How Platforms & APIs are changing the way that 3 billion people bank

1. How Platforms & APIs are changing the way
that 3 billion people bank
April 2019
Zennon Kapron, Kapronasia

2. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
Agenda
A massive shift to Digital
Multiple geographies across Asia are going through a large shift to mobile payments as e-commerce,
financial inclusion and shifting millennial demographics push a change towards digital payments for both
online and off-line transactions.
Using payments as the infrastructure, but platforms & data to drive revenue
Although fees from consumers and businesses for most forms of payments (beyond cash and cheques)
typically generate additional revenue for banks and 3rd party institutions, the future value will come from
the underlying transactional data.
The Need for APIs
As fintechs and banks move away from basic services, APIs are increasingly the key tool that all the
ecosystem players will be relying on to provide drive revenue and provide new products and services to
the community.

4. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
32,211
49
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
China U.S.
Total Mobile Payment amount in 2017 (US$ billion)
China Laps the U.S. in Mobile Payments

5. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
124 128 137 144 153 161 170 180 190 201 212
80 84 88 94 101 109 116 124 132 141 151
30 34 37 41 45 50 55 61 67
73
80
29 24 29 39
56
71
91
116
150
193
251
23 31
35
38
45
52
61
73
87
106
131
20 32
35
37
39
40
42
45
47
49
52
-
100
200
300
400
500
600
700
800
900
2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E
Number of Worldwide Non-Cash Transactions by Region
(Billions)
North America Europe (including Eurozone) Mature Asia-Pacific Emerging Asia Latin America CEMEA
Payments Landscape – Global Non-Cash Market Size
Payments have picked up after the global financial crisis as non-cash
transactions become an increasingly important part of the macro-economy.
Source: Capgemini Financial Service Analysis, 2018; ECB Statistical Warehouse Data, 2017; Bank for International Settlements Red
Book, 2017; Country’s Central Bank Annual Reports, 2017

6. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
30 34 37 41 45 50 55 61 67 73 8029 24 29
39
56
71
91
116
150
193
251
-
50
100
150
200
250
300
350
2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E
Number of Asia Non-Cash Transactions
(Billions)
Mature Asia-Pacific Emerging Asia
Payments Landscape – Asia Non-Cash Market Size
Asia as a whole has continued to grow, but payments in “emerging Asia”
including India, China and parts of SEA grew at much faster rate.
Source: Capgemini Financial Service Analysis, 2018; ECB Statistical Warehouse Data, 2017; Bank for International Settlements Red
Book, 2017; Country’s Central Bank Annual Reports, 2017

7. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
6%
11%
22%
39%
57%
68%
71% 72% 72% 73% 73%
8%
13%
19%
28%
37%
45%
50%
55%
59%
63%
66%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Smartphone as % of all phones in
China vs Globally
Smartphone as % of all phones in China
Smartphone as % of all phones globally
The Rise of the Smartphone
Rapid adoption of smartphones in Asia has driven the growth of mobile
payments.
374.9
73.2 70.3
47.9 36.4
51.2
30.2 27.7 26.8 18.4
28% 27%
55%
45%
38%
68%
44%
14% 16%
58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
50
100
150
200
250
300
350
400
Rising number of smartphone users in
Asia (ex. China)
Smartphone users by Sep 2018 (million)
Smartphone Penetration

8. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
QR code, QR code, & QR code…
News about QR code everywhere, not just about Alipay and WeChat Pay in
China, it is accepted globally.
For the iphone uesers, Apple has
added native QR code scanning to
the Camera app since iOS 11.
Google is working on using QR
codes to allow users to send peer-
to-peer payments.
Besides log onto the desktop
version, Whatsapp also enables
payments and supports QR code.
More developments are on the way.

9. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
Merchant vs Customer Presented QR
Merchant presented and Customer presented QR codes are adopted depending
on needs.

10. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
Why QR Code Payment?
Convenience is the key to choosing QR code payment.
Secure
Customer-presented
QR code payment are
highly secure.
Fast
QR code payment is
faster than traditional
payment channels,
especially for cross-
border payments and
transactions between
different banks.
Low Cost
QR code payment
fee is less than
other channels such
as bankcard.
Easy to use
Low hardware and
maintenance requirements
for both merchants and
consumers. The payment
methods are also straight
forward to learn.
Promotion
Payment firms and merchants
provide discounts to promote
QR code payment
好酷！

11. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
Rise of the Platforms
WeChat’s Wallet
packs a punch.
Others are catching
up quickly.

12. kapron
ASIA
Payment provides the infrastructure for other products
1985 2002 2004 2008 2011 2013 2014 2015 2016 2017 2018
Payment
1st Credit
Card
1st
Clearing
Institution
1st Third
Party
Payment
1st Mobile
Payment
App
Alternative
payment
license;
QR Code
Payment
WeChat
Wallet
Wanglian
Lending
Ali Internet
Small Loan
Consume
r finance
Huabei
Wealth
Management
Yuebao,
Alipay
WMP
WeChat
WMP
Insurance
Internet
Insurance
– Zhong’an
Internet
Banking
Webank
(Tencent)
Mybank
(Alibaba)
Credit
8 trial
companies;
Sesame
credit
Baihang
zhengxin

13. Relationship Shifting Away from Providers
5/25/2019 13
Money
Market
Equity
Fixed
Income
Time
Deposits
Insurance
Investor Platform Financial Institution Product

14. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
93
142
201
312
451
547
645
744
835
985
395 440 481 517
583
152
205
263
318
402
0
200
400
600
800
1000
1200
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2020e 2015 2016 2017 2018 2020e
Total Potential Card Fees
Card Fees
Potential Card Fees lost to Online / Mobile
China’s banks lost RMB 318 billion (US$47 billion) in card fees in 2018
*assumes 0.78% transaction fee)
Source: Kapronasia Analysis, People’s Bank of China
Total non-cash potential
merchant fees (RMB billion)
Fees lost to
Internet / Mobile payments
(RMB billion)
Transaction
fee
lost to 3rd
party players
Remaining
transaction
fee

15. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
So much data, so little time…
The ability of platforms to capture and utilize data enables a new view of the
customer that traditional financial institutions would struggle to match.

16. Just In
Time
Lending
5
Situational
Finance
1
Payments
3
Credit
Scoring
2
Wealth
Management
4

17. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
Situational Finance
Leveraging that trove of data, platforms are able to provide ‘situational finance’:
the right product at the right time to the right person.
Social
Commercial
Shopping
Finance
Commercial
Finance
ShoppingSocial

20. kapron
ASIA ©2019 Kapronasia Singapore Ltd. Pte.
Driving the API Need
Fintechs /
Open
Banking
Virtual
Banks
Data
New Customers

21. Conclusions
• Although fintech is a global discussion, it is an Asian reality
• Digital payments are changing the way that nearly 4 billion people will handle their financial
lives driven by smartphone adoption
• You may not understand Instagram, but you better understand Instagram
• The business model of fintech is changing: fees => services as fintechs are leveraging
payments traffic and and mining data to create value
• Technology is important, but not as much as a strong business model.
• As virtual banks, open banking initiatives, and fintech competition increases, APIs will be a
larger part of the story.

22. Q&A
Visit www.kapronasia.com or send us an email:
research@kapronasia.com
Twitter: @kapronasia
To download the slides:
https://landing.kapronasia.com/apidays