Prepare to go cashless or pay the price

MARKETING BRIEFING Prepare to go cashless or pay the price

One in three consumers will abandon a purchase if they cannot pay for it digitally.

With more consumers planning to drop cash and go fully digital with their payments in 2022 and in years to come, and with one in three abandoning a purchase when not given a digital payment option, small businesses really have no other way to go than shift to cashless.

Fortunately, a majority (95%) of small and medium enterprises (SMEs) are planning to accept contactless payment or some form of digital payment option in 2022, according to Visa.

For the remaining 5%, they might have no choice but to hop on to the cashless movement. “It is a matter of time for the cashless payment transaction to further penetrate into SMEs and independent retailers,” Herbert Yum, research manager at Euromonitor International, told Hong Kong Business.

According to Yum, SMEs can “either develop their platforms for their product and services to list out for consumers to choose and proceed to checkout or simply list their product and services on other e-commerce platforms,” depending on the missing pieces of their online capabilities.

“The former choice would require small and medium enterprises to invest in payment solutions or use thirdparty payment services, where the latter would reduce SMEs initial investment on such solution and result in higher cost of sales,” Yum added.

Will cash bid adieu?

Amongst the digital platforms, mobile apps are the most commonly used by Hong Kong shoppers (50%), followed by a web browser on a computer (23%), and a web browser on mobile (16%), according to Visa.

As for businesses that focus on offline channels, Yum said they could invest in point of sale (POS) systems, either through a POS device or using a mobile device as a POS terminal to receive payment. Yum cited HSBC’s mobile payment service, PayMe, as an example.

“Either way, the point of sale terminal for them to receive digital payment would be a must for them to adapt to the ongoing shift towards a cashless society. Followed by product and services listing platforms, as well as logistic capabilities for them to deliver their goods to customers,” Yum added.

PwC Risk Assurance Partner, Gary Ng, for his part, said small retailers can tap a number of Store Value Facilities (SVF) service providers in Hong Kong which offer low-cost cashless payment services. The list of these SVFs can be found on HKMA’s website: https://www. hkma.gov.hk/eng/regulatory-resources/registers/registerof-svf-licensees/.

With the growing demand for new modes of payment, will Hong Kong finally bid adieu to cash? Ng said it depends on what is being looked at.

In terms of infrastructure and customer demand, Ng said Hongkong is ready to shift to a fully cashless society.

However, that is not the case on the merchant side because, according to Ng, cash will still be used in several transactions in Hongkong, particularly amongst smaller merchants. This is backed by Visa’s Back to Business Study, which found that 16% of small businesses said they will never make the shift to digital payments only.

One of the reasons why smaller merchants are not inclined towards shifting to cashless transactions is probably because of the fees that come along with implementing electronic payments, Ng said.

“They need to pay some fees 1-5% depending on the type of payment vehicles that they’re using,” he said.

Ng said financial services could most likely play a part in easing the burden smaller of merchants by offering cheaper payment acquiring services, which in turn, would benefit them since they will be able to acquire a larger pool of customers.

Checklist for going cashless

For those planning to change to cashless, Euromonitor International’s Yum left a checklist of what businesses should consider before adopting new payment methods.

According to Yum, businesses should first have a good understanding of consumers’ preferences; their distribution model; and the additional solutions that accompany the payment solutions they will adopt.

As for consumer preference, Yum said buy now pay later (BNPL) scheme is the latest type of cashless payment solution to gain ground in Hong Kong—an example of this is Atome.

The payment intermediary helps retailers increase their conversation rate and checkout basket size without any additional interest fee, according to Yum.

Apart from BNPL, Ng said other popular cashless payment tools in Hong Kong include QR code payments, mobile e-wallets, and faster payment systems (FPS).

The government is also exploring different options to strengthen the city’s cross-border payment systems leveraging the success of these platforms, added Ng.

Herbert Yum

Gary Ng

It is a matter of time for the cashless transaction to further penetrate into SMEs and independent retailers

INSURTECH YAS MicroInsurance puts a price on NFTs

The insurtech firm is one of the first in the industry to insure non-fungible tokens.

artists, exhibitions, and galleries. As the rapid growth in asset value of NFT grew, YAS believed that NFTs are the same as classic cars, therefore they needed an insurance solution.

With that, YAS pioneered NFTY, an NFT insurance that protects these digital assets from capital loss such as theft or malicious attacks on digital wallets and the marketplace.

Unlike current insurance products that protect physical assets, YAS dedicated its policies to “digital collectables only” that are uniquely registered on the blockchain. As all the NFT data is stored on a public blockchain representing digital property rights, YAS MicroInsurance’s contract insurance policies define the NFT values and fully insure at their market value.

YAS pioneered NFTY, an NFT insurance that protects digital assets from capital loss

Insurtech firm YAS MicroInsurance has done what many thought was impossible: putting a price on NFTs or nonfungible tokens—a digital asset that a person cannot use or consume in a physical sense.

As one of the first insurtechs to give NFT insurance in 2021, Andy Ann, co-founder and CEO of YAS MicroInsurance revealed to Hong Kong Business that pricing for NFT can be derived in a few ways, such as past transaction values.

“First of all, NFT is a tangible asset, it is a smart contract, and we are insuring the smart contract on both theft and loss coverage. The pricing principle is similar to collectable insurance, which is priced in terms of premium and coverage. The premium pricing is based on risk levels calculations, and the coverage

Andy Ann

We have started to compute premiums at 20% of the NFT price and cover 90% of the purchasing price

amounts up to x% of the asset is also standard practice. We target to lower the premium when we scale up to a specific mass volume in the long run,” Andy explained.

According to Andy, all the NFTs that they have insured so far are on average 2-5 Ethereum (ETH) with the bigger sizes ranging anywhere from 12-22 ETH.

“As it’s a very new product, we have started to compute premiums at 20% of the NFT price and cover 90% of the purchasing price,” Andy added.

The NFT market is currently growing at an accelerating rate. In 2020, the market was worth around $350m which ballooned to around $24b at the end of 2021.

According to Andy, the initial idea of launching an insurance product for NFTs came from their partnership with several musicians,

Need for protection

Andy explained that this is the perfect time to launch this product because as the market for NFTs grows, so do attacks and thefts.

“We see a handful of hacks such as the Banksy scam with fake banksy NFT was listed on Open Sea and sold for $350,000; hacks on Nifty Gateway; Evolved Apes; Bored Monkey Yacht Club phishing scam stole $2.2m; and most recently we see Monkey Kingdom had a phishing link that over $1.3m worth of cryptos were stolen,” Andy said.

With NFTY, 90% of the purchase price of the NFT is covered. However, theft coverage can only be activated if it is reported to local authorities within 24 hours of its theft or if the insured item is not stored in a secure location with at least two-factor authentication.

Future outlook

Andy believes that the NFT market would grow a hundred fold in the next few years representing the beginning for the insurance business of the market as artists, photographers, gamers, musicians, collectors, brands, and all kinds of curators come together.

The customer (experience) is always right: a business case for personalisation

By Rajen Sanggaran, Head of the Asia Pacific and Japan at Pegasystems

For example, the Commonwealth Bank of

Businesses should provide customers with a unique experience customised for their needs

As humans, we want to be treated as individuals, and not the “next customer”. For many sectors, from banking, insurance, to gaming and air travel, personalisation has always been key to the customer experience. 30 years ago, it meant flight attendants greeting you by name on your flights. It meant bank managers building lifelong relationships with customers. Or it meant the hotel concierge asking about your family before checking you into your favourite room. Thanks to modern technology, the nature of personalisation have evolved, and it’s opening new avenues for innovation in customer experience.

The next stage of personalisation – realtime, AI-driven, with low-code development

The goal of personalisation remains the same – to provide each person with a unique experience customised for their needs. It is moving quickly, from including names in emails to using AI to tailor interactions with customers in real-time. Personalisation solutions can now make decisions in under 200 milliseconds, analysing a customer’s digital and physical exchanges to deliver the best interactions for each individual, on their channel of choice.

In practice, it means that businesses can communicate with customers when they are at their most receptive, with messages crafted for context and relevance. Here are a few examples:

When a casino patron flies into Macau, data on their personal preferences and past purchases are used to create customised offers. These are sent to the patron as soon as they enter their favourite stores, restaurants, or cocktail bars. If another patron is lucky enough to win big, they will receive an offer to stay at the presidential suite, including a discount for an extended stay.

An office worker is embarking on a New Year’s resolution to get fit and begins tracking their daily runs and eating habits. Using the health data from a smartwatch and associated apps, the office worker’s insurance company can provide customised wellness offers as they demonstrate their commitment to healthier living.

A business traveller boards their weekly flight to another city for work. Upon entering the plane, they are surprised to see the usual flight crew have been replaced with a new team. However, without skipping a beat, the flight attendant leads them to their seat and hands them their usual glass of champagne. In this scenario, low-cost airline Transavia used Pega’s CRM solution to build a personalisation platform that provided staff with a holistic profile of each customer, detailing their personal preferences.

So, how does personalisation drive business performance?

Using data, AI and automation and low-code processes, businesses can personalise at scale to improve the experience of hundreds of thousands of customers. This lays the foundation for strong customer acquisition and retention, key drivers of sustainable business growth. Australia successfully used personalisation to deliver industry-leading customer service ratings. Using Pega’s Customer Decision Hub, the bank created an AI-powered engine capable of connecting conversations across 18 channels, delivering 50 million next-best conversations. In addition to personalisation, organisations are also using process automation and case management to drive business performance. This creates a powerful, single solution that not only elevates the customer experience but the employee experience too. By consolidating all internal processes within a single system, organisations can reduce the time it takes to process requests for customers and staff alike. A centralised solution can deliver multiple benefits. Recently, Pega worked with a major airline to implement a unified cloud platform that brought staff together across multiple channels. With new user portals, chatbots, dashboards, knowledge management, and AIpowered self-services, the airline significantly improved service request turnaround times. The cloud solution reduced costs by allowing the airline to retire legacy systems and improved customer satisfaction through fast service delivery. For developers, Pega’s low-code capability drastically improves productivity helping major enterprises like

THE BEST WAY TO FUTUREPROOF A BUSINESS IS TO USE OCBC and Sun Life

TECHNOLOGY THAT CREATES THE KIND OF EXPERIENCES “Build for Change” and CUSTOMERS ACTUALLY WANT AND EMPOWERS EMPLOYEES TO SUCCEED adapt quickly to shifting customer needs and business priorities. For HSBC, Pega’s approach has delivered solid business outcomes, such as growing revenue per contact by 265% and increasing email open rates by 200%. Moving forwards, business success will depend on an organisation’s ability to attract and retain its customers and employees. The best way to futureproof a business is to use technology that creates the kind of experiences customers actually want and empowers employees to succeed. For more information on how your organisation can improve its personalisation and business performance, please get in touch via Pega’s Contact Us page.