Growth of Ecommerce and Opportunity for Banking

Opportunities for Financial Services in eCommerce

Presented By: Jessica Chung Engagement Manager Ipsos Strategy3, Hong Kong

23 July 2020 © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Introduction to Ipsos and Strategy3 IPSOS STRATEGY3 – THE STRATEGY CONSULTING ARM OF IPSOS

Leaders in Consumer Market Research Growth Strategy Specialists Leaders in Industry Market Research Global Big 3 market research group; largest Asia market research & consulting group Specialised division within Ipsos providing fact- based consulting services to help clients build, • #1 research firm in Asia; compete and grow • 18,000 employees worldwide, 3,000 in the Greater China Region and Hong Kong; • Top ranked growth strategy consultancy in • Publicly traded in the Paris Stock Exchange (IPS:EN Asia Pacific; Paris) • Over 25 years of industry track record • A global firm, present in 90 countries across the • Global consulting hubs for worldwide coverage world

NEW REVENUE FROM CAPTURE GROWTH IN MANAGE CREDIT AND UNDERSERVED OR ACCELERATING MASS LENDING RISK WITH RELIABLE UNSERVED SEGMENTS SPENDING CHANNEL AND REAL-TIME DATA

Credit Cards B2B and B2C space Credit and transaction history Commercial Credit and Loans Target shopping categories Review risks of default on loans Expand existing banking Fast receivables and cashflow cycles Enable faster and relationships smaller size loans

3 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Key Questions for Successful Roll-out Strategy

1. How many customers are underbanked or underserved?

2. Which customer segments and characteristics should I target to define my addressable market? What are these customers looking for?

3. What type of products can I offer competitively in the eCommerce financing space?

4. What channels and programs attract and retain eCommerce customers most suitable to my offerings?

5. What are barriers for my products and services to compete?

6. How should I assess risks and lending approvals for eCommerce platforms?

7. Who are my competitors for my product and target customers?

8. What partnership structures should I pursue to tap into the eCommerce financing space?

4 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 We support clients with developing a robust customized growth strategy supported by in-depth market insights and stakeholder workshops

Ipsos provides a modular approach to strategy development and design

1 2 3 4 5 MARKET CUSTOMER INTERNAL ANALYSIS AND STRATEGY DIAGNOSTICS INSIGHTS ASSESSMENT VALIDATION DESIGN

• Industry landscape • B2B (Enterprise) and • Internal alignment with • Assess competitive • Actionable strategy • Market Sizing and B2C (Consumer) client’s business opportunities and for top line and Forecast customer research performance, white space for bottom line growth • Market Segmentation • Path-to-purchase challenges, and Client • Growth scenario • Ecosystem/Channel • Key decision factors capabilities • Detailed route-to- planning on Mapping • Customer • Competitive positioning market development financial outcomes • Competitive Landscape segmentation • Identify direction on • Business model • Market Opportunity high-level opportunities development Evaluation

5 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Covid-19 Update COVID-19 continues to accelerate the rise of ecommerce

• Global eCommerce market projected to reach USD 5 trillion by 2022

• Half of eCommerce market value, and fastest growth, will be from APAC • Combined growth of at least 15% by 2022

• COVID-19 accelerated adoption, usage and growth of eCommerce globally, especially in APAC • Many consumers and merchants now need to use eCommerce platforms for retail sales • New eCommerce behaviours are becoming new habits for many consumers

6 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Covid-19 Update

Consumers believe covid-19 will Respondents in Hong Kong last beyond 2021, increasing use 30% of online retail in the meantime Q3 2020 Believe pandemic will not end before in Q3 2020

Q2 32% 2022 Believe Hong Kong will only recover in 2021 (18% expect recovery towards Q2 2021)

48% Spend more time browsing on 36% online shopping platforms Purchased more groceries online or used more mobile payments

7 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Sources: Ipsos Hong Kong, Hong Kong Consumer & COVID-19 Study March 2020 Market Diagnostics and Partner Scan A Closer Look at eCommerce in APAC

Local 120+ Prioritising Marketplace Platforms Access to APAC Platforms Dominate Ipsos eCommerce Landscape SMEs Database

Largest Fastest Value Growth Cross-border shopping APAC Apparel and Online in Asia Electronics Groceries

~ 4 million merchants 400 million + customers 1 Trillion + PinDuoDuo USD China Japan Mature ~ 5 million merchants China eCommerce Markets 30 million + customers in 2020 South Lazada and Shopee Korea Singapore Cross-border SEA region Singapore

APAC Room for ~ 20+ million merchants Growth in 180 million + customers Other APAC Bukalapak, Tokopedia, Blibli, Ralali Markets Indonesia

© Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Competitive Landscape and Partnership Deep-Dive Rapid eCommerce Adoption is Providing New Opportunities and Potential Competition to Banks Trade Flow Monetary Flow & Requirements Lending And Credit Flow

Business FINTECH COMPANIES Cash Flow Cash Points Requirements Credit/Loan

Provide Commercial Provide Consumer Loans/Credit Line Credit, rewards, lending FINANCIAL INSTITUTIONS ECOMMERCE CONSUMERS ENTERPRISES

Receive Payment on Platform Payments ECOMMERCE PLATFORM (B2C example) 11 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Customer Insights What commercial financial services are needed for eCommerce retail customers? Social distancing and economic instability from COVID-19 will accelerate adoption of eCommerce retail channels

LOANS AND INSTALMENT SIMPLE, SECURE, AND LOYALTY REWARDS FOR BIG TICKET ITEMS STREAMLINED PAYMENT TOUCHPOINTS

Consumers require loans or Credit lines or loan approvals Loyalty rewards such as instalment options for larger that are simple and streamlined cash back and rewards ticket items, such as with the eCommerce platform programs offered by the electronics they are using platform or partnered financial service provider

12 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Customer Insights What commercial financial services are needed for eCommerce merchants (enterprise) customers? To capture financial service opportunities in the eCommerce ecosystem, Ipsos has also conducted focus groups to uncover offerings and touchpoints needed by merchants to have competitive advantages on 4 key fronts

UNIFIED STREAMLINED LOW INTEREST RATES CAPITAL REQUIREMENTS FAST APPROVAL TIME PROCESS

• • Small and frequent loans or Traditional applications take • • Seamless and transparent Traditional loans 4%-13% or credit lines to match payment a few days to a month management system higher* schedule and pace of sales on • Now in 24 hours or down to between platform and • eCommerce and fintech eCommerce platforms 30 mins for loan financial accounts offering from 0.2% • Critical for financial shortfalls; approvals and to cash • Especially for cross-border working capital, payment receivables and release, inventory transactions management, and business expansion

13 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Platforms and financial institutions are aggressively pursuing financial service opportunities in eCommerce

Banking institution and platforms successfully expanding in this market acted fast

Developments by fintech and platforms are creating new financial ecosystems

THANK YOU CONTACTS

Jessica Chung Markus Scherer Engagement Manager Head of Strategy3, Hong Kong

[email protected] [email protected] +852 2830 2531 +852 2839 0647

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18 ‒ © Ipsos | Opportunities for Financial ServiceServices in in eCommerce eCommerce – –JulyJuly 2020 2020 We are Strategy3, Ipsos’ business and growth advisory firm

We believe that in order for any business strategy, marketing plan, brand positioning, or new innovation to be successful, it must do three things: be rooted in the organization’s strategy, be informed and inspired by customer research, and it must drive through to actual in-market activation. While there are many firms that advise on growth, very few deliver on all three: traditional management consultancies rarely delve deep enough into the world of the customer; creative firms don’t truly leverage the power of data; research agencies can sometimes lose the big picture in the midst of analysis. That’s why we are Strategy3. We approach every challenge through three lenses

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19 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 Corporate/Business Strategy What We Determining the right markets in which to play, and how to win Market Sizing • Go-to-Market Strategy • Distribution/Channel Strategy • Do Competitive Benchmarking • Due Diligence Drawing from our global network of consultants across four practice areas, we work with clients to Brand Strategy Build • Grow • Compete Developing strategies to help your brand and products stand out Brand Stretch • Brand Architecture/Portfolio Optimization • Brand Positioning • Brand Purpose • Brand Valuation and Investment ROI

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Innovation Strategy Planning for and conceptualizing new products and offers Trends/Futures Scenario Development • Early Stage Innovation Development • Innovation Scouting • Innovation Strategy and Process Development

20 ‒ © Ipsos | Opportunities for Financial Services in eCommerce – July 2020 More on eCommerce Ipsos Syndicated Study: Ecommerce Unleashed eCommerce Unleashed is a global syndicated study capturing durable change during the COVID-19 crisis and beyond. Our cost-efficient insights help marketers reinvent their plans for future recovery and growth in light of COVID-19. By capturing shopper emotions and behaviors, eCommerce Unleashed Illuminates emerging shopping patterns and durable changes to help future-proof shopper strategies.

OVERVIEW BUSINESS QUESTIONS WE WILL ANSWER OVERVIEW COVID-19 is unleashing eCommerce shopping globally and will drive eCommerce Unleashed helps you adapt your shopper strategies during COVID-19 and beyond by permanent long-term shopping behavior changes. People are trying new providing: channels, services and products – and forcing shopper marketers to re-think how they will meet their rapidly expanding needs. • Comparisons of new and experienced eCommerce shopper behaviors • Shoppers’ financial, health, and recovery sentiment eCommerce Unleashed is a global syndicated study capturing durable • Channel search, social media use, purchase locations, and retailer satisfaction change during the COVID-19 crisis and beyond. Our cost-efficient insights help marketers reinvent their plans for future recovery and growth in light of • Category triggers, barriers, brand planning, trial, and future purchase intent COVID-19. By capturing shopper emotions and behaviors, eCommerce • Shoppers’ plans to continue their emerging shopping behavior Unleashed Illuminates emerging shopping patterns and durable changes to help future-proof shopper strategies. DELIVERABLES Country Report delivered via Custom Region or Global Virtual Activation Workshops; APPROACH Portal: Shopper sentiment, Report: Custom multi-country Strategy3 virtual workshops to help behaviors & channel migration reporting designed for client you develop strategies and tactics eCommerce Unleashed covers 1,500 shoppers per country in Wave 1, and 1,000 shoppers per country in Wave 2 (females and males 18+). Our 15 business need minute online survey incorporates Ipsos’ proprietary view of COVID-19 emotions, behavior and shopper migration.

Categories: Alcohol and Tobacco, Banking and Credit, Beauty, Electronic Devices, Food and Beverage, Healthcare, Home Care, and Personal Care. Syndicated Countries: Canada, USA, Mexico, Colombia, Spain, Malaysia, Indonesia, Thailand, Vietnam Additional country availability: Brasil, Chile, Peru, Argentina, Australia, Japan, South Korea, Hong Kong, China, India, Belgium, France, Germany, Italy, Netherlands, Norway, Sweden, Czech Republic, Hungary, Poland, Saudi Arabia, South Africa, Turkey , UK Pictures are for indicative purposes only