As a Long Time Fintech Observer, I’m Not a Fan of e-Tunai — Here’s Why

As a Long Time Fintech Observer, I’m Not a Fan of e-Tunai — Here’s Why

by January 20, 2020

In this past couple of days, the e-Tunai programme seems to be all everyone is talking about and understandably so — free money tends to have that effect on people.

In case you’re unfamiliar with the Malaysian scene or if you’ve been living under a rock for the entire month of January, the e-Tunai programme is a RM 30 incentive offered to Malaysians above the age of 18 earning less than RM 100,000. The programme was first announced during the Budget 2020, as a means to boost e-wallet adoption. The government has set aside a budget RM 450 Million for this programme.

Based on the response in the past few days it seems to be working well, people around me who previously had no remote interest in e-wallets were suddenly messaging me to find out about how they too can get the free RM 30. Data from Google seems to support the notion of an increased interest in e-wallets as well. The assigned value for interest in e-wallets in Malaysia jumped from 19 to 100 between December 2019 to January 2020.

E-Tunai Malaysia google trends

Surely, all these things are good for the fintech industry as an observer in this space, I should, in theory, be excited about it.

But I am not, and here’s why.

Bigger fish to fry

I love e-wallets as much as the next guy, having just returned from media trip China that is organised by WeChat Pay’s team, it’s difficult to argue against that kind of convenience that E-Tunai is attempting to drive.

However, just within the financial services space alone, there are more pertinent issues that I think should take priority over the e-wallet adoption. Based on data that we’ve gathered for our latest Malaysia Fintech Report only 52% of Malaysians are insured, to put that into perspective nearly 15 million Malaysians could potentially be financially ruined should they be struck with any serious illnesses.

Malaysians are also not investing or planning for their retirement enough, 41% of Malaysians rely on their EPF savings as their main source retirement funds. Even then Malaysian’s are accumulating enough on their EPF accounts with 68% of them no even being able to achieve the basic minimum savings of RM 240,000.

While I’m all for e-wallet adoption, getting more Malaysian insured and incentivising them to invest for the future takes precedence over e-wallets. These examples are of course hardly the only issues we face in this space, but it should be sufficient to paint a picture of why the money might better be spent fixing other issues within this space.

Using taxpayer money to fund already well-funded companies’ user acquisition

Axiata Digital who owns and operate Boost received a RM 2 Billion investment from Mistui Co Ltd in 2019, TNG Digital is co-owned by Touch ‘n Go and one of the world’s most valuable fintech brand Ant Financial, and SoftBank-backed Grab has a raised a total of over RM 8 billion over 29 rounds.

These are all very well-funded companies who can, by all means, finance their own user acquisition drive. To top it off,  the optics are not great for our government when Grab who strictly speaking is a Singaporean company is using Malaysian taxpayer money to drive its user acquisition.

That is not to say I’m not a fan of these 3 companies or I necessarily think they are at fault, in fact, I’m an avid user of their services. It is by no means their fault that they are able to attract investor interest. As a business, if there are incentives to help drive your business you should not look a gift horse in the mouth.

To the best of my knowledge I’ve not seen any other government elsewhere directly funding the adoption of specific e-wallet brands. It is this writer’s humble opinion that startups and SMEs probably could use this RM 450 million than these 3 well established and well funded companies.

Positive progress but priorities could be better aligned

Don’t get me wrong, I’m not categorically saying that the federal government has an all-around bad policy strategy when it comes to fintech, I’m just saying in this particular instance I’m not a fan of the E-Tunai initiative

There are of course some positive developments, Budget 2020 was the first we are seeing a fintech-friendly budget tabled — or even the first time the word fintech was mentioned.

The increased focus definitely bodes well for the industry, my wish is that as we go along allocation could be channeled to more important areas.