The Asia-Pacific region in the year 2023 will be marked by unprecedented growth in intra-Asia-Pacific trade, and this flurry of activities is set to drive new levels of cross-border payments, in tandem with more cross-industry collaborations, innovative solutions, and multiple payment rails. Some of the emergent payment modes that have resulted from these developments are already viable alternatives to conventional systems like SWIFT. Direct, transparent, interoperable, and adaptable to many operating environments, all these emergent modes can potentially actualise APAC’s vision for a seamless payment system – an ambition long hindered by the disparity of payment modes preferred by the different markets in the region.
To get a sense of how APAC’s payment paradigm is shifting, Currencycloud explores three interesting trends that would impact the movement of money in 2023 and beyond.
Continued evolution of embedded finance
We believe that embedded finance will continue evolving in 2023. Unlike recent years where newcomers brought a host of innovative services to revolutionise the embedded finance market, this year will see the more established and larger players showcasing enhanced and improved versions of existing solutions to help customers raise the value of their financial service offerings.
Non-bank platforms are a prime market for embedded solutions and in 2023, these enterprises will face increasing competition. Going embedded remains a highly viable option for business growth. However, we do expect enterprises to be more strategic with their choice of implementations due to tight funding.
Pertaining to this, we expect some fintech companies to go back to basics by launching traditional financial services that complement their existing offerings. This would enable them to continue expanding their scope of offerings without disrupting existing processes or workflows. Examples include embedded payments and currency exchange, two banking essentials that are easy for retail platforms or lifestyle apps to introduce as extensions of existing services, and just as easily used by customers.
Increased accessibility of orchestration of B2B payments
In view of the immense growth expected for B2B e-commerce in the APAC region, enterprises must enhance the way they make cross-border collections and payments to drive greater efficiency, transparency, speed, and cost across their supply chain. That means broadening their money movement routes, and to integrate their internal enterprise financial systems with more payment rails.
In 2023, we expect to see payments orchestration becoming more accessible to organisations of different sizes via platform services. One way of doing this is through traditional financial institutions’ B2B offerings, such as Powerboard by Australia’s CommBank. As more of these services come online, they would enable enterprises’ accounts payable to access payments orchestration tools with greater ease.
Fintechs on the other hand, will continue to offer B2B customers the embedded finance route. Through APIs at the payment orchestration layer, organisations can quickly overcome complex issues in collections, foreign currency exchange, hedging, and of course, payment. Such implementations complement the tasks undertaken by enterprise financial management solutions, to bring about an integration with business systems that big finance departments are looking for.
Increased growth as wealthtech weighs in
Wealthtech is burgeoning in APAC and its growth will continue along two distinct routes.
The first is in wealth management, which would see more digital innovations emerging to help the growing number of High-Net-Worth-Individuals (HNWI) and family offices in the region. Specifically, wealth management platforms that offer comprehensive and integrated cross-border payments will differentiate themselves from the crowd, as their users can react faster to shifts in the investment landscape.
Another area of growth will come from investment apps and portals, particularly those offering micro and fractional investment services. These are expected to attract demographics not usually on the radar of traditional banks and investment firms, such as new, infrequent, and younger retail investors.
To get ahead in 2023, wealthtech must quickly become customer-first through digital means. Some of the improvements we can expect include:
- App and portal UI/UX becoming friendlier and more updated to customer expectations.
- Supplementary activities to improve customer engagement and loyalty like learning events, interactive forums, live streams, and more.
- Expansion of service portfolio with more asset classes, including alternatives, as well as the introduction of complementary products like insurance and savings.
With embedded finance, B2B commerce and wealthtech accelerating, the implications could change the shape of cross-border payment in the not-too-distant future. For now, with the plethora of money movement options going mainstream, 2023 is looking to be an exciting one for payments in APAC.