A hotbed for fintech activities
July 11th, 2019 – The millennial generation of Southeast Asia comprises of half of the region’s 644 million population. The region’s high internet penetration and growing middle class is driving the adoption of digital financial services. However, according to CB Insights, as of 2018, only 47 percent of adults in the region had a bank account, and just one-third of small medium enterprises (SMEs) had access to loans or lines of credit.
According to a recent survey by the Central Bank of Philippines, 77 percent of the population there is unbanked. In Vietnam and Indonesia, the unbanked populations are 65 percent and 52 percent, respectively. Having no access to financial services means no formal employment, no bank account and no opportunity to engage in e-commerce.
Southeast Asia’s growing economic activities, government incentives and healthy start-up ecosystems are attracting fintech companies to expand into the region. Fintech companies have seized the opportunity to offer loans, payments platforms, and other services to largely unbanked and underbanked populations.
Fintech – short for financial technology – is providing the region with innovations, convenience and high accessibility to financial services. Fostering a financial inclusion strategy will reduce the growing wealth gap and provide the poor with critical resources.
In a report by the Asian Development Bank (ADB), the effect of banking the unbanked could boost gross domestic product (GDP) by two percent to three percent in markets such as Indonesia and the Philippines, and as much as six percent in Cambodia. According to the 2016 KPMG report, reaching the unbanked population in Southeast Asia could result in an increase of economic contribution from US$17 billion to US$52 billion by 2030.
Written by The Asian Post
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