The digital future of Asia is already here. In China, millions of people enter public transport each day using their smartphones, pay for their breakfast with WeChat, and use an app to have their lunch delivered a few hours later.
They work at offices that are rapidly embracing blockchain, AI, robotics and cloud computing. They book restaurants for dinner over the internet and do late-night shopping while riding the train home.
Much of this has been enabled by a smartphone revolution that is transforming individuals, cultures and societies at an unprecedented pace. This is also posing an increasing challenge to policymakers and businesses tasked with skilfully navigating the evolving digital ecosystem.
Asia's consumers are particularly open to using technology compared with their peers in other markets. According to the research firm Kantar TNS, 77% of connected consumers in Asia-Pacific in 2017 made their most recent purchase on a mobile, compared with 61% globally and just 24% in Europe. Asia also leads the world in online payments, according to KPMG, with an average of 22.1 transactions per person annually (see table).
As digitisation expands in Asia, it is swiftly dissolving the line between the physical and online worlds. For example, a woman in India may see a pair of earphones advertised in a newspaper, purchase them online, and on social media later that night, post an image of herself using them. Separating the impact of her online and offline interactions during her day is difficult and will be even more so in the future.
GROWTH AND TENSION
While tremendously exciting, Asia's rapid digital growth is challenging businesses and policymakers to find ways to use the benefits digitisation brings while learning how to mitigate some of its risks.
For starters, companies have to constantly seek new strategies that cut through the digital market noise. The cost of not doing so is growing as consumers become increasingly confused by all of their online choices. This sentiment can make them more reluctant to trust new businesses on the internet at a time when they are growing.
Asia's regulators and policymakers are also focused on protecting their consumers' data at the same time that businesses need to make optimum use of data to ensure customers have confidence in their online experiences -- particularly as new technologies emerge or existing channels develop in different directions.
Government leaders are further promoting small and medium-sized enterprise (SME) growth and supporting the large existing players that help SMEs access marketplaces. For example, Go-Jek, Line or WeChat, which now aggregate a number of different services into one, help companies and partners better reach and serve consumers. However, in doing so, they also introduce an element of risk; these large platforms can hold disproportionate amounts of power and control across the internet.
Uneven digital development is another concern, with pockets of the population falling behind as they are digitally under-skilled or excluded. In Southeast Asia, more than 40% of the population still lacks regular access to the internet.
DATA PROTECTION
As policymakers look to address these issues without sacrificing growth, much attention is being paid to protecting and promoting the core asset in all of this digital development: consumer data. Governments around the world are creating legislation on who consumer data belongs to and how best to protect it.
Asia is in a unique position to observe and learn from regulations emerging in other parts of the world. For example, the General Data Protection Regulation has brought about harmonisation of data protection norms across Europe. It gives consumers in Europe control over their data and requires organisations to make privacy an integral component of their product development process.
In Asia, by contrast, consistency in defining the basic concepts of personal data and sensitive data and their treatment remains elusive.
While some countries recognise the need for safe and enabling cross-border data transfers, others are intent on preventing the flow of data for various reasons. This latter strategy impedes interconnectivity between markets, limits the ability for vital use of that data for things like protection from fraud, and ends up introducing more risk than it reduces.
To reduce this legislative variance, policymakers can start by committing to treating data in the same way all markets treat valuable assets -- by creating methods of exchange that engender trust through transparency, consumer choice and control, security, and responsible and fair use.
Consumers also require more education on the importance of protecting their data and about best practices for guarding their privacy online.
This will help to foster digital inclusion, digital literacy and next-generation technology skills to ensure Asia's population continues to best use and enjoy the benefits of technology.
Rama Sridhar is executive vice-president for digital and emerging partnerships and new payment flows at Mastercard.
