Touch 'n Go steps into online finance with GO+, with more to come

By Dzof Azmi April 21, 2021

Targets 1 mil GO+ users by end 2021, complement 15 mil existing users
Three specific areas identified for future products including personal lending

(L-R) Ignatius Ong, CEO of TNG Digital; Effendy Shahul Hamid, Group CEO of Touch’ n Go Group and Munirah Khairuddin, CEO of Principal Asset Management.

Touch 'n Go hopes to strengthen its foothold in the very crowded Malaysian e-wallet market, with 50 players, with the introduction of fintech services through their e-wallet app. Only time will tell if this foray into finance is enough to maintain their position as among the industry leaders, but they unabashedly make clear they intend to maintain their standing as the e-wallet market consolidates.

The company recently launched a new product called GO+, which allows the balance in the TNG eWallet to earn returns. The underlying fund for GO+ is Principal e-Cash – a money market fund managed by Principal Asset Management Bhd, a joint venture between Principal Financial Group and CIMB Group Holdings Bhd.

This launch comes only a few months after becoming the first e-wallet to obtain conditional approval in January to operate as a recognised market operator (RMO) by the Securities Commission Malaysia (SC), which allows the company to "directly distribute capital market products, including money market unit trust funds".

At the time of publishing, the listed Daily Return Rate is 1.43% per annum, which may not be particularly enticing to seasoned investors, but as Effendy Shahul Hamid, Group CEO, Touch ‘n Go (TNG) Group pointed out, "It does pay a lot higher than your current account!".

Online finance is "ripe for disruption"

However, he did point out that online finance is ripe for disruption. "Much of these online finance offerings or platforms are predominantly single-use cases which only exist to sell investment products," he said.

He explained that online finance needs to transform from being largely "transactional and utilitarian", to actual end-to-end delivery. "That space has been there for the taking for some time," emphasised Effendy, "GO+ is the first step."

Having said that, three specific areas they have identified for future products include asset management and investments, insurance and personal lending. They are also keen to roll out sharia products in the future. "Basic financial services — in this case, simple low risk investments — are still not accessible to large portions of society," said Effendy.

Nevertheless, there are limits to their ambitions. "We will not be evolving the TnG wallet into a bank," was the comment made, although Effendy did not rule out future partnerships in that direction. "It is premised on making sure that we are able to find the right consortium, and if we do, we will certainly participate in one way, shape or form," he said.

Leading the market, and eventually consolidation

Effendy revealed that there are currently 15 million registered users on the TnG eWallet. The goal is to acquire a million GO+ accounts in 2021.

A survey by market survey company Oppotus found that the TnG eWallet was the most popular in Malaysia. In Q3 2020, 61% of those surveyed used it over the last three months. However, this was a drastic drop from Q2 2020 (81%). During that period GrabPay moved up from 28% to 38%.

Despite seemingly losing some share to GrabPay in late 2020, overall growth in e-wallets was tremendous last year due to the lockdowns. "We certainly did not see a sharp decline," stressed Effendy. "In fact, if anything, we probably saw a sharp incline through the second and third quarters of 2020.”

In a sign that acceptance of digital payments was deepening in the market, 2020 also proved to be a record year for TnG eWallet in terms of acquiring micro merchants, a trend that is expected to continue.

Touch ‘n Go now have their sights set on the next stage of e-wallet growth in Malaysia, driven in part by the emergence of a unified QR code in the form of DuitNow.

Growth could also come from picking up customers from e-wallet players that drop off. In fact, the Oppotus survey also seems to show the market beginning to consolidate. In Q3 2020, only four e-wallet brands showed more than 10% recent use (meaning 'used within the last three months') by respondents (TnG, GrabPay, Maybank MAE and Boost). Remaining players seem to be dropping or hovering under 10%.

"We have expected and are supportive of the consolidation. In fact we want to lead that consolidation," says Effendy. "But let's see where it goes."