In the hope of maintaining Singapore as the
regional financial hub, the government has been encouraging Singapore banks to adopt
technology in improving business operations. Ever since Singapore
Prime Minister Mr Lee Hsien Loong highlighted that banks should adopt
blockchain technology in bank settlements in 2015, fintech start-ups from all around the world flew into
Singapore. In 2018, YouTrip, an e-wallet start-up, left its home ground – Hong
Kong – one of the world’s largest financial hubs to launch their venture in
YouTrip positioned itself as a
multicurrency e-wallet for travellers. It has developed technical infrastructure
for multicurrency exchanges with a network of FX providers. The uniqueness of
its technology is to offer FX exchanges to individual at a competitive rate
that banks cannot provide. However, that itself is not going to give YouTrip an
edge against the traditional money changers as their rates are almost the same.
Furthermore, storing money digitally in the e-wallet is useless if travellers
can’t use that to make payment in stores.
As such, YouTrip partners Mastercard (stock quote:MA) . Intuitively, this makes the YouTrip card more “useable” as users could make their payment if the respective merchants accept Mastercard. The strategy works. Months after their launch, number of users has surpassed 50,000. That caught investors’ attention. In May 2019, YouTrip raised USD 25.5M in Pre-Series A funding which is quite impressive for a Singapore-based company that is barely a year old.
YouTrip is a Bank Disruptor?
The recent capital injection is useful in
helping YouTrip to improve their technology infrastructure which is the
backbone for all financial institutions. In fact, this is the challenge that
YouTrip must overcome. Normal people deposit money digitally in their saving
accounts with the belief that the bank’s technology could safeguard their savings.
Let’s extend the idea further. When we top up money in YouTrip e-wallet, can we
expect from them the same security level that bank is offering? If you have
read my earlier blog post,
YouTrip is trying to assure the public that they have the same level of
technology that bank has in terms of risk management and anti-money laundering
capability. However, building up the infrastructure equates to building faith among
users which takes time. By and large, YouTrip, as a company, is still too young
for the public to put their trust (saving) with them.
To succeed in the fintech space, a fintech start-up has to offer the same level of services (or even better) that the bank is offering. As a matter of fact, that’s the value that fintech start-up is offering to the market. YouTrip has identified that digitalizing the existing business model of money changer is the way to enter the market which undeniably, they have succeeded and even convince major payment solution company like Mastercard and locally, Ezlink to participate in their growth stories.
They have great partners and now, it is for them to shape the market behaviour.
E-wallet business – More Than Just a
E-wallet, as the name suggested, should work like a WALLET. It should be able to keep fiat currencies, credit cards and reward cards etc. YouTrip positioned themselves as a wallet for travellers only provides the entry to the market but personally, I don’t think it is going to be sustainable. Singaporeans love travels but their time are mostly spent in Singapore. Although YouTrip card holders could use their cards to pay for public transports, there are other players rolling up similar services that gives better discounts. In short, the YouTrip card has not much use in Singapore given so many other options available.
There must be strong enough reasons for users to continue keeping YouTrip card in their wallet
Where are the merchants?
Banks refuses to lower rates as it hurts profitability. Offering low fees is a good penetration strategy but that is not going to be the barrier for new entrants. YouTrip needs to bring in more partners into their ecosystem. For a start, they should just be focusing on bringing more values to travellers. For instance, a reward system in the form of discount for travel insurance or hotel booking for heavy YouTrip users (frequent travellers) that will encourage card usage.
Basically, virtual money is only useful in 2 ways – One, I can use that to buy into services or products at greater discount. Two, I can grow it so that I could use that in the future. In principle, any fintech company that can achieve both can basically be called a bank. ANT Financial is one classic example. However, most fintech start-ups are only able to deliver services or products at greater discount than credit cards companies (which is exactly what YouTrip is trying to do!). However, keeping up with this in a longer term costs money and it may not be sustainable. YouTrip has to “engineer” a new form users’ reliance to your services to keep themselves afloat in the competitive fintech business. In my opinion, better forex rate?Nah!
Grab, a South-East Asian fintech and
transport services company, has established a strong network of merchants in
the region. Grab Pay, e-wallet services by Grab, can be used to pay for any goods
in their marketplace and delivered to users’ doorsteps. Outside Singapore, you
could even use Grab to pay off your transportation in other South East Asia
countries. Grab is also following footsteps of ANT Financial. They are hiring
consultant and it
is rumoured that they are preparing to be a virtual bank in the event that
Singapore is issuing virtual bank license like what Hong Kong did
Getting merchants into ecosystem is crucial
in developing use cases and I am sure there are a lot more to be explored. Grab’s
way of linking transportation and merchant seems to be working in South East Asia
market. YouTrip is not Grab. They have to offer use cases that are different from
what their counterparts are offering. They could study what their closest
competitor, Singtel Dash is doing. For a start, why not just tap on existing e-commerce
players? That might be faster for YouTrip.
In short, YouTrip has a good start but it is still a hype that I am doubtful it could sustain as a travel card. As of now, I am keeping my YouTrip card in my drawer.