In the wake of a two-week lockdown announced by the government, some 30 million Malaysians are now restricted to leave the comfort of their house unless necessary (P.S. going for a walk at the park does not count).

Alarmed by the government’s drastic measure to combat the COVID-19 outbreak, citizens have begun to practice social distancing. For many, this means not using cash for shopping or ordering from delivery services such as GrabFood and Foodpanda to avoid physical contact altogether.

This brings a new light on the perks of having an e-wallet installed on your smartphone. Being an avid debit card user for years, never did the writer foresee that he would one day face the need to sign up for a mobile wallet – and he is not alone in this.

In fact, Nielsen revealed that only eight per cent of Malaysians use mobile wallets for payments. Granted, there are a plethora of e-wallets in Malaysia, each offering different promotions and cashback, but they have not been able to spur widespread adoption as what we see in China, a country acclaimed for its e-wallet success.

So, why is that?

Higher bank account penetration

Historically, China has a larger unbanked population compared to Malaysia (16 per cent in China vs seven per cent in Malaysia). Accustomed to making payments with their cards, Malaysians are simply not incentivised to desert the banking system for mobile payment.

Also Read: Today’s top tech news: Ant Financial invests in Vietnamese e-wallet, Facebook acquired a five-person startup

Au contraire, due to its massive unbanked population and insufficient banking infrastructures, e-wallets offered unprecedented convenience to China’s cash-based economy.

Fragmented industry

Quite evidently, Malaysia’s e-wallet market is extremely fragmented, with more than 10 players battling for market share. This is in stark juxtaposition with China’s consolidated industry where WeChat Pay and Alipay account for more than 90 per cent of the market.

Tencent and Alibaba have been successful in creating an all-embracing ecosystem in which users pay for their food, utilities, insurance and more. Meanwhile, e-wallets in Malaysia lack usability as merchants and users alike have to choose from a dozen platforms.

Notwithstanding that, the government recognises the benefits of a digital economy – i.e. traceability of money, elimination of corruption, and effective monetary policy formulation, etc. It has also taken an active stance in encouraging Malaysians to go cashless, showcased through the introduction of e-wallet regulations as well as the central bank’s commitment to deploy a system that unifies all e-wallets under a single system.

More recently, the government launched an MYR450 million (US$104 million) programme (e-Tunai Rakyat initiative) to promote the use of Grab, Boost, and Touch ‘n Go’s e-wallet. However, up until now, policymakers’ endeavour has been lacklustre, to say the least, as the uptake of mobile wallets remains tepid. In that case, what can be done to foster the adoption of e-wallets?

Also read: The case of e-wallets: which e-payment apps do Singaporeans use the most?

Educating Malaysians

In this day and age where money laundering and pilferage are ubiquitous, the primary hurdle for e-wallet adoption remains that users associate them with debit and credit card fraud. However, the truth is all local e-wallet players are governed by the BNM and subject to data protection and security regulations.

In response, the government and market players first need to address the misconception. The population should be informed of the multi-factor authentication process, and money-back guarantee offered by e-wallet providers to ease the adoption.

Targeting the right audience

The disappointing attempt by the government to stimulate e-wallet usage could be that they failed to target the right group of people. To elaborate, under the recent e-Tunai Rakyat initiative, only Malaysians above 18 years of age who earn less than MYR100,000 (US$23,000) annually are eligible to receive the RM30 (US$6.9) in an e-wallet of their choice.

By doing so, the government has essentially omitted individuals earning more than MYR100,000 annually. Ironically, these are the people with higher disposable income, who are far more likely to be regular shoppers or spenders. They should, therefore, be part of the audience for subsequent programmes in the future.

Reaching out to the rural community

Looking at China as a reference, it is obvious that the unbanked population in rural areas have the biggest incentive to adopt e-wallets. Unfortunately, the majority of merchants and residents in Malaysia’s underdeveloped areas are unfamiliar with such technology.

To encourage the use of e-wallets, the government needs to introduce the concept to rural dwellers through workshops, billboards, word of mouth, and other forms of marketing.

 As an integral building block of a digital economy, e-wallets present a remedy to the daunting corruption issues in Malaysia. Needless to say, the country has a long road ahead in its journey towards cashlessness.

Hence, the government and citizens share equal responsibility in building a cash-free nation where business transactions are facilitated, and money laundering can be curtailed.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post. We are discussing inclusivity at work and women all of March. Share your thoughts, tips and best practices on how we can make the startup ecosystem more inclusive, gender and culture diverse.

Join our e27 Telegram group, or like the e27 Facebook page.

Image Credit: RHL Ventures

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COVID-19: It’s here. It’s real. And it’s threatening the survival of startups. In this ICE71 Mentor Series webcast, Thibaut Briere, founder of Growth Marketing Studio, shares three actionable tips for cybersecurity startups to survive the coronavirus pandemic.

Work on your brand

Tell the world what you stand for by sharing the “why” of the work you are doing. This is especially important for startups. “It links back to the values of the founders,” said Thibaut.

Be very human as a brand. Reach out to people even if it wasn’t for business. Engage your customers, partners, suppliers, and employees. Thibaut said, “You could ask how the coronavirus situation has affected your contacts.”

Communication builds trust and top of mind recall that will pay dividends later. So get on the phone or connect with people through different channels like Slack and WhatsApp.

The post 3 things cybersecurity startups can do to reinvent business amid COVID-19 appeared first on e27.

Globally, the banking and financial services industry is undergoing a dramatic transformation, as more and more countries adopt digital banking practices and new players in the market launch a range of exciting, cloud-based banking products.

Somewhat surprisingly Japan, renowned for a lifestyle that revolves around high-tech innovation, has to date not joined the digital banking revolution that is occurring in many other countries across the Asia-Pacific region and Europe.

The reason for this is twofold: firstly, Japan remains a largely cash-based society, and secondly, traditional legacy Japanese banking systems are relatively antiquated. 

Change is on the horizon however, with the Japanese regulator looking to offer digital banking licenses‘ sometime in the future’.

While there is no specified timeline for this as yet, the Japanese market is poised to capitalise on these regulatory changes that will open up the market to attract new entrants and allow existing banks to offer innovative new digital products.

This puts the Japanese financial services industry in an exciting position, with regulatory changes around the corner which will see the market completely transformed.

Also Read: Digital banking in Asia Pacific: What we can expect to happen in 2020

At Mambu, we expect to see Japan do something of a ‘fast follow’ based on the aggressive approach taken by Hong Kong, where the Hong Kong Monetary Authority (HKMA) was quick to approve and issue digital banking licenses to a range of incumbent banks as well as more ‘disruptive’ fintech.

With Japan’s track record in digital innovation in other areas, we anticipate the transition to a more cloud-based, digital banking industry will be an enormous success.

While traditionally the journey to launching new financial services products or entering new markets has been a long one, the days of lengthy and expensive core implementations are numbered, with new cloud-based banking services offering a speedy and cost-effective solution.

Rather than having to purchase, develop and maintain a collection of poorly connected systems or components, an API-enabled composable banking architecture lets institutions leverage solutions built on a flexible cloud infrastructure, completely managed and provided as a service by a trusted provider.

The right technology can give institutions the agility to constantly enhance the customer experience, streamline operations and create opportunities to diversify and differentiate. This could range from launching a digital banking spinoff to quickly launching products and testing new markets, all with the built-in ability to scale and grow.

The technology also provides a quicker time to market and the ability to create and illustrate the business value in months instead of years.

Also Read: Think like a fintech company: How banks can capitalise on the digital banking revolution

These could lead to alternative revenue streams, particularly for institutions that have achieved success utilising in-house technology but have reached a point where their ability to grow and scale is now critically limited by that same technology and internal capacity for development.   

On a global scale, financial technology has evolved to provide a vehicle that quickly responds to changing customer demands and market pressures, helping institutions navigate an ever-evolving market.

Once Japanese regulators give the green light for digital banking to proceed in Japan, those organisations that remain reluctant to change will quickly find themselves left behind by competitors and customers.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post. We are discussing inclusivity at work and women all of March. Share your thoughts, tips and best practices on how we can make the startup ecosystem more inclusive, gender and culture diverse.

Join our e27 Telegram group, or like the e27 Facebook page.

Image credit: Tianshu Liu on Unsplash

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Too often, entrepreneurs–especially inexperienced ones–take the “luxury” approach to funding, incorporating every bell and whistle into their expansion plan by trying to accomplish all goals at one time. That’s nice, but it’s usually not reality and often forces businesses to be cash strapped because of high debt repayments.

That’s why I suggest entrepreneurs take a three-pronged approach to their expansion planning. This exercise helps business people ruthlessly prioritise their needs and determine what is a must and what is frivolous.

A, and then B, and then C

Let’s say an entrepreneur believes he or she needs US$1 million to make their expansion plans a reality.

Now, write up a plan for that amount. What are the specific investments you will make? What will your cash flow look like afterward? What does your business, in general, look like?

Now do the same exercise with US$500,000. Ask yourself the same questions, as well as anything else that’s pertinent. Can you primarily accomplish the same goals with half the cash?

Finally, do the exercise one more time, this time with a loan of only US$250,000. What are the answers to the questions now? Might it be possible to do what you want to do with only a quarter of the original loan?

Also Read: 3 things cybersecurity startups can do to reinvent business amid COVID-19

And the answer is …

 

No set answer will be correct.

Perhaps your initial inclination that you need US$1 million was correct. And there’s a good chance that US$250,000 simply won’t get the job done.

But there is a decent probability that the middle option might be feasible, especially if it makes you realise that some of the more frivolous “wish list” things you’d like to do are best set aside for now. Remember, you don’t have to accomplish everything at once, and a scaled-down plan might allow you to better focus on more important things, preventing you from overextending yourself.

Of course, don’t get too stuck on exact numbers. Maybe this exercise will have you realise your plan can go ahead effectively for US$790,000 or US$615,000 or US$485,000 or any other number.

The purpose is to gain some clarity and sharpen your focus–not to mention to allow you to decide what makes you most comfortable and enables you to sleep at night. Don’t underestimate the value of that.

Also, keep in mind the time factor. The larger the loan you seek, the longer it likely will take to receive approval from a lender. The saying “time is money” always rings true, especially in this scenario. You might miss opportunities waiting for lender approval.

Remember, business tends to be more of a marathon than a sprint. You need to pace yourself in all aspects, including financing, to better your odds of finishing the race. Hopefully, this exercise helps you accomplish that.

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The article was first published on nfinitiv.

Image Credit: Austin Distel on Unsplash

Register for our next webinar: Best practices for communications during the COVID-19 crisis

The post How to determine exactly how much you need to push your business to the next level appeared first on e27.

Agaeti Ventures and Convergence Ventures, two early-stage venture capital firms in Indonesia, has formally announced their merger.

Named AC Ventures, the new entity will be managed by its partners Adrian Li, Michael Soerijadji, Donald Wihardja and Pandu Sjahrir, who represents Indies Capital.

AC Ventures’s Limited Partners include leading regional digital corporates, local Indonesian conglomerates, founders of China and US venture funds, and technology entrepreneurs, who have scaled billion dollar businesses.

Also Read: Report says COVID-19 might result in US$28B missing startup investment this year

The new VC firm will continue to invest in early-stage technology companies, with a great focus on e-commerce, digital content-enabled services, fintech, and MSME enabling technology. It plans to invest in 35 businesses in the archipelago over the next three years.

AC Ventures has a strategic alliance with Indies Capital, an alternative asset manager focusing on private credit and equity in Southeast Asia, to assist portfolio companies with later-stage capital as they scale.

Li and Sjahrir had been discussing opportunities to work closely together since 2018 when Agaeti was launched. The discussions on the merger started last year.

AC Ventures was formally established in Q3 2019 and over the course of the last six months, it completed several investments through Partners’ (LPs as well as the partners of the fund) capital.

The Jakarta-based VC firm said the prior funds will remain separate and are fully deployed. Their portfolio firms will now have access to the combined partnership to support their growth. The two VC firms have together invested in 70 startups.

“Our objective was to consolidate our resources to create a platform of exponential value that can provide significant support to our portfolio founders as they build and scale successful businesses across Indonesia, the largest market in Southeast Asia,” said Li.

“In addition, AC Ventures’s close partnership with Indies Capital enables support for the portfolio with later stage capital as the companies scale,” he added.

Sjahrir, who sits on the Board of gojek, is Chairman of Shopee Indonesia. He also represents Indies Capital in the Partnership.

He sees strong future potential for high-value creation in the country’s tech sector. “Indonesia already has an established track record of creating billion-dollar valuations for tech-enabled businesses. Given that Indonesia is forecast to be the fourth largest country in terms of GDP by 2030, we are still only at the early stages of potential future value creation through technology.”

Also Read: The global financial crisis gave birth to fintech. What will COVID-19 recession bring?

Alongside the formal merger announcement, ACV has also launched an initiative, called Leadership Talks. It is a series of talks by invitation to portfolio founders, featuring local leaders sharing their guidance on how to navigate the economic and business impact of COVID-19.

The first talk, scheduled for today, will feature Andre Soelistyo, Co-CEO of gojek, sharing his advice on how startups should be navigating the challenging times ahead.

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Disclaimer: Convergence Ventures is an investor in Optimatic Pte Ltd, the owner of e27.

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