Asia's blazing a trail for contactless and cryptocurrency
In 2018, China, Japan and South Korea are poised to lead the charge for exciting innovations in fintech.
As the year unfolds, here are three trends coming out of Asia to keep an eye on:
QR code-based payment transactions are on the rise. While QR code-based payments have yet to take off in the U.S., they are dominating in China. In 2016, mobile payment volume in China doubled to nearly $5 trillion, and it hasn't slowed down since.
Increasingly popular payment apps will be entities to watch as QR code-based payments continue to displace cash and card transactions in Asia, and eventually across the globe.
Blockchain-facilitated cross-border transfers are becoming a reality. Banks in Japan and South Korea began trials in December 2017 to test blockchain-facilitated international funds transfers. The banks expect to roll out the technology as early as this spring.
If successful, same-day international funds transfers will be possible. And it will cost nearly 30% less to process.
Formalization of cryptocurrency is on the horizon. Japan is on the forefront of bringing cryptocurrency into broader commercialization.
Also in December, Japan's Financial Services Agency authorized the operation of four new digital currency exchanges in the country, in addition to the 11 exchanges the Japan FSA approved for operations in September.
And in January, Japan reportedly met with China and South Korea for talks on how to most effectively regulate cryptocurrencies — though China and South Korea have yet to officially recognize cryptocurrencies as legitimate means of payment. The meeting signifies a potential change in position for China and South Korea — an interesting development to monitor over the months to come.
As exciting as these three trends are, they represent a tiny fraction of the hundreds of disrupting payment innovations coming down the pike in 2018. And while Asia has especially embraced fintech innovation, the U.S. is close at its heels and taking significant steps to foster an environment in which it can fully thrive.
A 2017 study by the global fintech provider Fraedom found that 82% of U.S. commercial banks plan to increase fintech investment over the next three years, and 86% of bank senior managers surveyed said they intend to boost fintech funding imminently.
Suffice to say, it's an exhilarating time for the evolution of fintech and payments — participants are fully immersed in the battle for market share, and invested spectators are watching for the most likely winners from the edge of their seats.