Digital transformation and long-term evolution (LTE) have something in common: both terms lack any sense of urgency in arriving at the end outcome. Who would rush the process of replacing legacy infrastructure if the transformation to digital can, and should, happen over a period of time? Growth in new business models and innovation has been undoubtedly slow as companies and countries try to align with a moving target in regards to what is needed to act and react in order to succeed. Variability in the stages of digital transformation would lessen if the industry had a shared vision. The case with LTE has been similar. It has been evolving for quite some time — first to LTE Advanced, and then to LTE Advanced Pro – and only recently has there been talk of evolution to 5G. LTE is still evolving so some parts of the world may not see 5G for a while.

Along comes the COVID-19 pandemic in 2020, a sudden disruption, and there is a sudden change. Digital transformation and 5G are now part of our new normal, including new behavior, needs and preferences. It cannot be disputed that COVID-19 has triggered a change in the way we do things. It has also brought to light that our assumptions about what our people and our industries need may have to be revisited. While most of Asia-Pacific was under lockdown and indoors in the first half of 2020, digital concepts were tested to ensure that we continue our daily life in the new normal as effective as possible.  New digital concepts, such as telehealth applications, were put in place to meet critical needs. COVID-19 has not only disrupted our lives but has triggered the urgent need to enhance and upgrade digital infrastructure. It has accelerated the use of technology and transforms the world as we know it.

Although the growth projection for Fintech does not augur well due to COVID-19, we still see some companies thrive in this challenging environment. The companies that have grown within the remittance market as a result of COVID-19 are interesting case studies. As the remittance market is plagued by high fees due to the heavy use of intermediaries and high capital outlay placed within banks, digital innovation seeks to offer new business models that can reduce fees and expand the market. Digital remittance in the Asia-Pacific region is expected to increase by 24.8% YoY despite a decline of 18.8% YoY in global remittance in 2020. Pre-COVID-19, remittance players that depended heavily on physical infrastructure, e.g., Western Union, experienced lower remittance turnover rates than players that offer multiple digital channels, e.g., Euronet and Merchantrade.

COVID-19 has accelerated digital remittance penetration, with numbers already surpassing 2020 forecasts by 10%-55% in April 2020. The figures are particularly staggering for Merchantrade, a comprehensive money services business player and e-money issuer, that offers remittance, wholesale, retail and digital currencies as well as e-wallet with prepaid cards in Malaysia and Singapore. By March 2020, Merchantrade’s branches in Malaysia saw only about 20%[1] of the transactions done in the previous corresponding period or March 2019, i.e., the biggest contraction since it began operations in 2011. In April 2020, there were no branch transactions because they were closed due to the lockdown but it was at this point that eRemit, which is Merchantrade’s online remittance service, began a rapid trajectory towards achieving a 100% increase in registrations and transactions by July 2020.

COVID-19 has highlighted the importance of building what we needed instead of just sticking to what we have done in the past. Some of the critical success factors that led to Merchantrade’s outstanding results in 2020 include how diversified and synergistic its businesses are, the strength of its partnerships, and the scalability of solutions that meet the needs of the people that it serves. Merchantrade began its digital expansion in 2016 and now has a digital remittance solution and a digital platform that connects most of its regional partner banks. It also has a growing ecosystem of related digital solutions built through partnerships to help people within their joint target segments. Merchantrade aims to emerge even stronger post-COVID-19. It remains open to partnerships with other Fintech, banks and technology companies to offer scalable, leading-edge solutions.

Features of Merchantrade are on par with other antifragile companies that are doing well during the COVID-19 pandemic. It is the capability of such companies to thrive as a result of disruption that Nassim Taleb, author and risk analyst, refers to as antifragility. Although I have used the example of the remittance market in this article, similar analyses of antifragility can be applied across other industries. Therefore, it is critical to understand antifragility and its role in driving a digital future. There is shifting emphasis from showcasing technology to leveraging technology to develop beneficial use cases that can address different needs. The build-it-and-they-will-come approach is no longer applicable in today’s world; it is acting for the greater cause and longer-term sustainability that will drive tomorrow’s world. The reality is clear: the future is digital. It is time to lessen the dependence on the physical world, prioritize capacity over efficiency, and leverage human adaptability. Companies and countries should become antifragile.

COVID-19 has taught us that it is not enough to be resilient. We need to not only survive but also continue to grow and thrive in challenging environments. Companies and countries must undergo rapid changes to emerge stronger with robust value propositions that can withstand an uncertain future.

[1] https://www.theedgemarkets.com/article/payments-innovations-remittance-services-driving-industry-growth

About Quah Mei Lee

Quah Mei LeeQuah Mei Lee is an Associate Director with Frost & Sullivan’s ICT practice where she leads Mobile & Wireless Research for Asia-Pacific. Her area of expertise lies in telecoms and payments strategy with a specific interest in 5G and payments.

Quah Mei LeeQuah Mei Lee

Quah Mei Lee is an Associate Director with Frost & Sullivan’s ICT practice where she leads Mobile & Wireless Research for Asia-Pacific. Her area of expertise lies in telecoms and payments strategy with a specific interest in 5G and payments.

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