Deal focus: Apis targets modes of engagement

It has taken Cambodia’s Wing Bank 13 years to transition from online payments platform to fully licensed, digital-first commercial bank. Adding consumer-facing loan and deposit services to a suite of money transfer, bill payment, payroll, and supply chain products administered through agents and apps brings additional operational complexity. It also presents new retention challenges.

This might explain why Wing signed up to Giift, a Singapore-based outsourced loyalty management program provider. Several other banks in Southeast Asia – such as Bank Negara Indonesia and Bank Rakyat Indonesia – have done the same, although the service is relevant to any brand looking to engage and retain customers and able to do so directly.

“Historically, they didn’t have programs or ran them in-house with local marketing agencies. It is estimated that 60% of the Asian market has no solution or runs an in-house solution. Now, they can have a plug-and-play solution with years of specialisation,” said Udayan Goyal, a managing partner at Apis Partners, which invests in financial technology in emerging markets.

“With Giift, a bank isn’t starting a loyalty program with one redemption partner. It plugs in and suddenly it has 150 partners. This is very powerful; it allows people to hit the ground running.”

Giift, which manages more than 50,000 programs across 55 countries with 130m users, received USD 50m investment from Apis earlier this year. The GP recently followed up by committing USD 30m – jointly with Giift – to Xoxoday. The Indian company works with 2,000 clients and 2.5m users in 10 countries, allowing performance by employees to be rewarded much like loyalty in customers.

Xoxoday integrates with applications such as Slack and SAP so companies can send programmable digital to their workforces at scale. The investment was partly driven by COVID-19 and a recognition that increased levels of remote and flexible working necessitate rethinking employee engagement and compensation. Moreover, an embedded solution facilitates instant gratification.

“It helps businesses transition to digital working environments, and it provides insights into stakeholder behaviour and engagement and retention efforts,” said Goyal.

Engaging with complexity

However, the overriding considerations were the potential interoperability of customer-facing and employee-facing technology stacks – though Goyal cautions this is some distance from being realised – and the size of the opportunity set in an increasingly complex, data-driven world.

Apis projects the global loyalty and rewards industry will be worth USD 25.9bn by 2027, up from USD 6.5bn in 2019. Within Asia Pacific, the current addressable market for tier-one clients alone amounts to USD 499bn in gross merchandise value (GMV) and USD 211m in annual contract value (ACV) with 313m end-users. The region’s incentives market is worth USD 791m and growing at 9.7% a year.

At the same time, loyalty programs are increasingly personalised. Rather than just award points for every dollar spent through a credit card and allowing those points to be redeemed for a long list of products, companies are leveraging data to offer rewards tailored to the individual. This can boost returns by pushing customers to do something they wouldn’t normally do, but it is hard to execute.

“These systems are becoming more sophisticated and so a lot of institutions are shifting to an outsourced solution instead of doing it in-house,” said Goyal. “Giift is a cloud-based system where they provide everything end-to-end. I’ve seen loyalty programs where they haven’t been in the cloud, they need a mainframe, and they rely heavily on systems integration.”

In addition to having an edge in terms of scalability and speed of integration, cloud-based solutions are not bound by geography. Apis believes Giift and Xoxoday can enter new markets and expand their product capabilities through a combination of organic growth and M&A, all the while cross-selling to one another’s clients.

“I hope there will be other acquisitions. We add value by identifying businesses that have good synergies with the ones we are invested in, but there must be the right fit,” Goyal added. “Payments is perhaps the most interesting adjacency because you can embed loyalty solutions into the payment itself.”

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• Topics
• South Asia
• Southeast Asia
• Financials
• Expansion
• Singapore
• India
• Fintech
• Financial Services
• Growth capital
• Apis Partners