Kashmi, a social payments app based in Singapore, has expanded its remit by launching a ‘360 degree digital’ banking service, aimed at younger people in south-east Asia.
The company decided to go down the route of setting up a digital banking service after it realised that the millennial audience it was attracting with its payments app, particularly those without ease of access to physical banks, were being underserved by its traditional counterparts.
Speaking to The Drum, founder Rakhil Fernando said his company decided to target people under the age of 35 because they are a “a group of individuals whose spending power is increasing exponentially but who are increasingly disengaged with the banking system. Why? Because attempts by banks to go digital are floundering. They do not target specific demographics in the design and delivery of their products and, therefore, young people are gravitating away from traditional banking, which they view as time consuming, complicated and cumbersome. They prefer, more and more, to use third party alternatives.”
The new service will become an extension of the current one from the first quarter of 2017, when it will offer the option to carry out transactions such as bill pay, card transfers, ATM withdrawals and peer-to-peer transactions, as well as new products such as term deposits, investments and loans.
A key differentiator in the service will be the inclusion of financial literacy tools, which are automated tools for budgeting, savings, and group payments that hope to encourage a more responsible management of money.
The aim for Kashmi is to expand into the markets in south-east Asia that are digitally engaged, such as The Philippines, Sri Lanka, Indonesia and Cambodia.
There will be a key difference in how the app or bank is used, depending on where the user is based in south-east Asia, with some developed markets like Singapore having a majority of ‘banked’ youth but less so in developing markets like Indonesia.
“In Singapore, users will be able to aggregate all information from their banks and get a useful, dynamic overview of their spending, saving and budgeting. In addition, they can use the Kashmi e-wallet to exchange money with friends and groups of friends easier than they ever have before,” explained Fernando.
“If you look at the broader south-east Asian region, the real disruption will come because our product will bring mobile financial services to unbanked and under-banked youths in areas where smartphones are readily available and heavily utilized, but where bank penetration is still very low. The disruption lies in bringing financial services to these individuals, engaging them with financial technology and ultimately bolstering the financial education and health of our users,” he added.
Completely digitising the process isn’t smooth sailing, however, particularly in the markets where regulatory issues and face-to-face layers are needed to set up certain parts of the process. Fernando said it’s working with partner banks to use existing digital services, as well as smooth out the physical aspects.
“Completely abandoning the physical aspect is not that easy since, in certain countries, regulations require physical checks before bank accounts are set up. In these areas we are looking at a number of models that will fulfill regulatory requirements in the most customer-friendly way possible – for example, this could mean that our representatives travel to our customers where physical checks are needed or we would create social, hang-out spots where Kashmi representatives can meet with customers if and when needed,” he added.
However, this won’t be an issue in SIngapore, where it will mainly rely on people’s existing bank accounts, rather than setting these up.