Browse. Select. Checkout. Fly. Be it flight tickets, accommodations or even insurance, travel platforms can simplify essential purchases by prioritising consumers. We witnessed the first wave of the digital revolution when bookings went online. A coupling with the financial sector is catalysing the next transformation, and this is a flight that waits for no one.
According to the International Air Transport Association, 82% of travellers paid for their trips using their preferred payment method in 2022. This means that consumers crave convenience, and travel platforms that want to remain competitive amid the recovery must offer ample choices. Already, many apps offer add-ons like exclusive credit card deals and other rewards.
While tie-ins with financial institutions are not new, there are fresh opportunities to seize – especially in the post-pandemic world where health and safety concerns dominate. Research has shown that 38% of travellers in Southeast Asia are turning to online travel agencies that include travel protection as part of the booking journey.
This provides a blueprint for partnerships with banks and fintech firms to capture a greater market share. By integrating diverse financial products into their booking process, travel platforms can provide a one-stop service for consumers seeking to explore the world again.
The chase for convenience
A role reversal is on the rise. Banks like JP Morgan Chase are quickly recognising the potential of travel and have been approaching or acquiring travel companies to spin off new service arms. It is a sensible move for organisations with a large, established customer base that earns them a slice of the pie.
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How will this disrupt industry players, if at all? Travel platforms with years of expertise currently retain the edge over newcomers. But the onus is on them to partner up to remain attractive to consumers by offering extensive choices, with travel ramping up in 2023 and options aplenty.
One road many travel companies have taken is to embed innovative products and services such as mobile payment options. The instant nature of digital payments is now part and parcel of travel. And with the skyrocketing popularity of multi-currency wallets, forward-looking platforms that onboard the right partners will be the ones to thrive.
There is room for further collaboration. According to Bain & Company, the global embedded finance market is projected to hit US$51 billion by 2026. Tourism players in Southeast Asia must take great strides to stay ahead of the curve.
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For instance, around 30% of Traveloka consumers used digital payment in 2022. This is despite the underbanked or unbanked comprising 70% of the region’s population. It outlines a huge opportunity for travel platforms to extend integrated financial services to those with limited access to banking facilities.
What’s exciting for these travellers is the convenience of opening credit accounts on an all-purpose hub to see the world. Significantly, domestic tourism still powering much of ASEAN travel – Indonesia and Vietnam are expecting 1.4 billion and 102 million domestic tourists in 2023, respectively.
By embracing partnerships with banks or fintech companies, travel platforms can whet the appetite of millions of aspiring Southeast Asian travellers with an array of financial solutions. But for consumers to enjoy a truly pleasant experience, security must be at the heart of these services.
Banking on security
Safe payment methods are imperative, more so with the explosion of online options. Travel platforms that support the shift to a cashless society stand to win big, with Visa reporting that Southeast Asia has an 85% cashless payment adoption rate.
Fostering stronger collaboration with reputable financial services providers safeguards crucial data like payment information. For instance, banks can offer secure payment processing and fraud prevention services, which are essential to building trust with customers.
The benefits are manifold. Travel platforms with high consumer confidence will not only see returning customers but generate new leads from those who recognize the brands associated with them. This bodes well for travel organizations – giving travellers added security when paying will help stimulate further spending.
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In fact, travellers are shelling out more already. Traveloka recorded a 64% jump in spending in Q1 2023 compared to the same period last year. Given the high mobile penetration in Southeast Asia, travel companies should double down on the financial sector.
Be reliable
For this marriage to work, travel platforms must ensure that their financial partners have robust security measures in place to protect customer data.
Travel is a big-ticket expense for many. Those concerned about the safety of their financial transactions will naturally gravitate to companies with reliable payment options. Take Singapore’s finance sector, which saw an increase in customer satisfaction when banks strengthened their online banking security following a slew of scams.
With travel rebound on the cards, competition will heat up. Travel platforms that lead the way in eliminating stress and anxiety, especially in terms of payment, stand to gain the most.
By understanding their customers' financial needs and preferences, they can provide richer offerings to cement their position in the market.
Doan Lingga is the CEO of Financial Services of Traveloka
