Why digital wallets must shed their ecosystem dependence

Experts noted the importance of forming the right strategy for sustainability and brand marketing.

Bankers and financial experts of today must navigate various strategies to strengthen their brand marketing, AI adoption, and sustainability, experts told attendees of the Asian Banking & Finance and Insurance Asia Summit 2024.

For digital banks, there will come a time when they must reduce their reliance on their pre-established ecosystems in order to grow further.

Digital wallets that became global players engaged in partnerships outside of their parent ecosystems, said David Zhang, Regional Market Insight Manager, Payments & Lending, Euromonitor International.

“There are four main opportunities: cross-border payments, interoperability of payment standards, alternative data for unsecured lending, and partnerships outside of parent ecosystems,” Zhang told attendees of the branding and strategy track of the ABF-IA Summit 2024 held at Andaz Singapore on 3 September 2024.

Zhang expects to see more partnerships between financial service providers and digital wallets in the short-term, driven by demand for interoperability.

“In the mid-term, as competition intensifies, digital wallet providers will focus more on personalization, using customer insights to reduce costs and improve engagement,” Zhang said.

Shrikant Bhat, CEO of AIA Group Unit-Linked and Pensions Business, followed with a discussion on investment strategies.

Bhat noted the complexities of keeping your investments on track when just looking at returns. Instead, he suggested a stewardship approach: or an investment strategy that focuses instead on meeting customers’ investment targets.

“We've created an approach we call stewardship, which has three components. First, we leverage our institutional setup to find managers, bring it all together, create solutions, and monitor portfolios on behalf of customers,” Bhat said.

“This is built into the products we create, and we don’t charge customers separately for this,” he said, adding they don’t need to make money on every single part of the balance sheet.

HSBC’s Ashmita Acharya, Head of Wealth and Personal Banking in Singapore, discussed how to empower people and enhance processes.

Amidst discussions of emerging technologies and starry-eyed optimism on the opportunities they present, Acharya sounded caution.

“Every day, there will be new technology, new digital tools, new data, or something new altogether. It’s very difficult to keep pace with what's happening out there. In that process, we keep forgetting to get our backend and our front-to-back approach right,” Acharya said.

“You can’t just have a shiny, beautiful front end on an app if you haven’t thought through the end-to-end journey. And if you haven’t thought through the end-to-end journey, you will never be able to deliver the best-in-class client experience,” he warned.

Building the brand
Jackie They, general manager of The Dubs Agency and a former senior vice president of Citi, noted the necessity of brand marketing.

“When brands stop advertising, their sales often decline year-on-year, with a drop of 16% after one year and 25% after two years. This decline is especially steep for brands that were already struggling before the pause,” They said.

They said that there is opportunity for brands to stand out now, especially as most slash their marketing budgets. “Whilst other brands are pulling back on their marketing spend, this is actually your opportunity to get ahead of your competition…increasing your share of voice during a downturn can actually lead to an increase in market share,” They said.

Rolande Berger partner Laurent Doucet followed with a discussion on strategies again– this time, on scaling the use of artificial intelligence (AI).

Doucet particularly highlighted the necessity of governance and good talent for its secure deployment and to prevent inconsistent use cases of AI.

“Regulatory pressure is present, and companies need proper governance to make sense of it all. Governance isn’t a static topic but a moving target, so companies must share best practices and lessons learned,” Doucet said.

“AI strategy is about solving real-life problems, and that’s why it’s so critical,” he added. 

The track ended with a panel discussing strategies surrounding sustainability. Aurexia Singapore director Sebastian L. Sohn led a panel with Eugenia Koh, Managing Director, Global Head, Sustainable Finance, Wealth and Retail Banking, as well as executives from Citi Wealth, Zurich Insurance, and Great Eastern.

Koh noted the presence of a false dichotomy between sustainability and business outcomes. 

“The most successful conversations happen when we bring the two together. Clients want to consider both risks and opportunities from a climate perspective,” Koh said in a panel that included Janet Shum, Sustainable Investing Specialist for Asia Pacific, Citi Wealth; Vy Pham, Regional Platform Product Owner, APAC, Zurich Insurance; and Simon Goh, Head, Digital Experience Studio, Great Eastern.

Shum also reminded banks not to keep their doors closed for ideas outside of the teams.

“There are countless opportunities for individuals to incorporate sustainability into their daily work. I encourage the audience to think about how they can contribute, no matter how big or small,” she said.

Koh echoed this sentiment. “Some of the best product ideas come from colleagues outside the sustainable finance team. At the height of COVID, one of our treasury colleagues suggested offering preferential rates to businesses pivoting to healthcare needs, which made a tangible impact,” Koh said.

Pham and Goh focused on innovating insurance products to drive more sustainable options in the market.

Pham particularly noted the potential of generative AI and advanced AI to anticipate climate impacts before they happen and design innovative insurance products in advance.

Goh, meanwhile, suggested incentivizing policyholders with lower premiums for sustainable choices.