Digital Innovations in Asia Looking back, looking ahead

Mark Inkster

Chief Digital Officer

Aegon Asia

Singapore, 7 November 2014

Asia Distribution Conference

2

In 1998, the Internet was new in Asia, and the world looked different

3

The Asian Internet landscape was vastly different from today

In 2000, Asia had less than 1/3 of the world’s users

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Internet Users

Asia

Rest of world

The largest number was in Japan

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Internet Users

Rest of Asia

Malaysia

India

Taiwan

S. Korea

China

Japan

4

The number of users has grown exponentially. Now nearly half the world’s Internet users are in Asia, mostly in China and India.

Since then, the Internet has exploded in Asia

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2014

Asia

Rest of world

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2013

Rest of Asia

Malaysia

India

Taiwan

S. Korea

China

Japan

0

500

1000

1500

2000

2500

3000

3500

2000 2014

Asia

Rest of world

5

Japan 1999: very heavy use of message boards / forums

Korea 2002: cafes, avatars, knowledge search

► Emergence of Naver and Daum as leaders

China 2005: ubiquitous message boards; QQ growing from IM to a social portal

Southeast Asia 2008: MSN, Y! Messenger, Friendster

Today

► India & Indonesia #2&4 countries in the world for Facebook, and in top 5 for Twitter

► Indonesia global #1 in terms of Twitter penetration of total iPhone users

Social media has often been the starting point, with local innovations

6

Situation

► Relatively low amount of Korean language content to index

► “Netizen” culture of user-generated content

► Naver looking for a competitive edge

Solution

► Naver launched “Knowledge Search” and got rapid traction

• Users asked questions

• Community provided answers

• Community up-voted best answers

• Points awarded for asking questions, answering questions, having best answers, etc.

• Daum and Yahoo! rapidly copied

• Yahoo! rolled out to Taiwan and Japan, then US and rest of world

Case study: Knowledge Search

7

Japan

► Yahoo! Auctions; Rakuten; Amazon

Korea

► eBay; Gmarket; Coupang

India

► eBay; MakeMyTrip; Flipkart; Amazon; JustDial (local)

China

► Early battles around C2C ~2000-2005, now dominated by Alibaba / Taobao

► C-Trip dominates travel

► Baidu does not play the same role in commerce that Google does

E-commerce has evolved very differently on a market-by-market basis

8

eBay acquired Chinese online auction leader Eachnet in 2002 / 2003

Alibaba, which had a B2B offering, entered the C2C space with Taobao in 2004

Taobao innovated and localized very intelligently

► Streamlined design / user experience

► No listing fees – helped create critical mass of sellers

► Enabled buyer-seller direct communication through IM tool (Wang-wang)

► Built “escrow-style” payment system (Alipay)

► Employed low-cost students to migrate sellers’ listings from eBay / Eachnet

► Found marketing channels not covered by eBay

Case study: eBay versus Taobao

9

Goal was to build an online travel agency, but users and infrastructure were not

ready

Started with membership cards, call center, web site

Added travel guides and reviews

Set up physical desks at airports

Over time, traffic shifted from call-center to web / mobile

Case study: Ctrip

10

Nearly half of the top 20 Internet

companies (by market value) are

based in Asia

Most others have large Asia

operations

Note that none are from Europe

10-20% of global venture capital

goes into Asian companies

Innovation has created value

Source: Statista.com Note: Alibaba IPO’d in September 2014; Market cap 6-Nov $270B

11 11

How do these trends

extrapolate into the

future, and what does

it mean for insurance?

12

Internet users will continue to grow

quickly in many countries with low

Internet penetration

South Asia and Southeast Asia

likely to have the fastest growth

But still room for growth in East

Asia

This will drive continuing

“Internet booms” as countries

go through predictable cycles

E-commerce generally grows at

a lag behind Internet growth

Most Internet user growth will come from Asia

Source: Statista.com

13

Relatively self-contained ecosystems in China, Japan and Korea

Australia tightly integrated with the global system

India big enough that there will be local giants, but integrated enough with the

global Internet system that some global players will also win

Southeast Asia will be a mix of local, regional and global winners

Asia will evolve along different paths than the US or Europe have taken

► Mobile-centric

► More online/offline combined models, especially in emerging markets

► Skipping generations (e.g., Facebook instead of message boards)

The Internet will continue to be complex in Asia

14

Lesson one: innovate in Asia

► Asia is big enough and different enough that models will develop in Asia that differ from

the ones in the US or Europe

Lesson two: significant localization will be required – from global systems and

also country-by-country

► The models and the ecosystems will be different across countries, especially China /

Japan / Korea

Lesson three: plan for growth

► The Internet user “S-curve” is still steep in places like India and Indonesia

► E-commerce lags Internet user growth, so another “S-curve” is likely

What does all of this mean for the life insurance industry?

15 15

Q & A