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In the rapidly evolving digital landscape of Southeast Asia, financial technology (Fintech) has emerged as a powerful tool for social and economic transformation.
With a significant portion of the population still underbanked, Fintech offers a promising solution to bridge this gap and democratize financial access across the region.
The Underbanked Challenge in Southeast Asia
Southeast Asia, with its diverse population, faces unique financial inclusion challenges. A considerable number of people in countries like Indonesia, the Philippines, and Vietnam lack access to traditional banking services.
Barriers such as geographical remoteness, limited financial literacy, and inadequate banking infrastructure have kept these populations on the periphery of the financial system.
Fintech: A Catalyst for Change
Fintech companies in Southeast Asia are really blossoming. Through apps and digital platforms, they are offering services like mobile banking, digital payments, and micro-loans, which are transforming the financial landscape of the region.
Mobile penetration in Southeast Asia is one of the highest globally, offering a unique opportunity for Fintech growth.
Mobile-based financial services are not just a convenience here; they are a necessity. They enable users to carry out financial transactions, save money, and access credit services directly from their phones, bypassing the need for physical banking infrastructure.
Innovative Credit Models
Credit access remains a significant hurdle for the underbanked in Southeast Asia. Fintech startups are tackling this issue with innovative solutions like alternative credit scoring, which utilizes non-traditional data such as mobile phone usage patterns and online transaction histories.
This approach is particularly effective in a region where many lack formal credit histories but have active digital footprints.
Challenges in the Region
Despite the potential, Fintech in Southeast Asia faces its share of challenges. The regulatory environment is varied and often complex across different countries, posing a hurdle for uniform fintech growth. Additionally, despite high mobile penetration, digital literacy and trust in digital services vary, impacting fintech adoption rates.
Some Case Studies
Airwallex
Airwallex is a global financial platform for businesses, providing payments, treasury, expenses and embedded finance services. Airwallex’s products include multi-currency business accounts and payment cards, foreign exchange (FX) and transfers, as well as online payment acceptance.
Founded in 2015 in Melbourne, Australia, Airwallex claims to be one of the fastest-growing payments and financial infrastructure companies in the world and says more than 100,000 companies around the world use its software and APIs.
Airwallex is valued at US$5.6 billion and has raised over US$900 million from some of the world’s top investors including Salesforce Ventures, Sequoia and Tencent. Its primary office is in Singapore.
Aspire
Aspire is a payment services institution located in Singapore. The company offers businesses a unified suite of financial services including international payments, corporate cards, payable and receivable management.
Founded in 2018, Aspire claims to serve over 15,000 businesses across Southeast Asia. The company announced in June that it had achieved profitability and reached US$15 million in annualized total payment volumes.
Aspire has raised about US$200 million in venture capital (VC) funding with its latest round being a US$100 million round secured in February 2023.
StashAway
StashAway is a digital wealth manager that offers investment portfolios and wealth management solutions for both retail and professional investors.
In January 2021, StashAway surpassed US$1 billion in assets under management. The company said it achieved this milestone faster than it took the world’s largest digital wealth managers, Betterment and Wealthfront, to reach the same milestone.
In 2020, StashAway was recognized as a Technology Pioneer by the World Economic Forum and a Top 10 LinkedIn Startup.
They operate in Singapore, Malaysia, the Middle East and North Africa (MENA), Hong Kong and Thailand. The company has raised more than US$70 million in funding, securing its latest round last year, raising a $12.7 million Series D+ round.
Conclusion
Fintech in Southeast Asia is more than a technological revolution; it’s a gateway to financial empowerment and inclusion.
It addresses the specific needs of the underbanked and opens up opportunities for economic participation and growth.
As the fintech ecosystem continues to mature in Southeast Asia, its role in shaping a more inclusive financial future cannot be overstated.
