The revolution that a mobile phone can bring especially to the emerging markets was pretty much clear when it gained wide recognition in the late 1980s. At that time, it was assessed that a mobile communication system requires approximately 18 months for its set up, which was lesser as compared to the 20+ years required for establishing a landline network. In addition, the ability of mobile networks to start operating after their establishment in no time boosted its popularity even further.
Many tech geniuses like Bill Gates have emphasized the role of connectivity in speeding up the economic growth of the nations. Various countries of the world have witnessed huge developments in various industries all thanks to wireless technology. Furthermore, the financial sector has witnessed a drastic change in the past few years mostly due to the advancements in mobile communication technology.
Matthew Ledvina is among the people who work in the Fintech industry and keeps a close eye on all its trends and developments. In fact, he is the managing director of a London-based Fintech company and keeps himself updated with all the fintech related happenings all around the globe.
Millennials Boosting the Fintech in Emerging Markets
Looking at one of the biggest emerging market in the world, China, its mobile payments have hit a massive $5.5 trillion mark for the year of 2016. Moreover, couple of years back, it was estimated that China alone will be responsible for the 50% of the world’s total digital payments in the year of 2017 and the prediction came to be completely true. But the main question that baffles the mind of many is what could be the possible reason behind such a massive shift towards mobile banking? Is its fintech or is it something else? To be honest, the role of fintech is imperative when it comes to online and mobile payments, but what made digital banking an enormous success are the Millennials who readily accepted the digital modes of banking transactions as a better alternative to the traditional methods.
Indeed, Millennials were the first ones to adopt cashless transactions and the other generations followed them soon after. Talking about China, the major portion of its population comprises of Millennials and this is the primary reason behind the country’s transformation from a cash-dependent country to a global mobile payments leader. Moreover, according to some sources, the Millennials are responsible for 75% of all the mobile transactions that happen within China. Factually speaking, the number of Millennials residing in China is greater than the whole US population.
Many financial service providers in China reported that the large portion of their daily active users is Millennials who were born in between the 1980s and mid-1990s. Representatives of Alibaba’s financial division, Ant Financial, stated during an interview that the company focus on the demands and requirements of the young generation and design their products and services accordingly. According to one of China’s Fintech analytic, people use financial technologies not as a mean to manage their finances but as an integral part of their lives. It is due to such popularity that the fintech is witnessing rapid developments.
India, which is another Asian country, the Millennials are widely approving digital technologies to accomplish a wide variety of financial transactions ranging from food payments to taxi fares. When Google launched its mobile payments service Tez in the country, it just took 4 months to process the same number of transactions as the leading banks of the country were processing in the same duration. According to a report by the RBI (Reserve bank of India), the Unified Payments Interface (UPI) that allow service providers and retailers to get payments directly to their bank, recorded transactions in February 2018 that were almost half the value of all the credit and debit card transactions happened in the same month.
Fintech in Other Emerging Countries
According to a study, almost 90% of the individuals who are currently under the age of 30 are living in emerging countries. Consequently, the scope of further development and adoption of fintech is very large. Some countries that share almost the same demographics as that of India and China include Brazil, Malaysia, South Africa, and Turkey. The financial markets of these countries are already utilizing fintech and the trend of digital banking will continue to grow further in the future.
Talking about Southeast Asia, already 90% of people in Southeast Asia have access to the internet via Smartphones. It is due to the aforesaid fact that the e-commerce market in Southeast Asia alone is estimated to hit $88 million by the year 2025, which will be facilitated by the developments in the fintech industry.
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