is compatible with and integrates can be topped up with bank cards Now it is available in all Southeast Asia 27 popular payment platforms at or in convenience stores, and can be countries. Because of recent activities home and abroad. Once launched used to pay at fast food restaurants like "Flash Buying Day" and "Promotion and used, sellers and buyers in or convenience stores. Fave is also a Day", in 2020Q2 it increased visits Singapore, regardless of their payment popular, easy-to-use payment platform by 82%. Shopee is closely followed preferences, no longer need to in Singapore. It is the fastest-growing by Lazada and Qoo10. Founded in search blindly for payment methods, O2O platform in Southeast Asia and 2012, Lazada is a leading international hey only need to scan the same QR the third most widely-used e-wallet e-commerce platform with a presence code to complete collection and in Singapore (behind DBS PayLah! in six Southeast Asian countries. payment. The convenience of this new and Grab)5. It attracts users through Founded in 2010, Qoo10 is a joint payment method is set to boost the cash-back and group discounts, and venture between Gmarket and eBay. In development of Singapore's domestic includes a platform for businesses to Singapore, Qoo10 mainly sells fashion economy and tourism industry. pay and attract consumers. goods, especially Korean products, and is very popular among young women. In Singapore's convenient payment Fashion e-commerce platforms environment, e-wallets have also and products are popular blossomed, among which Grab has In 2020, the population of Singapore the highest utilization rate. Based in has reached almost 6 million. Singapore, Grab provides online car Compared to other Southeast Asia hailing and meal delivery services countries, Singapore's high-tech throughout Southeast Asia with development has led to a very high

5Overseas Local Payment, 6SimilarWeb

30 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Table: Online shopping product transaction volume in Singapore (2019)

Product Type Transaction Volume (USD)

Online travel (including accommodation) 3.641 billion

Electronic and media equipment 1.08 billion

Fashion and beauty 999 million

Home appliances 726 million

Toys and handicrafts 658 million

Food and personal care 647 million

Video games 95 million

Electronic music 26 million

Source: Datareportal, Digital 2019 Spotlight: Ecommerce in Singapore

Among online shopping products, products Singapore netizens most beauty products, on which USD999 Singaporeans spend the most money favor are electronic and media million was spent. Singapore's online on online tourism and hotels, which products such as cameras, mobile consumption habits focus on high- benefit from the strong development phones and other equipment, with end products, and consumers have of Singapore's tourism and foreign a total value of USD1.08 billion in relatively high-level demand, as is trade. Among commodities, the 2019. This is followed by fashion and characteristic of developed countries.

Entertainment media favored over social media

Figure 34: Penetration rate of social sharing platforms in Singapore

100% 90% 86% 81% 79% 80%

70% 62% 60% 50% 50% 35% 35% 40% 32% 27% 26% 30% 20% 10% 0%

Skype Twitter Wechat ouTube LinkedIn Pinterest WhatsApp Facebook Instagram

Facebook Messenger

Source: GlobalWebIndex. Digital in 2020: Singapore

31 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Singapore's most used social network penetration has been rising for a Grab (ride hailing and take out) and is YouTube, the leading video streaming decade, and this trend is not expected Tokopedia (e-commerce platform) provider, followed by WhatsApp to slow down. Due to difficulties in These rich scenarios are enough to and social media giant Facebook. establishing a fixed line network make OVO stand out among numerous Singapore boasts the fastest Internet among the islands and the large-scale e-wallets, and almost all payments in connections in Asia Pacific, and the enhancement of mobile networks, Indonesia are through OVO. GoPay, in convenience of watching YouTube and smartphones are the main equipment second place, started with online car the richness of content are driving used to access the Internet. Online hailing and booking and has a strong the growth of online content. Social communications across the country user base. media is also very important in the present opportunities in many digital country. The total number of social areas, including digital payment and Indonesia's e-wallet market media users in Singapore exceeds four e-commerce. Although Indonesia's is undergoing multi-polarized million, accounting for more than 74% infrastructure is yet to be improved, development. Local e-wallets have of the population. Although YouTube its digital economy is unrivalled in dominated the digital payment market and WhatsApp remain the most Southeast Asia, and will promote high- in Indonesia, and the services they popular social media channels, young quality economic development. support and provide vary. Most Singaporean social media users are e-payment wallets can be used to flocking to Instagram, Snapchat and Digital payment covering almost pay water and electricity bills, and TikTok7. every daily life scenario medical insurance premiums. Although The most popular e-payment Indonesia's payment system is Digital Life "Followers" applications in Indonesia are OVO decentralized, it covers most scenarios. Indonesia: perfect payment and GoPay. As a product under It is a difficult market for new pattern, boundless online Indonesian giant Lippo Group, OVO competitors to enter unless they have shopping prospects has a natural advantage in acquiring several attractive functions. With more than 260 million people, cooperative merchants. Lippo Indonesia is the most populous Malls, owned by Lippo Group, has Various modes of e-commerce country in Southeast Asia. In addition, many shopping centers, including In recent years, Indonesia's online the country is made up of more than Hypermart and Matahari department shopping coverage has experienced 17,000 islands, which complicates stores, and online shopping platform exponential growth. According to communications between different mataharimall.com. The Group also forecasts, the number of online regions. Therefore, the Internet runs cinemas, hospitals, schools and shoppers will double in coming years. plays an important role in promoting media platforms. Besides, OVO wallet economic and social interests. Internet application scenarios also includes

Table 35: Coverage and forecast for online shopping in Indonesia

100% 90% 80% 64.1% 66.7% 70% 59.5% 60% 53.7% 47.5% 50% 41.4% 40% 32.7% 26.8% 30% 20% 10% 0% 2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista, Digital Market Outlook, December 2019

7J. Muller, Social network penetration in Singapore Q3 2019, 19 February 2020

32 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Table 36: Hits on e-commerce websites in Indonesia (2019, million)

100 90 80 71.53 69.8 70 60 50 37.63 40 30 24.4 17.6 20 6.07 5.64 10 4.45 3.05 2.42 0

Blibli JD.id Orami Shopee Sociolla Tokopedia Bukalapak Bhinneka

Zalora Indonesia Lazada Indonesia

Source: iPrice Group, April 2020

Indonesia's favorite online shopping will establish various brand stores, It is generally expected to witness fast websites have various operating from 2022. Tokopidia (invested in by growth this year due to reorganization. models and a range of functions. Alibaba) is the next most used site. LazMall, the largest online brand mall Strategically, leader Shopee has Lazada (Alibaba's flagship e-commerce in Southeast Asia, will be upgraded used its capital to attract sellers platform in Southeast Asia), in fourth in September 2020. Jingdong's arm and encourage low prices to quickly place, not only helps small and in Indonesia, jd.id, takes ninth place. establish its advantage. It is focusing medium-sized enterprises digitalize, Indonesia's e-commerce layout is on the building of Shopee Mall, which but also encourages brand operations. diverse, enriching consumer choice.

Social Entertainment: Indonesians like to chat and watch news

Figure 37: Use of social platforms in Indonesia

100% 90% 80% 70% 58.3% 60% 50% 44.0% 41.1% 41.0% 40.5% 39.4% 38.4% 36.6% 35.3% 40% 33.5% 30% 20% 10% 0%

Movie ideo Comedy Tutorials Cooking

T programs Movie trailers Watching news Beauty tutorials Religious speech

Source: Statista, Global Consumer Survey 2020, May 2020

33 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

According to Statista, 58.3% of particularly transportation, arising of high-quality infrastructure in recent Indonesians like to read news on social from tourism, constantly improving years, and the continuous extension media. In 2018, the total number of service quality and technology. Today, of metro lines, Touch'n Go's card has Facebook users in Indonesia was about Malaysia is a qualified "leader" in digital a huge user base. TNG's APP recently 64.6 million8, not large compared with life due to its high aggregate payment added an e-wallet function to support Indonesia's huge population. This is amount, active social platforms and various other scenarios, including mainly because Indonesia uses the convenient lifestyle services. utility bill payment and shopping on Internet mainly for chat and emojis, Taobao. and only half of people's time is spent Starting the digital era with publishing their own photos and infrastructure Boost is an up-and-comer in Malaysia. videos. It can be assumed from this The figure below shows the coverage Its salespeople have attracted that Indonesians are more introverted of various e-wallet applications in merchants to cooperate with one than their peers in Southeast Asia. Malaysia. The most popular is Touch 'n other, which is its main operating Go eWallet, Malaysia's digital payment model, and achieved decent results. Digital Life "Followers" pioneer. Initially a highway toll system More than 5,000 online and physical Malaysia: Advanced digital daily company, it now provides more than merchants now cooperate on Boost10. life scenarios 20 million TNG cards9 in the Malaysian In recent years, Malaysia has built market for automatic fare and toll its own unique digital life by making services. Through this high coverage, use of the developed infrastructure, combined with Malaysia's construction

Table 38: E-wallet coverage in Malaysia

100%

90% 82.41% 80% 70% 66.68% 60% 49.48% 50%

40% 30.13% 27.52% 30% 21.29% 20.12% 20% 7.04% 10% 0%

Fave Boost Paypal Bigpay GrabPay E-wallets Google Pay

Touch'n Go eWallet

Source: Statista

PayNet, an aggregate payment provider in Malaysia, currently has connections with 44 banks, enabling free transfer between them. PayNet's DuitNow service can bind ID cards and mobile phone numbers with bank card payments, and recently implemented a unified QR code. Since then, TNG and Boost have joined the service and support code payment, officially opening Malaysia's QR code payment era.

8Statista, Global Consumer Survey 2020, May 2020 9Momentum Works, Interpretation of the Electronic Wallet of Ant Financial in Malaysia, 17 September 2019 10Misterleaf, Comparison of Mobile Phones and Electronic Wallets: TNG, Boost, WeChat Pay, AirAsia Big Pay, Razer, 23 January 2020

34 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 39: The electronic payment system in Malaysia

Bank Mobile banking terminal

PayNet aggregate payment

Electronic wallet TNG Boost

Source: Deloitte analysis

QR code transport payment infancy, with cash payment comon in due to its rapid economic growth realized; digital finance ready to go addition to other payment methods and advanced digital technology After TNG joined the DuitNow system, for transportation, it is clear that infrastructure. However, the market Malaysia officially became the second Malaysia's exploration of digital life still faces challenges. Traffic congestion country to support subway payment will not be limited to convenient is one of the biggest challenges to and entrance via QR code. transportation. transporting e-commerce products across the country. Malaysia's At the end of 2019, the National Infrastructure and credit becoming e-commerce platforms have also been Bank of Malaysia announced a draft major hindrances dealing with online payment fraud. framework for digital bank licensing The contribution of e-commerce to Some 20% of online shoppers pay by and solicited opinions. It will issue Malaysia's gross domestic product credit card, which could restrain the up to five digital banking licenses, (GDP) has grown steadily, reaching e-commerce market's potential. Some with clear requirements on the risk about USD28 billion in 2018. online merchants offer COD options to resistance capacity, capital adequacy prevent credit card or online payment and data security of participating About 80% of Malaysia's population fraud11. E-commerce providers banks. Many institutions participated are active Internet users, and also offer marketing services, from in the competition. Digital banks and mobile phone use is also high. With providing free samples to arranging digital finance will help Malaysia's a population of about 30 million, product bookings, so customers can capital market improve further. Malaysia is an attractive market try products before they buy. Although Malaysia's digital life is in its for e-commerce in Southeast Asia

11J. Muller, Top 10 e-commerce sites in Malaysia Q1 2020, 15 May 2020

35 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Malaysians are keen users of the Internet and social media

Figure 40: Proportion of active users of social media in Malaysia

100% 90% 78% 81% 73% 75% 80% 70% 62% 60% 50% 40% 30% 20% 10% 0% 2016 2017 2018 2019 2020

Source: Statista

As of January 2020, about 81% of the Digital Life "Followers" In Thailand, most young people do Malaysian population are active social Thailand: Street-based digital not have credit cards, but there is media users, up by about a third economy huge demand for online payment for from 60% in 2016, which was already Thailand has some of the best digital e-commerce and game recharging. quite high. Facebook is the most economy development prospects in TrueMoney, one of Thailand's largest popular social media platform among Southeast Asia. Its relatively high per payment service providers, cooperates Malaysian users as of 2020, followed capita income has led to high mobile with convenience stores. Users can by Instagram, Facebook Messenger phone penetration, bringing digital recharge their TrueMoney wallets and LinkedIn. life to the vast majority of citizens. directly by purchasing recharge cards Whether it's social media, e-commerce, and prepaid cards at convenience Since its launch in 2004, Facebook has offline payment or game recharging, stores. Retail stores such as 7-11, become the most widely used social Thai people have a high degree of which are widely distributed and media platform in Malaysia. Facebook's acceptance and enthusiasm for the accessible, have become the "nerve penetration in Malaysia is expected to digital economy. Their high trust and endings" of digital payment and reach 70%-71% in the next few years. dependence on social media have the entire digital economy. After In addition, given the growing interest given birth to a unique "social media + recharging a digital wallet in a of social media users in Facebook, it is e-commerce" shopping model. convenience store, online game estimated that there will be about 24 recharging, online shopping and million Facebook users in Malaysia by Convenience stores: The nerve money transfer can be carried out, 2023. No matter which platform they endings of the digital economy creating a digital access point for use, most Malaysians believe social In Thailand, 7-11 is an absolute giant everyone that permeates every media can help them feel happy and in the retail industry, with nearly corner of their lives. Locals and find it challenging to stop using social 10,000 offline retail stores, accounting tourists can also use TrueMoney to media12. However, the growth rate of for about 95% of the sector. These purchase goods via digital payments active users has slowed since reaching small retail stores, which can be seen in convenience stores, making 70%, possibly due to the limitations everywhere on the streets, are the convenience stores also an "output of existing concepts and insufficient starting point of Thailand's digital point" for digital life. incentives. economy.

12J. Müller, Social media users as a percentage of the total population of Malaysia, 2020, 13 July 2020 13Observation Group of Digital Finance Research Center, Beijing University, Observation Report on the Financial Technology of Four Asian Countries, February 2019

36 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 41: Convenience store-centered digital payment in Thailand

ser registration

Deposit and withdrawal Bank ccount recharge Convenience store Consumer

True Money wallet Retail purchase Bank P2P transfer Digital economic Bill payment cycle nline payment

Offline payment Bank

Source: Deloitte analysis

National Overall Plan for Electronic At the end of 2017, Thailand released Chart 42: 75% of Thai people pay Payment and started promoting the Thai by QR code In 2016, the Thai government and Bank Standard QR code, based on EMV's of Thailand (BOT) launched the national international standards. This set off a overall plan for electronic payment. This "QR code revolution". For businesses, QR plan has become a part of Thailand's codes spare them the need to purchase 4.0 ambitions and is also the underlying expensive payment equipment, and can 75% policy support for Thailand to promote also handle payment from international digital and cashless payment. The plan tourists. For consumers, QR codes is coordinated by Thailand's Ministry of facilitate consumption and payment. Finance, BOT, the Ministry of Labor, and Platforms like mPay, BluePay and Using QR code the General Administration of Audit. TrueMoney Wallet have launched online Source: UnionPay International & Nielsen It includes five projects: PromptPay, and offline QR code payment in gas Card-Expansion, e-Tax, Government stations, convenience stores, restaurants e-Payment and Literacy and Promotion. and other scenarios. QR code payment Since its establishment, the functions has become one of the most popular of government expenditure, personal payment methods in Thailand, habitually transfer and enterprise payment have used by 75% of customers, according to gradually become more accessible and UnionPay and Nielsen15. improved. As of 2020, the number of registered users of PromptPay exceeds 50 million, and total daily transaction volume is more than USD2.5 billion14.

14Blue Boat Global, Thai electronic payment system PromptPay started its accelerated development under the pandemic, 16 June 2020 15CAMIA, UnionPay International & Nilsen: 75% of Thai consumers make habitual use of QR code for payment, 5 December 2018

37 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 43: E-commerce payment in Thailand

Proportion of online shopping payments

50%

40% 30% 30% 23% 23% 20% 15% 9% 10%

0% Cash Digital wallet Bank transfer Credit card Others

Source: JP Morgan

Shopping on social media businesses will publish product sources) million, and its capital Manila Like in other Southeast Asia countries, introductions and pictures on social is the most densely populated city in social media is one of Thailand's most media platforms such as Facebook, Asia. The Philippines is also one of popular online activities. In Thailand, it and consumers can browse and ask the youngest countries, with 62.3% of is not just the younger generation who about related products via these the population of working age (16-65 are fans of social media. The middle- platforms, communicate with sellers years old), and a median age of only aged and the elderly also welcome it, and pay. In Thailand, 51% of online 23. At the same time, the coverage of with more than 75% of 51-69 year olds shoppers shop through social media18, traditional finance in the Philippines is using Facebook16. and 92% of e-commerce consumers considerably underdeveloped. More use social media to view and compare than 70% of Philippine adults have no The popularity of social media has products before purchasing19. bank account and the penetration rate laid the foundations for social media of credit cards is less than 5%. e-commerce. Thai users believe in Digital Life "Followers" social media advertising more so Philippines: Tech-driven digital age than their peers in Southeast Asia, The Philippines has a population of with about 60% saying advertising on about 110 (it was 106.7 million in 2018 social media is trustworthy17. Usually, according to the World Bank and other

Figure 44: Low coverage of traditional finance in the Philippines

80% of Filipinos 90% of Filipinos do not have a do not have bank account credit cards

No bank account Have bank account No credit card Ohers

Source: Overseas local payment

16eMarketer, Report on Digital Use in Thailand, 21 March 2016 17Overseas Marketing, Global E-commerce Information—Thailand: Facebook top picks for social marketing; clothes and personal care are bestselling products, 15 November 2017 18PwC, Hugo.com, 51% of Thai consumers love social media and shopping and use cash settlement as the major mode of payment, 11 October 2016 19Zhao Xizi, Use of Social Websites in Thailand, Mobiwhale, 13 September 2017

38 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 45: Mobile users in the Philippines

12,000 10,700 10,000 7,300 8,000 6,700 6,000 4,000 2,000 0 Total population Mobile users 24 hours online

Source: Overseas local payment

In this context, digital payments in the The mainstream digital wallets in the InstaPay (the central bank's electronic Philippines are gradually changing Philippines include GCash, GrabPay funds transfer system) and PESONet businesses and consumers. In 2015, and PayMaya. Before the COVID-19 (the automated clearing house of the Central Bank of the Philippines outbreak, the popularity of digital the national retail payment system) launched the National Retail Payment payment in the Philippines was limited, increased by 260% in April over the System (NRPS) program, which aims to and cash payment was still the main same month of 2019 to 2.13 million20. increase retail e-payment transaction payment method. Retail e-commerce, food delivery and volume to 20% by 2020 through a digital goods have become new growth national electronic payment platform. During the pandemic, digital points in digital payment. In 2017, PESONet, the first automatic transaction volume surged due to clearing house in the Philippines, was fear of infection and government put into operation, providing great demand for "strengthening community convenience for money transfers isolation". The Central Bank of the among individuals, enterprises and Philippines said the cumulative government entities. number of transactions between

Figure 46: Growth of digital payment in the Philippines (USD million)

12,000 10,088 10,000 9,001 7,861 8,000 6,715 5,612 6,000 4,599 3,711 4,000

2,000

0 2016 2017 2018 2019 2020 2021 2022

Source: Statista

20Li Jiao, Philippine digital payment embraced a major development opportunity during the pandemic, Mobile Payment Net, 29 June 2020

39 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

E-commerce development has a brought about by the BPO's four pillar growth, the Philippines' e-commerce long way to go industries, gambling, tourism and labor market still has some shortcomings As the second largest digital life export, that the Philippine e-commerce to attend to if it wants to become the "follower", the Philippines' fast-growing market has huge potential. In 2019, future growth engine of the digital e-commerce market is another the size of the Philippine e-commerce economy. highlight alongside its highly active market will reach USD3.8 billion, with social media. With a population of over annual compound growth of 26.4%21. 100 million and high economic growth Despite its huge scale and rapid

Figure 47: Growth in digital commerce (USD100 million) and mobile terminal payment users in the Philippines

52.6 60 49.8 51.3 45.4 47.8 50 38.9 42.4 40 30 20 3.7 4.1 10 0.8 1.3 2 2.6 3.1 0 2016 2017 2018 2019 2020 2021 2022

Digital commerce Mobile sales terminal payment

Source: Statista

On one hand, the popularity of much stronger consumption power the Philippines and poor traffic e-commerce in the Philippines is quite than young people, and they also conditions in some areas, local logistics limited, with 70% of online shopping have the desire to improve family distribution is extremely inconvenient users between 18-31 years old22. life. For Philippine e-commerce to due to high cost and delays. Last- These millennials or GenZs are very develop, the riddle of how to attract mile distribution has become the receptive to the Internet and willing to and guide these middle-aged groups toughest problem in many cities. In try new things, so they have become with stronger consumption capacity to addition, local logistics enterprises are the "pioneers" of online shopping in become e-commerce users needs to small and dispersed, which makes it the Philippines. On the other hand, be solved. difficult to form a large-scale, network- although there are a large number of based logistics system that would Internet users in other cohorts, their Logistics in the Philippines is attain economy of scale advantages. penetration rate of e-commerce is an important factor hindering Logistics is a shortcoming in Philippine still quite low. These potential users, e-commerce consumption. Due e-commerce shopping, and needs to especially people aged 30-50, have to the large number of islands in be improved.

21Shopee Knowledge Bureau, About the e-commerce market in the Philippines, Sohu, 29 May 2020 22ibid (as source is same as previous footnote)

40 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 48: The benefits of using blockchain in Philippines digital payment

Domestic Abroad Traditional bank Traditional cross-border Traditional banks Money withdrawal accounts remittances and post offices

High costs Long waiting time Remittance time limit Personal transfer Offline remittance line

E-commerce lipay mobile online shopping nline consumption E-wallet GCash Cross border blockchain Game recharging -based remittance transfer Online video Almost no transfer fees Social networks Real time payment Offline consumption Safe, transparent and Digital payment Philippine regulatory ong ong Offline payment controllable authorities regulators Transfer via mobile phone at any time Digital life

Source: Deloitte analysis

Blockchain technology a new Blockchain technology has created new This new remittance method basically channel for digital transfers channels for cross-border transfers. has no fees, offers real-time payment, The Philippines is one of world's largest In 2018, AlipayHK provided the world's and can be handled on a mobile phone labor exporting countries, with nearly first e-wallet cross-border remittance at any time. Moreover, the immutable 10 million people, or about one out of service based on blockchain technology, features of blockchain ensure the every 10 Filipinos, working overseas. helping a large number of Filipinos safety of remittances, and regulatory The remittances they send back engaged in domestic services in Hong agencies in the Philippines and Hong home every year amount to about Kong remit money home. Through Kong can monitor every link in cross- 10% of GDP23. Therefore, for many cooperation with GCash, AlipayHK has border remittances in real time, which ordinary Filipino workers and families, successfully realized the real-time it more transparent and efficient. convenient, fast and cheap cross- receipt and withdrawal of cross-border border remittance channels are very remittances through day-end fund These significant advantages over important. The traditional remittance clearing and foreign exchange via traditional methods are promoting channels of banks, post offices and Standard Chartered Bank. rapid popularization of blockchain remittance companies often have large transfers. In addition to GCash, Ripple service charges. At the same time, Blockchain realizes real-time and Send Friend are developing due to legal, regulatory and exchange synchronization and parallel and providing blockchain transfer rate issues, money takes a long time confirmation of business nodes transaction services, and blockchain to reach accounts. Under normal through a distributed ledger, transfer is a rising force in the circumstances, each remittance carries which improves efficiency. When a Philippine's digital payment market. a USD6-USD146 service charge24, takes remittance is initiated by the wallet, nearly a week to arrive at the target all participants receive information account, and the remitter must queue at the same time. After checking, all up and remit on bank working days, links on the blockchain complete the making it very inconvenient. remittance transaction simultaneously.

23Globalfang, Know something about the 4 industrial pillars in the economic development of Philippines, Sohu, 26 August 2019 24Observation Group of Digital Finance Research Center, Beijing University, Observation Report on the Financial Technology of Four Asian Countries, February, 2019

41 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Table: Comparison of cross-border remittance methods

Method Fees Time Access Experience

Traditional cross-border USD6-USD146 per Bank working Offline queuing and on-site 3-7 working days remittance transaction days remittance

Blockchain remittance Almost 0 fees Real-time 24/7 Mobile transfer

Source: Beijing University's Asia Digital Finance and Investigation Report

Given overseas remittances are many top positions and institutions. extensive use since its launch. At an important source of income for India's huge population has made it present, Paytm is the third largest many Filipino households, new digital possible for many successful digital e-money provider in the world, with cross-border transfer channels applications to achieve optimal growth. 450 million real name users25. UPI have promoted the popularity of It is a market with great prospects, is an aggregate payment service digital wallets and the expansion of and India's digital development will created by major banks. It initially online consumption. To be able to forge ahead as the country's economy connected most of the banks in use digital cross-border transfer, a grows. India, and in recent years, has also growing number of Filipinos and their begun to access third-party payment families have digital wallets, and have E-wallet and bank terminals: from platforms such as Paytm and Google started to try digital wallets for online competition to unification Pay to support real-time, inter-bank consumption, digital payment and India, with its plentiful scientific and payment, attracting 100 million other lifestyle services. technological talent, has been at the users26. People no longer need to forefront of digital society creation in take out their bank or credit cards, Digital Life "Prospects" South Asia. After the Modi government and this unified payment method is India: Digital life from a small implemented the removal of large convenient for consumers. The Indian perspective banknotes from circulation, banking government has been approved to India, the world's second largest and digital banking rose rapidly. require the deployment of UPI in country by population, has been all stores, and will provide support increasingly recognized by the Paytm has brought great convenience mechanisms for national payment international community in recent to all kinds of lifestyle services, and processing companies to deploy it years. Indian elites can be seen in received widespread attention and across India as soon as possible.

Figure 49: Paytm can replace traditional banks

1.3 billion Can be used for deposits, with an annual interest Capital security rate of 4%. It is no longer necessary to look for offline banks or disclose account information online

ater electricity All cities covered and coal payments Paytm e-wallet Online recharge via Smartphone top-up is replacing Convenience non-intelligent machine banks 10 million merchants accept R code payment R codes, accounting for 50% of domestic store payments Purchase financial Small gold transactions online products Financial management Supports credit card Only 250-300 million people use Credit services the 200 million active debit cards withdrawal issued by banks

Source: Deloitte analysis

2536Krypton, "Third Largest Unicorn Club of the World—India", 28 February 2020 26Mobile Payment Net, Indian Platforms, e.g. Paytm, will add UPI automatic online payment function, 27 July 2020

42 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

In 2016, Paytm began to support Multiple e-commerce platforms; sales, India's market is small, but utility bill payment in every Indian city. cash-on-delivery is the has extensive prospects. Almost all However, mobile banking and some mainstream e-commerce platforms support credit overseas applications, such as Google According to statistics, in 2017/18, card and online banking payments, Pay, have followed its model, opening India had 460 million Internet users but support for e-wallets is relatively their functions to payment for daily and 330 million e-commerce users. limited. However, cash on delivery essentials. Some mobile banking The penetration rate of e-commerce (COD) is still the most popular form of applications also support online users was 65%, and per capita online payment, because most e-commerce reservation of natural gas, including shopping volume was USD61.47, websites do not support direct returns provision of payment receipts. Many accounting for 3% of the total retail to bank accounts. Instead, they will mobile terminal providers are entering sales27. transfer refunds to e-commerce competition with Paytm, and the website accounts for subsequent digital life payment market is becoming India's e-commerce platforms are online shopping payment. The increasingly diversified. still in a growth stage, and most of advantage of COD is that it enables them are loss-making. With its low payment after acceptance, which proportion of e-commerce in total makes Indian buyers feel more at ease.

Table 50: Why Indian consumers do not use digital payment

50% 45% 40% 40% 35% 30% 25% 22% 20% 14% 14% 15% 10% 5% 4% 2% 5% 0%

Other

I prefer cash

I don't know how digital payment works Digital payment makes I don't believe in the me wonder how muchI don't I have a smartphone,There is not good digital security of digital payment spent smartwatch or computer payment infrastructure in my city Source: Rakuten survey

27APUS, Report on Indian Internet Finance, April 2018

43 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Social software internationalization; short video applications highly popular

Table 51: Penetration rate of social sharing platforms in India

100% 82% 76% 80% 70% 64% 53% 60% 49% 39% 35% 40% 33% 30% 29%

20%

0%

Twitter TikTok Skype ouTube LinkedIn Pinterest Snapchat Facebook WhatsApp Instagram

Facebook Messenger

Source: Statista

WhatsApp and Facebook are the most clicks through this application. TikTok are unable to access financial services popular social media APPs in India, has local competitors, including short such as transfer, remittance and with 250 million Facebook users. video sharing platforms Chingari and payment. It costs USD0.12 to open This is similar to most countries. Mitron. More similar products could a bank account29, which many poor Because these APPs are also common appear in India, providing a platform people cannot afford. in Europe and the US, they are for Indians who love life and sharing. convenient communication channels Traditional financial services are for many Indian students' families. particularly scarce in rural areas. Among media APPs, YouTube and Digital Life "Challengers" Young people who work in cities can Netflix are also supported in India. Bangladesh: Inclusive digital only send their wages home by asking finance for low income people drivers to take the money. In such TikTok, a Chinese application, Bangladesh is a mainly agricultural a situation, there is strong financial has become very popular among country with a low economic base. inclusion impetus in Bangladesh's Indians, with 611 million downloads, Bangladesh's per capita GDP in digital finance development. By accounting for 30% of total downloads 2019 was USD1,930, ranking 165th virtue of its inclusive mobile financial in India28. It supports a variety of in the world. There is a large gap in services, bKash, a local payment Indian languages and is very popular conventional financial services in enterprise in Bangladesh, has almost in villages and towns. It has created Bangladesh. Many people do not have subverted the country's whole financial many Internet celebrities and many credit cards, bank accounts or other structure. people have been paid for their video traditional financial instruments, and

28Sensor Tower Store Intelligence, Downloads of TikTok in Overseas Markets, May 2020 29Observation Group of Digital Finance Research Center, Beijing University, Observation Report on the Financial Technology of Four Asian Countries, February 2019

44 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Figure 52: The business model of Bangladesh's bKash

Cash

Retail stores Telecom Contact with banks, 10% operators Personal transfer Digital payment

Deposit and Cash bash Electronic withdrawal at any time wallet Couple shop Street Stall Phone number pin code E-commerce shopping Cash out No contact with banks, 90%

Cash

Bank Operators Agent

Source: Deloitte analysis

The route to expansion: agent certain percentage of commission on mobile network operators to serve distribution network the customer's transaction volume, more low-income people and realize bKash's expansion is reliant on a large consumers, agents, distributors and inclusive finance, reducing its handling network of tens of thousands of agents bKash itself all gain profits or benefits. fee to 1.85% of the transfer amount30. and hundreds of distributors in every bKash has created a virtuous digital Through this series of measures, corner of Bangladesh's urban and financial cycle. bKash has become a digital financial rural areas. Most of these networks service provider with 80% market cooperate with traditional commercial Mobile finance: E-wallet for users share and 48 million users, with 90% distribution companies, and develop anytime, anywhere of new users never having accessed agents by using distributors' original As low-income groups in Bangladesh traditional banking services. In this networks selling consumer goods, often cannot afford smartphones, way, it has shown that technological mobile phone top-up and household bKash has designed a universal progress and digital life not only create products. These agents are usually interface to run on a USD15 handset dividends for middle- and high-income retail stores, grocery shops or small widely used in Bangladesh. Customers countries and groups, but also enable family run establishment. They are can access their e-wallet to conduct low-income groups to start connecting responsible for attracting customers, financial transactions such as transfer with and enjoying digital life. helping them register, and making and payment by simply dialing a deposits and withdrawals from number on their mobile phone and "310" access to small and micro customers' electronic accounts. The inputting a pin code. Customers can digital loans agent will collect the cash deposited also go directly to an agent, including Due to a lack of traditional financial by customers or provide small cash acquaintances such as grocery store services, low-income groups, small withdrawals for them, and deliver owners, to withdraw cash from their and micro businesses, students and the collected cash to distributors, e-wallets. In addition to a simple user other groups in Bangladesh struggle to who will deposit it in a bank. Because interface and quick use, bKash has obtain loans from traditional financial agents and distributors all get a established partnerships with multiple channels. The lack of traditional

30Observation Report on the Financial Technology of Four Asian Countries

45 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

finance also hinders the development conditions and sharing information, to operate a loan business, because of Bangladesh, especially small and they can immediately receive the loan it is supervised by the central bank micro enterprises, creating space for in their bKash account. bKash relies via traditional banks. The banks, the expansion of digital lending. on loan and credit risk management meanwhile, gained access to more technology to support its credit diverse loan channels, enabling access In cooperation with City Bank of evaluation of potential borrowers, to customer groups that could not Bangladesh, bKash has launched achieving "310" lending: the whole be contacted in traditional ways. small and micro digital loan services. process only needs three minutes for Low-income groups and small and Through bKash, users can immediately applications, one second for payments, micro enterprises in Bangladesh can obtain short-term loans of up to and zero manual intervention. The get short-term loans more quickly, USD117. City Bank of Bangladesh pilot loan term is three months, and short-term capital demand, closely monitors the repayment and users can repay the interest consumption demand and capital behavior of users to determine in installments or via prepayment turnover of enterprises in Bangladesh whether they are eligible for loans in through their bKash wallets. can receive timely support from the future. Eligible users can enter digital loans. The digital wallet has an amount within the loan limit Through cooperation with a traditional made a great contribution to personal approved by the bank using the bKash financial institution, bKash obtained a development and economic growth. application. After accepting the loan source of loan funds and permission

Figure 53: Support for digital consumption in Bangladesh

35%

65% of Bangladeshi consumers support digital consumption 65%

Support digital consumption Other

Source: Visa & YouGov

Huge potential user market Committee issued 4G licenses to the improvement of Internet Bangladesh is in a digital life "chasing" Grameenphone, Banghalink, Robi and infrastructure, further reduction of position, mainly due to less developed Teletalk, bringing Bangladesh into the smartphone prices and rise of per infrastructure and low per capita 4G era. About 50% of users access the capita income, a large number of income. The Internet penetration network through 3G or 4G, and some new Internet users will emerge in 31 rate of Bangladesh is about 60%, and 20% are active on social media . Bangladesh to become a new growth there is a huge potential Internet point in its digital economy. user market. In 2018, the Bangladesh Bangladesh still has a large Communications Management potential user market space. With

31Observation Report on the Financial Technology of Four Asian Countries

46 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

Table: Major e-commerce websites in Bangladesh

Website Main products Features

PriyoShop.com Accessories, electronics, home appliances, books, fashion, health, beauty

Rokomari.com Online books Low prices

One of the largest e-commerce ClickBD Electronics, cars, clothing, digital cameras and other products platforms for electronic products

The largest online shopping site; BDHAAT All serves customers through chat, email, smartphones and analog phones

Fashion, watches, electronics, t-shirts, perfume, saris, tops, contact lenses, Bagdoom.com Free delivery; large discounts sheets, jewelry, household appliances, gadgets and other commodities

Fashion, mobile phones, jewelry, home appliances, flowers, gifts and life Kiksha The only lifestyle e-commerce website products iferi.com Men's fashion, women's fashion, groceries and baby products

Source: Looking Outside

Digital Life "Challengers" Supporting Pakistan's digital In addition, introduction of Pakistan: Every area of digital life foundations lower-priced but highly advanced needs to developed Taking into account the above context, smartphones is changing Pakistan's Pakistan has relatively slow social Pakistan's collaborations with Chinese digital environment. Because it is and economic development. Pakistan companies, as well as the introduction a low income country, the price of only introduced 3G networks in 2013, of products and digital business popular smart phones in Pakistan whereas India and Sri Lanka adopted models from China has helped the is typically below USD100. With 3G networks as early as 2006. Slow country to catch up. China's Huawei, Oppo, Vivo and other advances in infrastructure and brand smartphones entering the socio-economic development have For example, at the national level, Pakistan market, the smartphone seriously hindered the progress of economic and infrastructure-related penetration rate is rising rapidly, which Pakistan's digital economy. In 2018, initiatives have provided valuable should guarantee the user base for total e-commerce sales volume in opportunities for Pakistan to bridge development of the digital economy. Pakistan was only USD256 million, its digital divide. The construction of There are now about three million far lower than in other countries digital infrastructure has become an new smartphone users in Pakistan (equivalent to 5% of Egypt's and about opportunity for Pakistan to get rid of every month, with students and young 32 1.4% of Iran's ). E-commerce is a long its "laggard" status. The 4G network people the main growth segment34. way from infiltrating daily life. Many provided by China Mobile's Pakistan Pakistanis are skeptical about looking company has expanded to more than Using China's e-commerce at photos to buy goods. Traditional 300 cities in the country, with more experience consumption still dominates their lives, than 30 million users, of which 10 Based on the rapid development and digital consumption habits need to million use 4G, accounting for half of its digital environment, Pakistan be cultivated. the 4G market33. The network has has developed new e-commerce become an important part of digital and payment models. As Pakistan's retail industry is dominated by small life in Pakistan.

47 The Net Wave Emerging digital life in South and Southeast Asia Chapter III niue Digital Life in South and Southeast sia

grocery stores, cultivating the digital of Chinese enterprises. In 2018, e-commerce habits at their retail Alibaba acquired Daraz, Pakistan's terminals has become the central most popular e-commerce platform, aspect of e-commerce development. and Chinese enterprises shared their Shoplus provides online purchasing technologies and models with Pakistan and logistics services for these small to help develop local e-commerce and retail stores and family-run shops, payment enterprises. In 2020, Sadapay, aiming to change the shopping habits a fintech company in Pakistan, was of consumers in Pakistan by cultivating granted an e-money license from the digital acceptance among these small National Bank of Pakistan to launch shop owners. The emergence of digital wallet services. With these these new models and patterns are development trends, digital life can be inseparable from the participation expected to flourish in Pakistan.

32Xianfengchuhai, Why is the e-commerce market in Pakistan a ‘hard bone’ to bite? Where are the drivers and turning point? Hugo.com, 12 November 2019 33Lu Bin, Number of 4G customers of China Mobile's Pakistan Company top 10 million, Chinese Economy Net, January 16, 2019 34ePanda, Interview: He is a Pakistani who is most familiar with Chinese e-commerce and launched the unique B2B2C cross-border model, Sohu, 17 May 2018

48 The Net Wave Emerging digital life in South and Southeast Asia | Chapter I The Rise of Digital Life

49 The Net Wave Emerging digital life in South and Southeast Asia Chapter IV nleashing the Potential of Digital Life

Chapter IV Unleashing the Potential of Digital Life

There is no doubt South and Southeast need to enhance their construction of 2.Encourage and develop Asia will see rapid developments in infrastructure such as base stations, consumer and merchant adoption digital life. However, there are still improve coverage and reduce tariffs. of digital payment several areas that can be improved, Despite the rapid development of especially digital infrastructure, Second, improve Internet coverage Southeast Asia countries, e-commerce consumer development, information in rural and remote areas. Due to the accounts for only 3% of their total retail security, and policy coordination, to late development and high cost of sales, far below the global average. The realize and release these region's base station construction, Internet six major Southeast Asia economies maximum potential users in many countries of South Asia account for less than 1% of global and Southeast Asia are concentrated e-commerce transactions. One of the 1.Continuous promotion of digital in major cities and surrounding reasons for the slow development communication infrastructure areas. For example, most Internet of e-commerce transactions is that Due to the late starts of some and digital wallet users in Thailand consumers still have concerns about countries and their relatively less are concentrated around Bangkok. online shopping, and traditional developed economies and digital Internet coverage in rural and consumption habits still dominate infrastructure construction, there remote areas is still poor, and most their lives. One of the reasons Pakistan is still room to improve Internet and of Thailand's "Internet strangers" citizens have low acceptance of mobile coverage. The gap is mainly in are in rural and remote areas. e-commerce is that people are not rural and remote areas of South and There is an urgent need to improve used to looking at photos to buy things, Southeast Asia. In future, South and the coverage of rural networks to and do not trust in e-commerce. Southeast Asia countries will accelerate strengthen digital infrastructure. digital infrastructure construction, with The most important component of Even in countries with high banking a focus on these potential users. Thailand's 4.0 strategy is its national penetration, such as Singapore, 15%- infrastructure plan, which aims 20% of payments are made in cash. First, the penetration rate of to connect the Internet to 70,000 Cash has long been the main payment communication bandwidths above 4G villages by 2020. In 2019, India's rural method in India. Despite the rapid should increase to gradually replace Internet users will reach 227 million, growth of digital payment, there is still 3G. 3G and 4G development started surpassing those in cities for the widespread consumer concern about late in some countries. For example, first time, with huge development security, privacy and transparency. Bangladesh launched 3G in 2012, potential. To give people in rural and its 4G network was only launched in remote areas access to the Internet, Therefore, consumer awareness 2018, and its domestic communication the short-term cost of base station remains an obstacle to the large- network is still dominated by 2G. construction is high, but in the long scale adoption of digital financial This hinders the development of run will give powerful impetus to the transactions. Fintech companies are some digital life services, such as live digital economy. technologically ready, but one of their broadcasting and e-commerce, which biggest challenges is encouraging all rely on higher transmission speed. people to transit from cash payments South and Southeast Asia countries to cashless wallets, and getting

50 The Net Wave Emerging digital life in South and Southeast Asia Chapter IV nleashing the Potential of Digital Life

potential users to understand Of the nearly 400 million adults in The limited trust of the public in the benefits digital transactions Southeast Asia, only 104 million enjoy the security of payment could can bring. Fintech companies and adequate financial services. Another hinder the development of digital the e-commerce industry need 98 million people have bank accounts payment and e-wallets. Although to establish public trust in online but not enough money in them, the ultimate goal of digitization is shopping and digital consumption with insufficient channels for credit, to create a digital economy, hasty through continuous marketing investment and insurance. About promotion of digitization can pose activities, and cultivate people's habit 198 million adults still have no bank significant challenges to existing of using digital payment. deposits or no bank account. This is security and fraud controls. To find an obstacle to loans and savings, but any vulnerabilities in systems they can Offline digital payment is a key part of banking applications and other fintech exploit, cybercriminals often attack the digital economy, and its popularity products can provide solutions for individuals rather than the system largely depends on the acceptance individuals and small businesses that itself, collecting sensitive details. of digital payment by merchants. meet their goals. Traditional payment methods such There are three main considerations as cards require merchants to install Both region's futures will be in information security. The first is the expensive terminal equipment and increasingly "cashless", as China "digital trap", in which many first-time carry hefty service charges. But QR is now. Those who do not receive users are not "digital natives", making it code payment has changed this adequate financial services are likely important to ensure they comply with dynamic. Businesses can simply to become the real growth engine of necessary security protocols. collect money through QR codes digital financial services companies. and smartphones without installing Consumer technology platforms, due Second, banks and fintech companies equipment. The promotion of digital to their huge user bases, can meet must solve information security payment among businesses needs to the needs of this market segment. In issues. Enterprises can deploy high- rely on lower or zero service charges, the next few years, it will be the main end machine learning based on AI to the integration of national identity battleground as players compete to identify and reduce fraud, and solve application program interfaces, win consumers' trust. the problem of fraudsters entering merchant system and other elements. from a given channel for a specific Industry participants need to invest a 4.Building an information security time or to an individual account. In great deal of energy to overcome this mechanism "trinity" fraud detection, it is more important obstacle, not only through marketing Information security has become to determine the source of fraud activities, but also through continuous one of the most serious problems in rather than the transaction itself. For product improvement. the digital economy. In India, digital example, all payment channels (digital, payment fraud accounts for about half mobile, card, ATM and UPI) must be 3.Grasp opportunities to serve of bank fraud. In 2019, more than 40 connected. Today, fraud detection those with inadequate access to security bugs were identified in the in these channels is still highly financial services government audit of India's flagship fragmented across many financial With continued investment in payment processor. Some 32% of Thai institutions. financial technology across South and technical professionals have personally Southeast Asia, the region is striving experienced payment fraud related Third, information security has become to bridge the gap between mobile to e-commerce in the past year. In a necessary component of the digital connectivity and financial inclusion. 2016, the website of the Philippine's economy development policies of Mobile connectivity in the region is at Commission on Elections was almost every country. Thailand has 133% (meaning some users have more hacked and a large amount of voter launched a strict Cyber Security than one SIM card or mobile phone), information was leaked. A series of Act. India introduced a personal yet only 27% of people in Southeast security incidents have cast a shadow data protection act in 2019 and its Asia have bank accounts. over development of the digital Cyber Security Strategy 2020, and economy. the Reserve Bank of India (RBI) has

51 The Net Wave Emerging digital life in South and Southeast Asia Chapter IV nleashing the Potential of Digital Life

issued guidelines on security and communication. risk mitigation for digital payment, Governments of South and Southeast 6.Encourage localized digital taking measures to make credit card Asian countries should coordinate innovation transactions, online banking, electronic the financial services sectors across Due to the different social and payments, ATM transactions and their regions, which will promote the economic development conditions prepaid payment instruments (PPI) development of regional business and customs of different countries, more secure. The RBI has also issued models and help direct resources their digital services have strong local guidelines to limit the liability of towards world-class technology features. Unlike overseas Internet customers for unauthorized e-banking and talent. For example, digital enterprises entering domestic markets, transactions. identification data, including digital IDs, localized digital innovation can create and e-Know Your Customer (e-KYC) digital services in line with national Countries are also introducing processes can significantly increase conditions, and are more likely to be biometric measures to reduce fraud opportunities in digital financial favored by local consumers. in digital payment processing. Those services, including opportunities that establish the legal, institutional, to serve the unbanked. Promoting South and Southeast Asian countries technical and other mechanisms common standards for payment and have great potential for domestic to protect information security and remittance will be key to promoting digital innovation. Their populations reduce payment fraud, will provide interoperability between different are young and their education systems solid security backing for development solutions. In turn, these policies will are strong. India and Pakistan have of the digital economy. Although push South and Southeast Asia into a world-famous programmers and data network security and digital payment competitive environment that is less engineers. Encouraging local digital fraud cases are a substantial risk, differentiated from markets such as innovation can give full play to each the digital payment ecosystem can China, India and the United States, country's advantages and provide be strengthened, and organizations, where companies can scale up rapidly. characteristic digital services. users and governments should share responsibility for ensuring its security. There is also fragmented supervision For example, Thailand's 2021 Digital across both regions. Because digital Development Vision promotes 5.Collaboration and communication payment involves financial services, for digital transformation at a national to reduce business risks their own financial security, countries policy level. With policy support, the A common requirement among have very strict regulatory standards Punnowithi innovation park, a key participants in digital financial for foreign payment enterprises, such element of Thailand 4.0, will become services is that policies should be as business licensing, service scope, the largest of its kind in Southeast Asia, consistent and predictable. Regulatory banking relations and partnerships. To providing a platform for innovation uncertainty is the biggest drag on solve these issues, a unified payment and entrepreneurship for digital investment and risks entire business platform or standard needs to be start-ups and unicorn enterprises. models suddenly becoming infeasible. established at the national level. For Telecommunication infrastructure and A fragmented regulatory landscape, example, Thailand has established a digital platforms at the park enable including substantial differences unified electronic payment platform digital innovation. Start-up enterprises in licensing procedures, is a major and issued a unified payment QR can also contact scientific research challenge facing regional players code. To resolve issues in cross-border organizations and multinational operating across multiple markets. transfers, as supervision matures, enterprises to obtain financial, If coordination is not strengthened, governments should establish technological and policy support. With variations in local regulatory communication and consultation such support, Thailand's digital start- requirements can lead to higher costs mechanisms, eliminate unnecessary ups have changed the face of digital and delays in enterprises' regional regulatory measures, unify standards life across social networking, finance, expansion plans. as much as possible, and realize shopping and online video. joint supervision and collaborative

52 The Net Wave Emerging digital life in South and Southeast Asia Chapter IV nleashing the Potential of Digital Life

particularly in digital payment, and Internet enterprises, which will help To further help digital start-ups and traditional training struggles to provide improve local digital economic models establish a uniform playing field a sufficiently large amount of such across South Asia and Southeast for start-ups and major Internet talent. Therefore, developing talent with Asia. For example, Alibaba's business companies, the degree of information "Internet thinking" and an ability to adapt school, together with the Thailand infrastructure sharing and openness to fast-paced work has become key to the Industry Promotion Agency (DIP) and between South and Southeast Asian long-term, sustainable development of the the International Trade Promotion countries needs to be enhanced. South and Southeast Asia digital economy. Agency (DITP), recently launched Small and medium-sized enterprises long-term online and offline can share cloud computing, Internet School-enterprise cooperation and e-commerce training to cultivate access, bank loan, market information international cooperation are two digital economy talent and promote and other resources, helping them solutions to this talent issue. Through the development of "Thailand 4.0". access a fair competitive environment targeted training and cooperation, and become a new force in the digital talent with solid financial and economy. computer knowledge, and practical experience, can be developed. 7.Actively cultivate digital talent Through international cooperation, With the rapid development of digital people can access the world's most technology in South and Southeast Asia, advanced Internet knowledge and there is a growing talent gap. Demand concepts, and learn about the digital for Internet and financial talent is huge, economy models of large multinational

53 "The Next Wave" Emerging digital life in South and Southeast Asia | Contac us

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Gary Wu Taylor Lam Deloitte Global Strategic Account Deloitte China Executive Partner Technology, Media and - Alibaba / Ant Finance Group Telecommunications Industry Tel: +86 10 8520 7762 Leader Email: [email protected] Tel: +86 10 8520 7126 Email: [email protected]

Roger Chung Shuting Guo Deloitte China Deloitte China Technology, Media and Technology, Media and Telecommunications Industry Telecommunications Industry Research Director Research Assistant Manager Tel: +86 21 2316 6657 Tel: +86 21 6141 1043 Email: [email protected] Email: [email protected]

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54 "The Next Wave" Emerging digital life in South and Southeast Asia | Endnotes

Endnotes

01. Observation Group of Digital Finance Research Center, Beijing University, "Observation Report on the Financial Technology of Four Asian Countries", February, 2019 02. Emarketer "Global Ecommerce 2020", June 2020 03. Moneycompass，"Contactless innovations keep the world moving amid COVID-19", April, 2020 04. Overseas Local Payment, "State of Payment in Singapore", June 11, 2020 05. Overseas Local Payment, "State of Payment in Singapore", June 11, 2020 06. SimilarWeb 07. J. Müller, "Social network penetration in Singapore Q3 2019", February 19, 2020 08. Statista, "Global Consumer Survey 2020",May 2020 09. Momentum Works, "Interpretation of the Electronic Wallet of Ant Financial in Malaysia", September 17, 2019 10. Misterleaf, "Comparison of Mobile Phones and Electronic Wallet: TNG, Boost, WeChat Pay, AirAsia Big Pay, Razer", January 23, 2020 11. J. Müller,"Top 10 e-commerce sites in Malaysia Q1 2020"，May 15, 2020 12. J. Müller,"Social media users as a percentage of the total population Malaysia 2020"，July 13，2020 13. Observation Group of Digital Finance Research Center, Beijing University, "Observation Report on the Financial Technology of Four Asian Countries", February, 2019 14. Blue Boat Global, "Thai electronic payment system PromptPay started its accelerated development under the pandemic", June 16, 2020 15. CAMIA, "UnionPay International & Nilsen: 75% of Thai consumers make habitual use of QR code for payment", December 5, 2018 16. eMarketer, "eMarketer: Report on Digital Use in Thailand", 199IT, March 21, 2016 17. Overseas Marketing, "Global E-commerce Information—Thailand: Facebook as top pick for social marketing; clothes and personal care are bestselling products", Hugo.com, November 15, 2017 18. PwC, Hugo.com, "51% of Thai consumers love social media and shopping and use cash settlement as the major mode of payment", October 11, 2016 19. Zhao Xizi, "Use of Social Websites in Thailand", Mobiwhale, September 13, 2017 20. Li Jiao, "Philippine digital payment embraced a major development opportunity during the pandemic", Mobile Payment Net, June 29, 2020 21. Shopee Knowledge Bureau, "About the e-commerce market in Philippines", Sohu, May 29, 2020 22. Shopee Knowledge Bureau, "About the e-commerce market in Philippines", Sohu, May 29, 2020 23. Globalfang, "Know something about the 4 industrial pillars in the economic development of Philippines", Sohu, August 26, 2019 24. Observation Group of Digital Finance Research Center, Beijing University, "Observation Report on the Financial Technology of Four Asian Countries", February, 2019 25. 36Krypton, "Third Largest Unicorn Club of the World—India", February 28, 2020 26. Mobile Payment Net, "Indian Platforms, e.g. Paytm, will have the function of UPI automatic online payment", July 27, 2020 27. APUS, "Report on Indian Internet Finance", April 2018 28. Sensor Tower Store Intelligence, "Downloads of TikTok in Overseas Market", May 2020 29. Observation Group of Digital Finance Research Center, Beijing University, "Observation Report on the Financial Technology of Four Asian Countries", February, 2019 30. Observation Group of Digital Finance Research Center, Beijing University, "Observation Report on the Financial Technology of Four Asian Countries", February, 2019 31. UCloud Cloud Computing, "White Book on Chinese Internet Enterprises Going Global – Situation of Bangladesh Market", Zhihu, April 23, 2020 32. Xianfengchuhai, "Why is the e-commerce market in Pakistan a 'hard bone' to bite? Where are the causes and turning point? ", Hugo.com, November 12, 2019 33. Lu Bin, "Number of 4G customers of China Mobile Pakistan Company topped 10 million", Chinese Economy Net, January 16, 2019 34. ePanda, "Interview: He is a Pakistani who is most familiar with Chinese e-commerce and launched the unique B2B2C cross-border mode", Sohu, May 17, 2018

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