Regional Connectivity: Payments and the Digital Economy

So we all know that ASEAN is building a single-digit digital market on top of ten different currencies and nine different real-time payment systems and a dozen different regulatory philosophies. So Winnie, in reality, what do you think is still the hardest part of the multinational corporations? Yes, when we talk about a region, we're still talking about multiple countries and jurisdictions, so there are different rules and regulations still applies, right? Even with the evolution of the clearing system, payment system today, we can achieve real-time on the real-time basis. When a transaction, you know, moving from one country to another, we still, the corporate Corporate treasurers, multinational corporate still face this. Similar challenges of, you know, like the visibility of the, you know, the liquidity, the balances, and also the accessibility of the balances, and then also in compliance with all the rules and regulations when it comes to delivering the payment to the end beneficiaries. And then with the increasing fraud happening in this part of the world, the faster delivery of a payment actually... poses a challenge of detecting and stop some of the you know fraudulent transactions so the corporate treasurers in this part of the world continue to face the challenge what's more important is not just about speed of delivering the payments that's right it's about security the trust the resiliency and the control of the end-to-end process yeah so uh these are not all frictions but challenges right so real few other builders you were the builder you spent seven Seven years. With DBS building the ecosystem for the payments. So what kind of frictions and challenges, Winnie just mentioned, are you solving right now? I mean, along the context of what Winnie mentioned in terms of trust and security, I mean, those have always been the issues. I mean, in general, I think banks do what is necessary in terms of providing the authentication, the support, and dispute resolution wherever it's required. So I think that is there in terms of how we handle it. I think the real disputes, real challenges that we see is, you know, corporates have spent so many years trying to build their networks around the region in terms of trying to make payments to all these countries. So I'm keeping the context of payments. But it's just not as straightforward as that, that things have changed from payments to supply chain and they know how things go into financing and supply chain and stuff like that. So original invoice amounts and later amounts are very different. So things have got a lot more fragmented. And now with the diversification of supply chains across ASEAN and China, The focus around how we do some of these things have changed quite a lot. So the complexity is the payment itself is a pretty straightforward thing. It's not so difficult. I think there are so many people who can provide this kind of supportive services. The challenge is in terms of how you remit certain type of transactions, how you attach the actual goods to the actual payments, stuff like that. Those are real frictions today. And even look in most parts of Asia, 30 to 40% of the volumes today are flowing into China. And not all the Chinese banks are in ASEAN, right? There are so many banks in China. But there are so many banks in China are still doing business in ASEAN. So how do they get their money? So there are a lot of corporates here that still have the challenge of remitting funds into some of these Chinese banks, so banks like DBS, even Bank of America, being a global US dollar player. You know they have all these flows and solutions in place but there are frictions in this process because it is attached to documents, it is attached to all the regulations like what was mentioned earlier. So we do cater for these things as much as we can. We solution the clients accordingly to make sure that's a much more streamlined process. So, at the end of the day, it comes down to working capital management, and we try to see what sort of product and solution set that fits them well. So, what you're saying is that it's actually not really a tech problem, it's a structural problem that exists in the real world, right? So, payment rails have been being built, and solution sets have been being built. We've been talking about cross-border payments, improvements for the last 20 years. The nature of it is still the same. It's the complexity of the client, how they operate, and how banks keep up with it is the ultimate challenge. John, you wrote a book, co-authored a book, The Digital Currency Revolution, which is very much relevant to the topic today. So as the author, what's your takeaway for our audience today? Especially why you think it's either reinforced or disrupted the monetary system when we talk about digital money? Yes, so I co-authored the Digital Currency Revolution with Dr. Mark Mobius, who I had the honor to work with for the past six years and co-founded our most recent hedge fund. And, you know, what we were seeing is the rise of these digital wallet providers as a competition with central banks as a way to provide different ways for peer-to-peer transactions and cross-border payments. And we started off looking at WeChat and Alipay in China and saw how these two companies came to dominate the market. But in China, it's a little bit more simple because there's one country, one currency, one regulator. As we look towards ASEAN countries now and how they're being interconnected by the payment rails created by the central banks and the governments here, it's a little bit more complex because there's 10 plus countries, many different currencies, and a lot of hoops to jump through. But what we're seeing is this movement towards digital wallet providers because there are these super apps that offer so many different services outside just peer-to-peer transactions. They're offering credit lending to traditionally underserved, underbanked populations that may not have easy access to traditional brick-and-mortar banks. And there's still very low penetration in some ASEAN countries. I think even in the Philippines, it's near 50% of the population is banked, and that's including digital wallet providers. So there's still a lot more room to grow for these digital wallets and for these banks throughout ASEAN, but it's how to integrate and connect these countries with ease of FX conversion and cross-border payment solutions. Okay, so there's an inevitable question of AI. AI is having a huge impact on mathematics, which is very foundational to the financial sector as well, finding patterns, predict the risk distribution, for example, so on and so forth. So Winnie, what do you think is the biggest change AI is having on the corporate treasury these days? Sure I haven't had any day waking up without using AI as a tool for my work and from the personal level too and then I haven't had a day not talk about AI externally or internally. So for the corporate treasurers the corporate treasury function they holds a lot of data of that company right you have data from your ERP from your treasury management system you have you know data from all your banking partners platforms right the most important part about adopting or or applying AI. I think it's really important to use that as a tool to do analytics so that, you know, the corporate treasurers can make an intelligent decision and then doing a better prediction in terms of, you know, all the, you know, future actions. And then, of course, we as a bank, right, we will always come up with different solutions to help our clients to... Make their treasury function more efficient. For instance, we can provide prediction in terms of the cash flow. So the corporate treasurer can make a decision when to do the FX hedging or FX foreign exchange or when to fund certain large payout or when to do dividend payout and all that, right? That cash... Precision prediction is something easy for a bank to provide to the corporate treasurers. We also create a lot of different functions to help our client for better reconciliation using machine learning, using AI. A lot of those reconciliation can improve gradually from 70% all the way to 93%. Okay. three Percent with different languages in terms of the invoices that you know the client collected so it's important that the opportunities now is not about making the corporate treasury function doing their day-to-day job faster that's right the changing is around what the corporate treasurers spending their time on going forward that's right any more examples like also from detection something It used to be a very big challenge, but now it could actually be much easier. Yeah, so. So let's get back to payments. We see that, let's take Vietnam for example, we have ZaloPay which is basically a social app. Momo grew out of offline agent network and Telpay is built from a telecom network. So facing all those external players, what do you think the banking system is trying to fight back? I'm not sure if we are trying to fight back. Firstly, I want to clarify that DBS Bank in Vietnam doesn't do retail. So I'll share with you my views on this in the perspective of how commercial banks would probably look at it. A couple of stats, though. First of all, for a population just above 100 million people, 89% of the country is banked, right? And the paperless volume, the cashless volume in Vietnam has gone 27 times GDP, okay? And we're talking even in the first quarter of 2026. Cashless volumes have grown about 38%. This is record-breaking. This is a very large existence. So everyone is using it, right? So what is the potential for the banks? So for the banks, it's very simple. Actually, we love this because it increases consumer flow, increases the volume in payments. Thank you. The merchants do extremely better because their volumes increase. Ultimately, it helps the commercial banks because you get the flows. Our customers actually do better in the businesses, particularly in the SME segment where the volumes are a lot more higher. So I think we don't actually look to compete. Specifically, from a wallet and real perspective, what we want is the flows. What commercial banks want is the flows. Ultimately, the flows are still with the banks. So if I ask anybody today in the room, when you put your saving in a wallet, no, the savings are still going to be with the bank. So in terms of high commercial flows and volumes, this market has got a good way to go. The only thing I would add on to your point is that At the pace it's growing, Vietnam infrastructure has to keep up, right? So it has come a long way and I think Vietnam will keep up. I think some of the hardest working people I've met is in Vietnam, okay? So I think in terms of getting up the curve, I think it's good. When it starts becoming a B2B flow, that's when the next level of challenge comes in, right? So we will see how that develops. So yeah, I don't think we compete. So, John, from the investor's point of view, On the consumer side, we have QR codes. On the corporate side, we have stablecoins. Can you comment on these techs? Are they genuine structural shifts in how the trade should get done? Or are they just workarounds until the rails get better? Yeah, so stablecoins and these digital wallets are competing with the banks in terms of these peer-to-peer transactions. But as you mentioned, the transactions aren't what drives revenue for these companies. So that's why for banks and for these digital wallets in particular, it's important to start offering higher margin products such as lending and credit. That's where we're seeing the most opportunity. When it comes to stablecoins, I think that stablecoins are really a competition with traditional banks because If you have a cross-border remittance payment from one bank to another, it can take several business days, doesn't get processed on weekends, doesn't get processed overnight, FX charges, etc. But stablecoins are virtually near instantaneous, free, operating 24-7. But they come with some risks as well. I mean, when you're investing or utilizing cryptocurrencies or stablecoins, you also become your own custodian. So that comes with your own responsibility, your own approach to security. Whereas, as you mentioned, most people would leave the majority of their savings in a bank because you trust the bank to be a custodian of your assets and to keep these assets secured, especially with the rise of AI, like you mentioned, cybersecurity risks. As you know, Binance recently even was hacked. So, it really comes down to each of these... Facilitators, stable coins, digital wallets, and banks. I believe they each provide their own different purpose. Yes, they all have the same rails to process payments, but it's more so about the products and services that you can use and that you can trust with that provider. Thanks. So it is estimated that ASEAN's digital market could actually double by year 2030. So before we wrap up, maybe one sentence each. What is the single most important payment innovation that will define ASEAN's digital economy by 2030? I think there will be many different methodologies in terms of the use of payment or assets. The most important part of the evolution is about interoperability. And then there will be different selections for the corporate treasurers to decide. Which one will be the best use for certain transactions, so that interoperability is most important. Interoperability. Of the multiple methods of delivering payments or assets. I agree with Winnie. I think interoperability is very good because the rails are advancing. Things are getting better, things are getting faster. Along with that, of course, cybersecurity and all that is a concern. I think the fact that rails are integrating in ASEAN quite fast, I think it's a very good sign because I think it improves economic integration for ASEAN very, very well. So I think that's one. The other thing is, I think what's going to really differentiate is not whether the new rails or the faster payment is going to make the difference. The difference is going to be how intelligent you get. How banks are going to get intelligent in solving client problems. Because, I mean, historically, we've been talking about it for decades now. Payment for cash and a payment for trade is always looked at it separate. Banks look at it separate. I mean, no matter how much they tell you, the departments are separate. But the reality is the customers buy them as one. And the reality now is with, like I mentioned earlier, with supply chain type solutions, the closer the integrated solution to that, the more intelligent you get in terms of proposals and AI and stuff like that it's rather advanced. What I'm really looking forward to, though, is just recently there's an announcement on VNEID, which is our digital ID for Vietnam, and SingPass. So... Connecting two digital IDs, nothing to do with payments, yeah? Connecting two digital IDs is a good start because that will connect with this and then you'll connect with MyDigital in Malaysia. So these are the things. If the digital IDs connect, then you're starting to create an ecosystem where businesses can connect much better. And because right now it's just a consumer play, you know, you go around scanning QR. So that's the kind of infrastructure, you know, building for this ecosystem. I would like to say a global solution is, of course, the best way to go, but look at it from ASEAN standpoint, right? Because waiting for the rest of the world to get in shape is going to be a different story. But for getting ASEAN in place, I think if we can get digital ID integration, clearing networks integration. And business invoices digitized, I think that would be how the future would go. Because ASEAN needs to be one integrated economy and there's so many organizations trying to make that happen. So let's see how that goes. So John, you studied the payment innovation when you were at Cornell, especially the Chinese mobile payments. So what's your takeaway for the audience today? Yeah, so we believe that by 2030, the biggest payment provider in the region will be a digital wallet. And you're seeing this throughout emerging markets, not just in ASEAN. Like I mentioned, in China, you have WeChat and Alipay are very dominant players in the country. In Brazil, for example, you have NewBank, which is using the PIX payment facilitator, which was created by the central bank. So in ASEAN, you're seeing the same thing. You're seeing the government and the regulators provide the railways and allowing private companies to utilize these railways to compete. And when you have a bunch of companies competing for market share, it's best for the consumers, it's best for the merchants that are all going to save on FX conversion, on remittance fees. Thank For many of us here today that want to purchase something even on the street from a street vendor, this FX can be done instantaneously and near free. So this is really a big deal and it really does impact the lives and businesses of SMEs within the region and small businesses in particular. you. So we see that digital wallets are really the future and looking forward to, by 2030, we believe that the biggest payment provider in the region will I will. The one of the winners that is currently competing for market share. Thank you for your thoughts and the sharing. So we're hearing that the future of finance won't be decided by Bitcoin maximalists or central banks alone, but will be by whichever model delivers speed plus trust for inclusion without sacrificing privacy and sovereignty. Actually, I would add one thing, you know, for your closing point. Tokenized deposits and stablecoins, there's two different decisions. I think in my view, tokenized deposits, I think have got a much faster rail moving forward because by design, tokenized deposits go very well with our accounting tax standards. So that is a much more easier adoption and I see that part actually going very well from a treasury solutions perspective, programmable payment perspective, it works really well. And I think it's a question of just how fast we want to get corporates to adopt. And corporates just need to understand that. But in the case of stablecoin, it's slightly different. Because a stablecoin has got a crypto behavior. So the reality of the matter is, with stablecoins, we are seeing the adoption to be a bit slower. Because one, they need to understand corporates, our regular corporates. If you're going to interview 10 customers, 9 of them will tell you, I heard of stablecoin, but they don't know what it is. They heard of stablecoin, they heard of blockchain, but they don't know what it is. Then they need to understand what is gas fee, they need to understand what are the other things which goes along with it and that comes with a big point around security and trust. So that I think has got a slower adoption but for people to understand it, for industries, institutional type force and settlements, I think it will work very well. But that's a slower climb but I think tokenized deposits, I think it's got a better future faster. Thank you. Thank you all for sharing. All right. Yeah. Thank you.