Emerging markets innovation is a prime factor where nearly 90 percent of people are aged under 30-years-old.
The same demographic also accounts disproportionately for online transactions.
According to the latest report from PwC, the majority of the two billion unbanked population reside in emerging markets, with 89 percent of payment executives in emerging markets believing that products and business models need to change to meet future customer expectations.
A new breed of mobile and FinTech innovators are disrupting the payments market with innovative customer centric business models.
According to PwC, the payments landscape in emerging markets is expected to transform on the backbone of accelerating growth in electronic payments given the advent of new and disruptive market players and alternative business models.
The growth of economic power within the emerging markets and their potential to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem, which will set the pace for markets worldwide.
The key factors shaping this transformation will be the impact of technology, shifting customer expectations, changing global demographics, the rise of e-commerce, and the growing regulatory supervision. The transformation will also be characterized by convergence across markets focusing on products and solutions and by technology and business/ operating models linked to payments, which will be global in nature and reach.
PwC’s report “Emerging Markets – Driving the Payments Transformation” looked at the dynamic nature of emerging markets, especially payments, which creates challenges that have never confronted the developed world, but also opens up opportunities for innovation and growth.
Hugh Harley, Financial Services Leader for Emerging Markets, PwC, said: “Given the large unbanked population and the growing regulatory agenda to engage these people into the financial system, emerging markets are in a unique position to drive growth in the payments industry.”
He further mentioned that “FinTech companies can work as a catalyst in the growth story, enabling these new platforms to be leveraged for the benefit of the wider populations.
Commenting on Vietnam’s payments landscape, Tran Quoc Dung, Partner, Technology Consulting Services at PwC Vietnam said: “Driven by customer needs, more and more Vietnamese banks are investing in their IT infrastructure to enable the issuance and acceptance of new payment methods and instruments.
“They are directing more resources to digital banking and exploring ways to leverage cloud computing and social media. Going forward, it’s important that they uphold an integrated, long-term approach to modernising payments”.
Cutting-edge technology will reshape the next-generation payment systems, with both FinTech and established players driving innovation. The payments ecosystem will also be redefined by regulatory interventions, which are balancing the disruption of alternative payment service providers (PSPs) with the reliability of traditional players.