A recent Motherboard article (highlighted by Chris Skinner in ‘The superpower that is China‘), reveals how 710 million Chinese people are internet users. That’s a huge slice of the 1.35 billion population, and is indicative of the progress being made in internet-related activities such as mobile payments.
Tencent’s WeChat and Alibaba’s Alipay lead the way. WeChat in particular is a messaging app at heart, but performs so many other tasks. The country’s approach to personal data may not be quite what we’ve come to expect in Western regions, but people’s general apathy towards ‘snooping’ has undoubtedly helped push China to new levels of mobile acceptance.
Mobile (and other) technology is still something we’re suspicious of. An independent research study of European SME leaders, compiled by Exact in 2015, revealed that many enterprises embrace new software technology, “but only when it is absolutely necessary to do so”. It’s an interesting point. Take social media, for example – many people use Facebook simply because their friends are on it, and fear of missing out compels them to sign up, share their data and take part. You could argue that China has successfully managed to create its own version of Facebook and has enhanced its powers to include financial benefits. This has forced the payments industry to adapt and progress (and ultimately benefit).
Here at Backbase, we’re always encouraging our friends, business partners, clients and potential customers to adapt and adopt new technology to advance financial services. We do this because we think it’s the right thing to do. While many people are suspicious of technology, we err on the side of enthusiasm; that technology will help us make products and services better, in all industries, but particularly financial services.
And it’s an exciting challenge, with lots of issues to tackle, such as real-time business payments and cash flow management, personal financial management, and insurance. Technology will influence the competitive landscape in lots of different markets over the next few years. The challenge is to stay competitive while exploring the options available to us, which is why credit unions, banks and other financial institutions should be paying attention to what’s happening in other countries.
China is showing us that, despite advances in technology and the regulatory environment, what really matters is mass adoption. People want things to be easy to use, which means the simple things such as buying a newspaper shouldn’t be hampered by being cash-only. In fact, “We’re at a tipping point now,” said Rhia Liu, an analyst with China Tech Insights, which conducts research for Tencent. “The younger generation has never read a physical newspaper, and similarly in the future they’ll never use cash.”
According to the Riksbank, in 2015 cash transactions made up barely 2% of the value of all payments made in Sweden – a figure some see dropping to 0.5% by 2020. In shops, cash is now used for barely 20% of transactions, half the number five years ago and way below the global average of 75%.
With advances in mobile technology occurring faster than we can bake a cake, it really is encouraging to see so many fintech entrepreneurs taking advantage of the changing landscape. We’re so happy to be a part of this exciting movement, and look forward to playing our part in the development of financial change for many years to come.
Photo by Li Yang on Unsplash