Well-known brands venturing into paytech to mine data?

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  • Ride-hailing app Grab is open about its plans on using customer data to create alternative credit ratings
  • The payments industry is evolving into a data mining sector
  • This kind of development is good news, according to observers, because it enables companies to serve customers better

 

Google just got its financial services license in Ireland and was granted the same in Lithuania a month before. Social networking giant Facebook is rumoured to be working on its own remittance service as well, and the blockchain-based platform will allow Facebook users to transfer money internationally right on the website or the app.

While these developments are considered good news for individuals who want to send money to friends and family without worrying about expensive overseas transfer rates, others are concerned about data mining. Fintech and data go hand in hand for the former to be successful, experts note.

It’s not just Google and Facebook who are venturing into the paytech market, based on recent reports. In fact, the two giants are some of the late comers. In October 2018, ride-hailing service Grab is now one of the biggest non-bank financial firms in Southeast Asia. It offers payments services and microloans. According to a Tech in Asia report, the company handles over a billion financial transactions per annum. Alibaba and Amazon have done the same as well.

It is noted that the payments market and the remittance market are worth billions of dollars, but the main appeal of these markets is data mining. Getting data through fintechs will help companies see what people spend money on, pointing these companies to potential ventures. Data mining will also help them understand the needs and wants of consumers, making it possible for brands to either improve on existing services or develop new products.

The biggest concern, however, is data being sold to third parties. Observers say that this can be dangerous, but there is some good news. Reliable money transfer services are already in place and they are still likely to dominate the market over the newbies in the paytech world.

It is no secret though that fintech is evolving into a data industry. According to Yuan Qi, Ant Financial’s VP and chief data scientist, the word “fintech” no longer describes Alibaba’s Ant Financial. He notes that calling it a “techfin” firm is more appropriate. Investors seem to agree, based on reports, as the firm enjoyed 65% growth in recent fiscal years.

Experts note though that the real growth in the industry will come from combining other types of data with financial information. Grab, for example, can paint a rather vivid picture of what their customers do, what their schedules are, and what they spend their money on. In many ways, this is a good thing, observers say because it means that brands will be able to understand their customers better which can result in better services.

Anthony Tan, Grab’s CEO has talked about this openly, noting that it will use information collected through their payments and other fintech products to create alternative credit scores.

While this approach is deemed exciting, observers warn that there will be hurdles. Data analysis is complex and if the data they collect is not analysed effectively, it would be worthless. Insights from this data, if correct, will only be useful if put to use, experts add.

Find out more about the developments in the paytech market by following our magazine.

 


Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO at FXcompared and has numerous years of experience in the international finance world, especially within the media, technology and property sectors. Daniel is passionate… Read more

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