Sibos 24: the secret to Asia’s payment success

Asian economies lead the world on digital payment adoption, but there are steps markets like Australia could take to try to close the gap, according to Lee Ross, Domain Lead, Payments at ANZ Institutional.

Speaking on podcast with Leigh Mahoney, Head of Wholesale Digital at ANZ, Ross said Australia had a lot to learn from its regional peers if it wanted to take full advantage of the opportunities modern digital payments offer.

“One of the big ones, I think, is just encouraging this experimentation and innovation that has been so prevalent across Asia,” he said.

The Asia-Pacific was home to more than half of the world’s paperless transactions in 2023, according to Euromonitor, amid a growing use of digital wallets and mobile applications. According to PwC, digital payments in south-east Asia alone are expected to total around $US1.5 trillion by 2030.

While Australia has almost abandoned cash, consumers there are yet to embrace the diversity of payment options enjoyed by their counterparts in Asia, with 75 per cent of Australian payments in 2023 happening via cards.

Ross told ANZ Institutional On Air that leading Asian economies had attracted strong investment and support for new payments technologies, including in some cases from policymakers. That’s created “real momentum within the fintech community”, he said, which has led to “a lot of innovative solutions”.

For Ross, industry participants in Australia could do worse than consider partnering with market-leading digital payments operators across Asia.

“You know, you don't need to go this alone,” he said. “Building that environment and fostering that innovation is super important, but then taking advantage of that.”

Ross and Mahoney were speaking as part of a series of On Air conversation held ahead of the Sibos financial services conference in October. You can listen to an edited version of the conversation – part one of two parts – below.

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Mahoney said the adoption rate of digital payments in Asia has been “really, really high”, while in Australia, in some cases consumer preferences “still seem to be stuck”.

In Asia, those preferences have “already shifted towards seamless, integrated payment experiences”, he said.

Mahoney said use of those options in Australia and New Zealand had increased, but remained “uneven” across various demographics. And while the transition has been “supported by regulatory framework”, it's been “less aggressive than what it's been in Asia”, he said.

“If we look at payment methods themselves here in Australia and New Zealand, we've got growing use of digital wallets,” Mahoney said. "But again, if we go to Asia… the electronic-payments area has been dominated by wallets and QR codes for some time.”

Ross figures the adoption of those tools in Australia is “a must, and it's going to happen”.

“It's just happening maybe slower here than in other regions,” he said.

In markets like China, the space is dominated by so-called “super-apps”, according to Mahoney.

“You can just live in an app, and make a payment, and do all the other things,” he said – including, in some cases, social media.

Ross was sceptical such apps could make inroads in Australia, but said Australian operators needed to ensure interoperability with payment options across the apps they do provide.

“Getting our financial institution services [to be] easily accessible is going to be an important piece of it,” he said.

“It’ll be important for us to make sure [consumers] have the right digital experience for those [apps], and ease of onboarding and ease of integration.”

While some tech adoption has been strong, according to Mahoney, use of digital assets for payments has not reached a point of “real embedment here in our home markets of Australia and New Zealand”. In Asia, he said, “it's already there”.

“We've got to also focus on making sure that we modernise our payments infrastructure here in Australia,” Mahoney said. “And we're doing that”.

Underestimate

Despite trailing its peers in these select areas, Australia’s strength lies in its developing real-time payment network, according to Ross.

“We are incredibly well placed here in Australia,” he said. “And we can't underestimate the investment that's required to establish the foundational capabilities of a real-time payment system.”

What Australia enjoys from its NPP network is something many other economies struggle to replicate, according to Ross. Still, in many Asian markets, demand for such services is high, Mahoney told the podcast.

“There is not a discussion, I don't think, when we are talking about how we serve our customers in the Asian geography, where we're not talking about real-time payments,” he said. “I think that these two things: digital payments and real time, [are] inextricably linked. They have to go together.”

Ross said there had been notable innovation occurring “to link these real-time payment systems together to create a seamless cross-border experience” in Asia, thanks largely to the “matured standards” across region.

For Mahoney, take-up of increasingly diverse digital payment options is something that’s “going to happen”.

“The innovation in each of these countries, and the way that people use it, and with the proliferation of smart phones and that ubiquity, it's just going to be part of the way we do life,” he said.

The experts also touched on the conditions which led to Asia’s rapid uptake of digital payment solutions. Listen to the podcast to hear more.

This article reflects the edited version of the conversation as it appears on the podcast.

This is part one of a two-part podcast. Keep an eye on ANZ Institutional Insights ahead of Sibos for part two.