The PAYTECH Book

The New Emerging Banks and Their Role in Payments

By John Ryan

Director General, Emerging Payments Association Asia

We live in a world where payments are becoming increasingly frictionless, where spending happens with greater ease and money is being moved even more frequently. We see payment transactions rising in 2019 at a rate of 32% p.a.¹ in emerging economies in Asia. The tangible world of bricks-and-mortar institutions and physical cash is transitioning into a virtual world of digital data and tokens.

The role played by banks in this new world of payments must change. This chapter describes the drivers behind such changes, outlining them and concluding with some big questions facing the banking industry.

Traditional Retail Banks

Retail banks have been around since the 15th century, a timeframe which speaks to their reputation for security and reliability. Originally, banks were simply a repository for money. Today, the services on offer are far more comprehensive, offering a one-stop shop for all banking and payment services. Mutual or community banks have also grown organically during this time, offering more localized banking services. These “mutuals” offer cost competition in selected services, even if their offering is often limited compared to the large banks.

In the last decade, just as high street retailers have suffered at the hands of online merchants, so there has been a migration of customer banking relationships online. These days most consumers rarely visit ...