What Asia's Technology Trends Mean For The Rest Of The World - Forbes

Photographer: James Whitlow Delano/Bloomberg

What do Asia's financial technology trends mean for the U.S. and the rest of the world? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Sean Creehan, Senior Asia Analyst at the SF Fed, on Quora:

Asia is at the center of many exciting developments in financial technology and digital innovation. We’ve taken note of several promising trends.

1. Technology is supporting the inclusion of more and more people in the financial system. Whether you look at the incredible growth of China’s mobile payments (estimated at more than 50-times the value of similar payments here in the United States) or the digital delivery of hundreds of millions of new bank accounts in India, financial services are available to a larger and larger share of Asia’s population. This is a big deal as, until recently, roughly half of the estimated 2 billion unbanked people around the world lived in Asia. Inclusion not only helps individuals better save and invest for their future, it also harnesses national savings to fund future economic growth. The United States faces its own financial inclusion challenges, and we can always learn from other countries’ experience. For example, do digital financial services help people living in communities with few, if any, bank branches? Can technology lower the costs of remittances for people sending money to their ancestral home?

2. Fintech can also include more small businesses that face a credit gap. Generally speaking, small businesses around the world receive a disproportionately smaller share of credit than we’d expect given their role in the broader economy, where they represent a large share of GDP and employment. We’ve noted exciting trends in financial technology solutions for small businesses in Asia, and there’s reason to expect this innovation can spread around the world (see our recent research paper and podcast on the topic).

3. Digital payments not only make life more convenient, but also may enable more sophisticated financial services. Countries like China are leapfrogging previous payment technologies like payment cards as consumers rapidly adopt mobile payments. This is creating a wealth of new data that may support other services like lending—by enabling alternative credit scoring techniques—wealth management, or insurance.

4. Still, we need to balance the convenience of technology with protections for customer privacy and their rights to their own data. As alternative data becomes a more important part of people’s financial lives, we’ll need to confront issues ranging from privacy to the right of the consumer to control her own data. We’ve seen the Indian Supreme Court grapple with this issue as it considers the extent to which the country’s national ID system can be leveraged by financial service providers. We also see Asian policy makers and regulators thinking about the potential rise of data monopolies as powerful platforms emerge, and how we respond to that.

5. Governments and the private sector can work together to promote technological change and drive inclusive growth. The Indian government has done impressive work building what’s known as the India Stack to enable the transition to a more digital life. This includes modern payments infrastructure and a universal identification system that enables digital activity. With these rails in place, a number of companies are innovating as they compete to serve the Indian population. We see a variety of global tech giants and domestic players operating here, from India’s mobile payments leader Paytm and traditional banks to global giants like Google and Facebook. India is still extremely cash reliant, but recent developments show the importance of both deliberate public investment and private sector competition to spur innovation.

6. Old habits die hard, so be deliberate about nudging users to try something new. Japan was the first country in the world to offer mobile money: You could buy a ticket on the famous shinkansen bullet train as early as 2001, six years before the iPhone was invented, yet mobile payments never took off and the country remains highly cash dependent. Here in the United States, despite the fact that most people own mobile payment-enabled smartphones, the uptake is still limited. China has not faced this problem, in part because hundreds of millions of new users didn’t have to un-learn old habits—payment cards were never particularly popular in China. In India, we’ve seen creative efforts to nudge customers beyond their initial distrust of new mobile payments through basic techniques like small money promotions, and I could see those experiments spreading to other parts of the world. Relatedly, in introducing new technology, building trust—in the company, the product, and the customer’s own ability to use the new product—is key, as we covered on a recent podcast. This really resonated for me the first few times I used my smartphone to make payments at the grocery story. My initial hesitation was, for one, that my payment card worked, so why bother?; and, perhaps more stifling, what if I messed up and made the clerk and other customers wait as I fumbled around?

This question originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

https://ift.tt/2Ony4aD