According to UOB’s report on the State of Fintech in ASEAN, Singapore takes the lion’s share of fintechs in the region, at 39%. In Singapore alone, fintech investments crossed the billion-dollar mark, a figure that the Monetary Authority of Singapore (MAS) has set for 2019 but has achieved within the first three quarters of the year.

In South-east Asia, digital financial services are expected to generate a base-case projection of US38 billion in annual revenue by 2025, with lending set to make up about a third of this while supporting financial inclusion. With ASEAN being a home to two-thirds of the world’s population, here are the chief drivers of the region’s fintech landscape.

Young urban population spurring robust macroeconomic growth

About half of ASEAN’s population is under 30 years old. This means that come 2030, the young group of people will likely have increased levels of literacy and become first-time job seekers. Concurrently, the urban population is expected to increase by about 100 million, to 373 million people, by 2030 as well. The future prospects of ASEAN economies are positive, with a forecasted average real GDP growth of six per cent or higher in emerging economies of Cambodia, Indonesia, the Philippines and Vietnam. As compared to developed economies, the low government debt can also act as a fiscal cushion for ASEAN.

With above average economic growth and a young and digitally savvy population, middle-class spending is likely to be stimulated. This, in turn, can drive demand for financial services.

Low banking penetration rate for many ASEAN countries

Over half of the population in ASEAN is unbanked. This gap widens in rural areas where 74 per cent of the population does not have access to a bank account due to various reasons such as a lack of personal documents and credit history, poor financial infrastructure, as well as logistical and delivery challenges, just to name a few.

For ASEAN countries with high levels of bank penetration such as Malaysia, Singapore and Thailand, credit availability in the micro, small and medium sized enterprise (MSME)

sector is still considerably low. As such, fintech solutions focusing on payments and mobile wallets can be seen as a first step towards financial inclusion by fillling gaps left by traditional banking providers. This is also aligned with the ASEAN Economic Community’s Vision for 2025 to close the digital gap, increase financial access and literacy, expanding the scope of intermediary facilities (such as digital payments) and developing financial services for smaller firms and lower income groups.

ASEAN is ripe for digital adoption

Excluding Singapore, ASEAN countries are in the early stages of digitalisation. That being said, ASEAN ranks fourth globally in terms of the number of internet users, behind China, India and the US. In fact, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam represent the world’s fastest growing internet market with about 14 per cent five-year compound annual growth rate (CAGR)) with an existing internet user base of 315 million forecast to grow to around 480 million by 2020.

Holistically, with an increasing mobile and internet penetration but a low access to a formal financial sector, ASEAN is ripe for digital adoption. This presents an opportunity for fintech firms to offer financial services to these traditionally underserved segments.

Consumers are ready for Fintech solutions

Beyond the region being ready for digital adoption, global consumers are also more and more receptive to the notion of alternative banking channels. Previously, consumers evaluated financial services based on price, product and scale of the branch network. Today, the overall consumer experience seems to be the main driver of channel choice. This translates to the emphasis on simplicity, speed, convenience, round-the-clock connectivity and responsiveness to consumer needs.

In this regard, fintechs can have an advantage. In ASEAN, many consumers have used non-bank financial services in the past 12 months; 64 per cent in Indonesia, 49 per cent in Malaysia and 45 per cent in Singapore. To overcome this, perhaps trust needs to be established in young, online-only fintechs. Given that 54 per cent of Malaysian banking consumers said that they would not trust a financial service provider without physical branches, perhaps it is time for fintechs to rethink how to communicate their credibility to consumers. This way, consumers will be more likely to move away from traditionally safe and regulated financial institutions.

Banks stepping up

The growth of fintech in Southeast Asia is rapid. In fact, fintech growth in traditional banks are also making headway. A case in point would be Permata Bank, a local bank in Indonesia that is integrating technology into their operations. As it seeks to become a digital bank, Permata Bank has explored digital solutions such as Artificial Intelligence (AI), as well as biometrics and blockchain. It has since introduced various biometric authentication systems, such as FingerID, FacialID and VoiceID, to speed up the authentication process for customers.


With the issuance of digital bank licenses, annual biggest fintech festivals in Singapore, and fintech awards to recognise promising fintechs, MAS’s support toward financial technology and fintech startups is often regarded as a driver in Singapore. Funding Societies also clinched third place under the MAS FinTech Awards (Singapore SME) in 2016, just a year after its launch date.

At the end of the day, fintech products and services all aim to increase efficiency and customer satisfaction. The contributors to ASEAN’s fintech discussed above are set to expedite the progress of fintech development, adoption and proliferation.