Part Two: Southeast Asia’s fintech sector takes a breather: growth expected to explode again soon… see part one here
Having looked at developments in the fintech sector in Singapore and Indonesia last month, Adrian Ashurst, CEO of Worldbox Intelligence, examines what is happening in the rest of Southeast Asia. The fintech sector is expanding rapidly in most countries, bringing financial inclusion to people across the region and supporting higher potential growth.
Malaysian fintech sector closing in on US$100 billion target
Malaysia’s fintech sector is thriving and is marked by strong government support and a solid financial infrastructure, say experts cited by the country’s Sun newspaper.1 The market research and consulting firm Mordor Intelligence says the fintech market is poised for significant growth, with an anticipated expansion in transaction value from US$46.63 billion in 2024 to US$96.09 billion by 2029, producing a CAGR of 15.56% during the forecast period.2
Mordor Intelligence states that:
“With its growing middle class, high mobile phone usage, and strong government support for the digitization of the economy, Malaysian businesses and consumers appear ready to embrace fintech technology. Digital payments and wallets are leading the way in Malaysian fintech, followed shortly by insurtech, digital remittances, blockchain, crowdfunding and other forms of financial technology.”
Leading players in Malaysia include Jirnexu, MyCash Online and Capital Bay. Jirnexu and its brand RinggitPlus – Malaysia’s leading financial comparison platform – were founded in 2013 and focus exclusively on Malaysia. MyCash Online is an e-marketplace targeted at migrants in Malaysia and Singapore. It offers easy, secure and convenient online services to foreign workers who do not have access to online banking or credit cards. Capital Bay, known as CapBay, is a peer-to-peer (P2P) financing firm which is exploiting rapid growth in demand for P2P following the Covid outbreak. Banks pulled back on lending to preserve capital, with P2P financing platforms among those filling the gap.
Vietnam lags only Singapore in growth
Vietnam’s young population, supportive regulatory environment, high economic growth rate and rapidly expanding adoption of digital devices mean it has huge potential in terms of fintech. According to the local automated financial-services firm Robocash, the fintech sector is experiencing the second-highest growth rate in
Southeast Asia after Singapore and is expected to reach a turnover of US$18 billion this year.3
Mordor Intelligence puts a lower value on the size of the market in 2024 than Robocash, at US$16.62 billion. However, it expects the market to grow to US$ 1.76 billion by 2029, resulting in a CAGR of 20.23% during the forecast period.
Mordor Intelligence adds that:
“Vietnam is one of the most promising and untapped fintech markets, with a rapidly growing market for technology companies supporting digital banking, digital payments, blockchain, and cryptography. Vietnam is home to over 130 fintech startups serving hundreds of clients and offering various services, from digital payments and alternative finance to wealth management and blockchain. Regulations, government policies, and attractive investment opportunities in Asia are driving the growth of Vietnam’s fintech sector. Fintech has revolutionized many financial services in recent years, quickly gaining acceptance and attracting billions of dollars of global investment.”4
The payment sector is the fastest-growing area, with e-wallet facilities and contactless payments surging on the back of the country’s e-commerce boom. MoMo, ZaloPay and ViettelPay dominate the payments sector. MoMo serves around 31 million Vietnamese. Its mobile app allows customers to conduct transactions directly from their mobile devices and is accepted in over 80% of food and beverage outlets and 70% of supermarkets in Vietnam. ZaloPay, a subsidiary of VNG Group, provides e-wallets to around 14 million Vietnamese. ViettelPay is a digital banking application developed by Viettel Military Industry and Telecommunications Group.
Figure 1: The growth of the digital banking industry in Southeast Asia by value (US$), 2017-2028
Source: Statista, https://www.statista.com/outlook/dmo/fintech/southeast-asia#transaction-value
The Philippines fulfilling its huge potential
A young and tech-savvy population, government initiatives, and a lack of financial inclusion are driving the development of fintech companies in the Philippines. Around two-thirds of the population is unbanked5 and the increasing penetration of smartphones and growing availability of the internet mean that demand for fintech services is growing rapidly.
In contrast to Thailand, the Philippines has also brought digital banks online relatively quickly, in line with its ambitious financial inclusion targets. The central bank, Bangko Sentral ng Pilipinas, has licensed six digital lenders in the country: GoTyme Bank; Maya Bank, Inc; Overseas Filipino Bank; Tonik Digital Bank, Inc.; UnionDigital Bank; and UNObank.
Thailand’s slow pace
The turnover of the fintech sector in Thailand amounted to around US$29 billion in 2023, according to Seven Peaks, which describes itself as a “digital transformation driver”.6 The Bank of Thailand (BoT), the key regulatory body for the industry, has acted with “a marked lack of urgency”, according to Kapronasia. The consulting and market research firm said the BoT mulled the idea for several years before stating in 2023 that it would allow digital banks by 2025.
Kapronasia believes the fact that more than 80% of Thais have a bank account may explain this leisurely approach. However, it added that many Thais have a strong interest in digital banking. It cited Visa’s Consumer Payments Attitude study, published in March 2023, which found that nine in ten Thai consumers (90%), consisting mostly of Gen Y, Gen X and “mass segments”, are interested in virtual banking. According to the study, Thais are most interested in virtual banking to be able to make deposits and withdrawals (72%), transfer money to family and friends (67%), and pay bills (64%).7 However, the study also found that nearly two-thirds of respondents prefer to use a traditional lender as their main bank account.
Leading fintech companies in the kingdom include Ascend Money, the fintech arm of Charoen Pokphand Group, which has a presence in seven countries across Southeast Asia. The company’s TrueMoney super app offers e-payment, lending, Buy Now Pay Later (BNPL), investment and insurance. In July, MUFG and the Finnoventure Private Equity Trust I fund invested US$195 million in Ascend Money, which has 30 million users in Thailand.8
Meanwhile, Dee Money is a robust Thai cross-border transaction system that supports over 26 currencies across 50 countries worldwide. In the long term, the company aims to extend money transfer services to electronic wallets, and to ensure that over 8 million accounts are ready to receive money and that recipients can conveniently withdraw cash from more than 130,000 bank branches, ATMs, and various service points nationwide.
Other countries in Southeast Asia
Fintech can play a huge role in boosting financial inclusion in the region’s poorer countries, such as Cambodia, Laos and Myanmar. Cambodia is seeing a surge in digital payment solutions, with e-wallets, QR-code payments and P2P transfer services growing rapidly, particularly among the younger demographic. The main players are Wing, Pi Pay and TrueMoney.
The Lao fintech LTS Ventures, based in Vientiane, is helping to drive the spread of digital banking services via Lan Xang Banker, a microfinance platform that works online and offline. There are also a number of digital banking apps available in the country, including MB Laos, BCEL, K Plus Laos, u-money and EzyKip.
The military government in Myanmar is hampering the development of the country’s fintech sector. Since the coup, the military has sought to tie mobile accounts to registered SIM cards, closed down tens of thousands of anonymous accounts, and increased personal information requirements, according to Radio Free Asia.9 However, a large number of payment apps are available and the rebel movement is trying to launch alternative banking networks.
Fintech powering financial inclusion and growth
The growth of mobile banking services is enabling people in even the most remote parts of Southeast Asia to access banking services, allowing them to make payments as well as raise loans. That can only be good for the region’s growth potential, given that a functioning banking system is a prerequisite for economic growth.
2 https://www.mordorintelligence.com/industry-reports/malaysia-fintech-market
3 https://internationalbanker.com/technology/can-vietnams-fintech-sector-fulfil-its-immense-potential/
4 https://www.mordorintelligence.com/industry-reports/vietnam-fintech-market
6 https://sevenpeakssoftware.com/blog/thai-fintech-ecosystem
8 https://www.finextra.com/newsarticle/44413/mufg-invests-in-thai-super-app-ascend-money
9 https://www.rfa.org/english/commentaries/myanmar-nug-bank-07222023100436.html
Source: Worldbox Press Release
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