May 1, 2017 By FTI Consulting
Have you ever experienced the panic that comes from reaching into your pocket and not getting a feel of your wallet? Well, the good news if you live in China’s major cities is that wallets are fast becoming obsolete so long as you’ve got your mobile phone. From one-person street vendors to large supermarket chains, many businesses in China are now accepting mobile payments through a simple scan of a QR code.
A new study conducted by the UN-based Better Than Cash Alliance shows a 20-fold increase in the size of China’s digital payments market in the four years from 2012 to 2016. This is almost solely owing to Alibaba’s Alipay and Tencent’s WeChat Pay, the two companies that dominate the market, through which approximately CNY 20 trillion (USD 2.9 trillion) in payments were made in 2016.
Digital payments, both online and mobile, now account for over 17 percent of all retail transactions in China. The share taken by cash payments is resultantly shrinking, accounting for just 40 percent of all transactions in China in 2015. This is lower than the equivalent figure in the UK, which stood at 45 percent even one year later in 2016. China has fast become the global frontrunner in the sector. According to the Financial Times, China’s digital payments market is about 50 times greater in size than that of the US.
China’s rapid adoption of digital payments can be somewhat explained by the low credit card penetration rate in the country as well as the cumbersome processes often required to make online payments through debit cards. Issuing and acquiring banks have lost significant income as these third-party mobile payment services bypass UnionPay, the protected state-owned monolith that monopolises China’s settlement network. The banks have also lost critical payment and consumption data that would help them develop competitive products and services. Traditional banks and retailers are therefore having to re-think their approaches in China, with many looking to optimise their own digital offerings and many exploring partnerships with third-party providers to stay competitive in the supply chain.
Google recently unveiled its Asia Pacific Financial Dashboard, a tool for financial institutions to monitor the changing dynamics of search trends across finance categories. The dashboard includes data for 10 countries and regions: Australia, Hong Kong, Indonesia, India, Japan, Malaysia, Singapore, Philippines, Thailand and Vietnam. Google currently provides six insights. These include ‘share of search volume’, ‘share of brand searches’ and ‘top 10 questions asked via smartphones’.
Results from the tool show that home loans emerged as the top search term in Hong Kong over the past two years, having peaked in the second quarter of 2016. This trend is consistent with property transaction data published by the Hong Kong Land Registry. The data also reveals that users in Hong Kong and Singapore show more interest in local banks despite the fierce competition from international players, with HSBC and Hang Seng Bank drawing the highest search volumes in Hong Kong. Another obvious topic of interest to the search engine’s users in Hong Kong relates to insurance policies, which occupies three of the top 10 queries.
The Internet has opened up new and unprecedented research options for consumers, who have been further empowered by the recent growth of comparison sites. In an age of information overload, it is crucial for businesses to stay ahead of changing consumer behaviours in order to deliver tailored information to target audiences. Not only should companies ensure that their business information is easily accessible online, they should ensure that the information effectively answers the questions that consumers are most frequently asking. Through this new Google tool, businesses can discover the right long-tail keywords in order to capitalise on searches that are highly convertible to sales.