From cash to e-wallets . . .
A huge wave of disruption is sweeping through Southeast Asia’s banking and financial industry. Consumers in Indonesia, Singapore, Thailand, and Vietnam have been swapping their physical wallets for e-wallets due to the high rate of smartphone adoption in the region. The increasing growth of e-money transactions has helped propel the development of smart or digital banking. The Philippines and Vietnam have launched their first digital-only banks, while Singapore is aiming to issue its first digital banking licenses by mid-2020. As Southeast Asia leapfrogs from cash payments to e-payments, the region is entering a new era of smart banking.
Bridging the gap . . .
Only 26 per cent of the population in Southeast Asia has full access to banking services and 24 per cent of the population is ‘underbanked,’ meaning they have unmet financial needs, including inadequate funding and no access to credit cards. The ‘unbanked’ account for the remaining 50 per cent of the region’s population. Digital banking improves financial inclusion by giving the unbanked population, largely in rural areas, greater access to financial services. More importantly, digital banking allows micro, small, and medium enterprises (MSMEs) to have better access to credit with lower interest rates, which is difficult to obtain in the region’s conservative traditional banking sector.
Racing for digital banking licenses . . .
The rise of digital banking has prompted traditional banks in the region to innovate and transform their financial services. And digital banking licenses are now intensifying the competition between traditional banks, tech unicorns, and other fintech players. The race is currently the most intense in Singapore, where the Monetary Authority of Singapore (MAS) will issue its first five digital banking licenses in 2020. As the December 31, 2019 application deadline approaches, the ride-hailing giant Grab is a strong contender. If Grab successfully secures its license in Singapore, it could gain ground on its rival Gojek in Southeast Asia’s rapidly growing fintech industry as the two giants compete for the region’s super-app throne.
- Fintech Singapore: Singapore’s digital banking license race intensifies with deadline looming in weeks
- Nikkei Asian Review: Singapore brokerages join race for digital banking licenses
- Nikkei Asian Review: Tech-savvy upstarts race for Singapore digital banking licenses