A glimpse into the fintech boom within Southeast Asia

Key Highlights 

  • Payments and lending are the most disruptive fintech sectors. 
  • Fintech has completely altered the way people and businesses transfer payments, save their money, borrow, invest, and buy insurance products.
  • Fintech has increased access to money for the poor and individuals living in rural locations, therefore improving the economy and driving demand.
  • Fintech has made it simpler for small businesses to obtain minor loans and credits at any time to keep their operations operating.
  • Many economies have implemented regulatory sandboxes to motivate innovation in the fintech sector.

Southeast Asia is among the world's fastest-growing fintech markets. Market growth is anticipated to reach between $70 billion and $100 billion by 2020, surpassing the United States, the United Kingdom, and China.

Inadequate financial inclusion is one of the issues leading to this region's development. According to World Bank data, Southeast Asia has a lack of access to financial tools. According to the research, just 49 percent of people in Indonesia have official bank accounts, whereas 22 percent in Cambodia, 34 percent in the Philippines, and 31 percent in Vietnam. Insurance and financial management are also underutilized.

This makes it difficult for people to easily save, borrow, and manage their money. This has created a huge potential for fintech businesses to offer creative ways for unbanked customers to use fintech services and better their financial position.

Investors are pouring money into the region, with financial technology being the major focus. According to recent CB Insights data, fintech fundraising activity in Southeast Asia increased by 143% year on year in 2018. Southeast Asia's fintech investments rose by more than 30 percent in 2018, reaching roughly $6 billion.

In a recent report from Robocash Group, names of the top five countries experiencing the fintech boom in southeast Asia are revealed. Let’s take a glance:

1. Singapore

Singapore has been at the vanguard of the fintech boom for some years, dominating the region's fintech sector. 400 local fintech raised a total of $229 million in 2017.

Singapore, with a desire for a wide range of fintech services, fetched more than half of all fintech agreements done in the area between 2013 and 2016. Fund transfers, cryptocurrency trading, peer-to-peer payments, investing applications, insurance services, money lending services, and crowdfunding platforms are all part of the diverse fintech sector.

2. Indonesia

Although Indonesia is densely populated, just little more than half of its people have access to the internet. This implies that around 150 million individuals have access to fintech. Sixty-one percent of Indonesian internet users have signed up for mobile banking apps. And 11% of the population uses the internet to make purchases or pay bills. Online payments, on the other hand, climbed to $313.6 million in 2018.

Only 49 percent of Indonesia's population has a bank account as of the end of 2019. Alternative payment channels are becoming increasingly popular. Peer-to-peer payment systems account for more than 30% of all fintech. E-commerce, together with payment platforms, is projected to propel the sector ahead.

3. The Philippines

The Philippines' central bank announced intentions in 2018 to digitize at least one-fifth of its transactions within two years. By 2020, digital payment use is expected to rise by 20%.

The country has 71% active internet users and 65.5 percent unbanked citizens. And fintech businesses have sprung up to fill the need. In 2017, $78 million in funds were raised, a 13% increase over the previous year. As mobile banking has evolved, 54 percent of all internet users in the nation have at least one mobile banking app.

According to Singapore Fintech News, payment platforms accounted for one-third of all fintech businesses established in 2018, followed by alternative finance (30%) and blockchain (16%).

4. Vietnam

The overall transaction value in the personal finance industry in Vietnam has surpassed $1 billion. Furthermore, its value is expected to rise at a 38.4 percent yearly pace, culminating in a total value of $4.5 billion by 2024.

According to research, the number of fintech companies increased by more than 179 percent between 2017 and 2020, with payment applications topping the industry, accounting for 31 percent of all firms.

Peer-to-peer lending was another area that expanded significantly during this period, in addition to payments. Within a year, the government hopes to have more than 70% of its residents over the age of 15 have a bank account.

In 2017 and 2018, just 31% of adults had a bank account, and only 4.1 percent of the population had a credit card. Between 2010 and 2020, a plethora of personal loan applications developed, some of which grew to be quite popular.

Vietnam's unbanked population, like that of the rest of the region, is turning to fintech for the convenience of financial transactions. Around half of all internet users in the nation utilize mobile banking platforms, 39 percent make mobile payments, and 9.3 percent hold cryptocurrencies.

5. Thailand

The internet is used by 82 percent of Thailand's population, and 74 percent of the bank online. 47 percent of all internet users make mobile payments, and 71 percent use their phones to make monthly online purchases.

Despite the fact that so many people are online, Thailand is not a particularly welcoming market for fintech when compared to other nations in the area. The country draws fewer fintech investments, but it is still seeing a fintech boom, with 10% of its internet users owning some kind of cryptocurrency. Thailand is now the world's second-largest cryptocurrency owner, after only South Africa.