The Asian consumer landscape is being reshaped by rising incomes, diversifying and new sources of growth, and the mutating consumption curves, and companies need to rethink how to serve consumers and compete in these changing markets effectively over the next decade and beyond. MGI’s new research identifies three key actions companies may need to consider:
Redraw your growth map
Each company has a map of growth, but this can all too easily become outdated without a concerted effort to understand and track dynamically changing markets. Companies may need to rethink how demand for their products and services is likely to evolve and to look carefully at which of the growth angles are relevant to their businesses.
Some financial service players may find success by leveraging the big convergence through an embedded finance play while others may locate promising growth opportunities in Asia’s demographic transformation with some players opting for a full-service offering to boost access to specific underserved demographics.
For instance, SBI launched YONO Krishi in 2019, a digital platform to serve farmers that offers specialized loans (such as crop loans), insurance and investment opportunities, as well as a universal platform where farmers can see live prices of crops and buy inputs and make sales directly.14
New consumption curves may significantly shift consumption patterns. Previously unbanked customers may leapfrog directly to digital wallets, and players may use this as a launching pad to expand and offer other products.
Many fintechs have acted to capture the potential of this new access curve. Paytm already serves many new customers with digital wallets, and it is now expanding into other services such as deposits, micro investment, digital loans, and insurance.15
Increase your agility
With a refreshed growth map, companies may then consider adopting a more agile operating model, increasing the speed of innovation in order to get to market more quickly; empowering local decision makers, given that centralized decision making and execution are not likely to be sufficient to capture the nuances of local markets; and ensuring that the company board is digitally savvy.
Resource reallocation in particular may be crucial as financial service players may need to substantially reallocate capital to areas of growth and opportunity.
Companies not only need to be agile but also need to take an open, networked approach. In increasingly diverse and dynamic markets, it is likely to be hard for any company to be all things to all consumers, and for many, a promising way forward may be in partnerships and ecosystems.
Companies need to decide whether to lead their own ecosystem or participate in an existing one, depending on which role they could fulfil most effectively. Players such as Ping An have illustrated how ecosystem leadership may provide a large prize for the companies with the appetite and resources to pursue it. Other players may choose to participate in other ecosystems through embedded finance plays.
Regardless of their option, players may need to be able to navigate new digital ecosystems and handle much larger amounts of data, and often the most effective way to do this is within partnerships. For example, Kasikorn Bank (K Bank) in Thailand has developed its loyalty program and a new customer network through its banking app K Plus, Thailand’s most popular mobile banking app.
In the app, users can make payments, request loans, and even store other loyalty cards such as AirAsia BIG point and PTT Blue Card, which are compatible with the K Bank reward program.16
Asia’s dynamic consumer markets require financial service companies to increasingly understand, and learn how to serve markets that are changing radically—socially, demographically, and technologically. The next decade will present countless opportunities to the players that find the right ways to serve the new Asian consumers.