The FinTech industry represents another type of digital disruption that could have a direct impact on treasury centre activities. A FinTech company is one that utilises digital technologies in order to provide customers with financial services (BNY Mellon 2015). This industry is quickly changing the way people expect to buy and receive goods, and has the potential to dramatically change the role and responsibilities of a treasury centre. It changes the way money can be collected from customers, totally changing the retail market. For instance, it enables real-time transactions and allows users to not have to go directly through a bank. Disintermediation is FinTech’s most powerful weapon against banks, and it is a common trend in the various industries, as seen with Tesla’s centralised distribution strategy. First of all, it was important to study look at the business case of the FinTech industry for Asia as a whole, especially South East Asia, as there are many contributing factors that could lead to a rapid applications to a wide number of industries. The four main factors to consider are the following: geographic fragmentation, a growing consumer class, the large proportion of unbanked population, and the high mobile penetration rates.
First of all, the factor of geographic fragmentation refers to the large differences between the countries that make up the APAC region. First of all, each country has its own language, and often a few more regional dialects. This cultural difference is not negligible when dealing with the financial institutions in each country, which often require documents to be translated by a certified translator into their own language. Secondly, geographic fragmentation also refers to the large number of different currencies across the region. This means that the population that travels across various countries of the region will lose money on transaction fees each time he exchanges one currency for another. The FinTech industry could help clients to avoid these problems. First of all, the language of most of these applications is English, and some offer you the possibility to hold multiple wallets in various currencies at the same time, others also allow you to trade currencies at much more attractive rates than those provided by banks.
One of the most obvious factors to look at, when looking at the possible impacts of the FinTech industry, is the mobile penetration rates. Indeed, in the SEA region, the average inhabitant has an average of 1.19 mobile phones, which is significantly higher than the global average of 0.98. The average Singaporean citizen has on average just over 1.5 phones (Vanzyl, 2015). When comparing these figures with those of unbanked population in the region, it is fair to assume that the access to digital financial technologies is better than the access to banks. However, one of the remaining concerns is that a majority of these services require the user to have a credit card. This concern is not extremely relevant in Daimler’s case, as it is fair to assume that their customers are banked, and have a credit card if they have the financial means to buy their products or services.
Furthermore the case for Singapore to become a business-hub for the industry is relatively easy to argue, although its main rivals are Australia and Hong Kong in the region. The concentration of expertise and financial startups in Singapore would represent a great opportunity for the local treasury centre to lead Daimler AG in terms of cash collections and FX hedging. The Digital Evolution Index (DEI) is an index developed by MasterCard and the Fletcher School (Chakravorti et al., 2014). It can be seen that Singapore is among the highest scoring across the four dimensions that make up the DEI and has been one of the fastest growers from 2008 to 2013. These four drivers are: demand conditions, supply conditions, institutional environment, and innovation & change (Chakravorti et al., 2014). The model shows that Singapore is placed in the ‘Stand Out’ category, indicating that the country has displayed high levels of digital development historically, and are likely to maintain the same levels (Chakravorti et al., 2014).
The future of the various industries does not only revolve around innovations in terms or performance, but rather in the ways to finance such a product, or relating to changes in ownership (i.e. Uber user rather than car owner), or in the way the car is used. Through both vertical and horizontal integration, firms can build up their capabilities to stay on track with the current developments that the digital disruption is bringing along. These changes will mostly impact the financial service departments of organisations, as they are the ones required to provide financial instruments to their customers, and also mobility services. Although most of the contributing factors leading to the evolution of the FinTech industry do not seem to be of direct interest to Singapore, it is essential to take this disruption into account because customers adhering to such services will expect services of the same or higher standards from the large corporations.
BNY Mellon, October 2015. Innovation in Payments: The Future is Fintech. https://www.bnymellon.com/_global-assets/pdf/our-thinking/innovation-in- payments-the- future-is-fintech.pdf
Chakravorti, Chatuverdi & Tunnard. September 2014. Digital Planet: Readying for the Rise of the e-Consumer – A report on the state and trajectory of global digital evolution. http://fletcher.tufts.edu/eBiz/fletcher.tufts.edu/~/media/Fletcher/Microsites/Planet%20eBiz/EBIZ_DigitalPlanet_FINAL.pdf
Choudhury, Saheli Roy. CNBC. The Next Big Opportunity in FinTech is Here. May 19 th 2016. http://www.fintech.finance/news/the-fin- ternet-of- things-how- iot-affects- financial-services/
Vanzyl, Adrian. June 5 th 2015. eCommerce in Southeast Asia. Ardent Capital, http://fr.slideshare.net/JaredPolites/e-commerce- in-southeast- asia-june- 2015
