In a Fireside Chat held at the Fintech Frontiers Conference Malaysia 2023, Alan Ni, CEO of TNG Digital, shared insights into the remarkable journey of his company, which was recently awarded the title of Fintech of the Year.
Moderated by Vincent Fong, Chief Editor of Fintech News, the conversation provided a unique window into the growth and evolution of TNG Digital, tracing its trajectory from a pilot project to a significant player in Malaysia’s fintech landscape.
TNG Digital embarked on its journey during a challenging period, characterised by the arduous task of moving from inception to a prominent fintech contender.
Alan shed light on the initial hurdles faced by the team. Two key factors emerged as instrumental in shaping the early success story of TNG Digital.
Door-to-Door merchant acquisition
TNG Digital adopted an unconventional method of acquiring offline merchants through a door-to-door approach. Surprisingly, a substantial 80 percent of their initial customer base was cultivated through this unorthodox method, a decision that proved pivotal to their eventual success.
The journey of TNG Digital began with a commitment to the hard work of acquiring offline merchants door-by-door. Contrary to many assumptions, this unique approach became a defining factor in the company’s early growth.
Alan recalls those challenging days when the fintech landscape was far from mature. He emphasised that the initial phase of establishing TNG Digital, from zero to one, was the most daunting and critical part of their journey.
“At the early stages of a startup, zero to one is the most challenging phase. It’s about figuring out what works and what doesn’t,”
remarked Alan during the Fireside Chat.
This strategic decision to engage with offline merchants in such a hands-on manner was both bold and strategic.
The TNG Digital team realised that for an e-wallet to gain user adoption, it was essential to ensure widespread acceptance among merchants. This approach laid the foundation for building trust and a broad user base.
The unconventional method of door-to-door merchant acquisition soon began to pay off. Alan recalled their challenges and the determination that drove them forward.
Their persistence paid dividends as they steadily increased their merchant network, and, in turn, their user base began to grow. In retrospect, acquiring offline merchants, which seemed counterintuitive for a digital wallet provider, was wise.
The Solution
TNG Digital faced a significant challenge in reloading their cards due to their physical architecture requiring contact with a reader. Despite the straightforward appeal of creating a digital wallet to reload the cards and gaining millions of users, the technical reality was more intricate.
Alan recalled the scepticism.
“In the early days, everyone said that Touch ‘n Go’s wallet was so stupid. You have the fantastic opportunity to resolve people’s pain points – how to reload the card. You could just make the wallet for reloading the card, and you’d get millions of customers tomorrow, right?”
said Alan.
However, the solution was PayDirect. Instead of reloading the card digitally, they used it as an identifier to deduct funds from the user’s e-wallet each time it was used.
This method led to acquiring a second batch of users and played a pivotal role in TNG Digital’s growth.
Government initiatives and explosive growth
TNG Digital received a significant boost from a government initiative, the e-Tunai Rakyat program launched in 2019, aimed at promoting digital payments. This initiative acted as a catalyst, propelling TNG Digital to the forefront of Malaysia’s fintech landscape.
The journey of TNG Digital coincided with the launch of the e-Tunai Rakyat program in Malaysia.
This government initiative aimed to encourage the adoption of digital payments by providing eligible Malaysians with financial assistance through e-wallet credits. This program was pivotal for the TNG Digital team.
Alan recalled,
“The e-Tunai Rakyat program significantly boosted us. It was a government initiative designed to promote digital payments and aligned perfectly with our goals.”
The e-Tunai Rakyat program allowed eligible Malaysians to receive e-wallet credits, which they could use for various transactions. TNG Digital, one of the prominent e-wallet providers, witnessed a surge in users during this period.
This government-backed initiative accelerated user adoption and emphasised the importance of digital payments in the country’s financial ecosystem.
For TNG Digital, it was about gaining users through the program and contributing to the broader mission of digitising payments in Malaysia. They saw this as an opportunity to showcase the convenience and benefits of digital wallets to a wider audience.
Learning from failures
Alan emphasised the importance of failures in TNG Digital’s path to success, stating that they are essential learning opportunities in the dynamic fintech startup scene.
“One thing I believe in the startup,”
Alan remarked,
“is that our industry is not a big fish, eat a small fish but is a quick fish, eat a slow fish.”
He stressed the need for speed and agility, highlighting that startups must iterate and try various approaches to find the right solution ahead of their competitors.
“Failure is an essential part of the startup journey. It’s where you learn the most and refine your strategies,”
Alan commented.
He mentioned early challenges like consumers’ reluctance towards digital payments and the need to build trust.
“People weren’t used to digital payments… we had to educate users,”
Alan recalled.
Establishing a merchant network posed another hurdle. Despite some strategies not meeting expectations, resilience and adaptability, core to the company’s culture, guided their way to becoming a top fintech entity in Malaysia.
Strategic partnerships
TNG Digital’s early growth was significantly shaped by its partnership with Ant Financial, now known as Ant Group.
This collaboration combined Ant Financial’s digital finance expertise with TNG Digital’s strong brand recognition and understanding of the Malaysian market, resulting in a synergistic relationship.
Alan reflected on the partnership:
“Our partnership with Ant Financial was strategic. They had the technical expertise, and we had the local knowledge and understanding of our users. Together, we were able to create a powerful digital payment platform.”
This partnership equipped TNG Digital with advanced tech foundations and facilitated solutions specific to Malaysian users, enhancing user trust.
Over time, TNG Digital shifted from external partnership dependence to prioritising local operations, showcasing its ambition to be a standalone fintech leader in Malaysia and Southeast Asia.
The Merchant Discount Rate (MDR) debate
The debate over Merchant Discount Rates (MDR) has been a prominent issue in the fintech industry, and TNG Digital has not been immune to its impact.
MDR is a fee that merchants pay to payment service providers when customers make payments using digital wallets or QR codes. It has been a subject of discussion and debate, with various stakeholders expressing differing opinions on its appropriateness and level.
Alan addressed the topic during the Fireside Chat, shedding light on the complexities of MDR and its implications for both merchants and consumers.
He clarified,
“In Malaysia, the regulator has taken a market-driven approach, allowing the industry to determine the rates within certain guidelines.”
This means the Malaysian regulators have refrained from imposing specific MDR fees and left it to market forces to decide. Alan emphasised that Malaysia’s proposed MDR rates rank among the most competitive in the region.
In addition, he advocated for examining successful MDR models from other countries, stressing the importance of finding a balance that ensures the fintech sector’s sustainability without compromising merchant interests.
This stance mirrors the more significant industry’s quest for a mutually beneficial fee structure for consumers, merchants, and payment service providers.
TNG Digital is a micro-banking solution
With its expansive range of financial services, TNG Digital has entered discussions about its role in the microbanking sector. Its move beyond the confines of a simple digital wallet to a platform offering bill payments, money transfers, and investments suggests a transformative potential in the financial landscape.
Alan said,
“We see ourselves as an enabler of financial services. Many people in Malaysia, particularly rural regions, lack access to conventional banking avenues. We believe that entities outside the traditional banking sphere can be pivotal in extending these services.”
This stance isn’t just theoretical; it’s operational. TNG Digital’s dedication to financial inclusivity is evident in its offerings, seeking to bridge the accessibility chasm in banking.
They are actively working to extend credit and investment opportunities to those, be it individuals or small businesses, who have been traditionally left out of the banking loop.
In the rapidly evolving fintech industry, the rise of non-banking entities like TNG Digital is gaining attention. As they diversify their offerings and reach, these platforms are set to play an increasingly prominent role in driving financial empowerment and inclusion.
TNG Digital’s strategic priorities
TNG Digital is shaping its future direction with a focus on several key areas. The company’s primary commitment is “to advance financial inclusion” by providing access to financial services to underserved populations empowering individuals and businesses.
They also emphasise “technology innovation” and plan to invest in cutting-edge tech to enhance user experiences and meet evolving market needs.
“Sustainability” is another core element of their vision, focusing on minimising their environmental footprint and making positive social contributions.
TNG Digital plans to expand into other Southeast Asian markets, building on its experience in Malaysia. Lastly, they stress “collaboration with regulators” to ensure responsible and sustainable growth in the fintech industry in Malaysia.
A call for an entrepreneurial mindset
As the session concluded, Alan left aspiring fintech entrepreneurs with a powerful message. He encouraged them to adopt an entrepreneurial and founder mindset when entering the industry.
He added that fintech demands more than a professional manager’s perspective and that genuine commitment is essential for success.
In the dynamic world of fintech, TNG Digital’s journey serves as an inspiration. From humble beginnings to becoming the Fintech of the Year, their story is a testament to innovation, adaptability, and the power of strategic partnerships.
The future holds exciting possibilities as TNG Digital continues to drive innovation in the Malaysian fintech landscape.
Watch the full “Fireside Chat with Fintech of the Year – Alan Ni, CEO, TNG Digital” at the Fintech Frontiers Conference
