How Digital Banking & Fintech Adoption Is Growing Rapidly In SEA

Yesterday, William Bao Bean of SOSV moderated a digital banking forum that took place at the 2020 Wild Digital SEA conference.

He was joined by panelists who were themselves fintech industry experts:

It’s not about challenges, it’s about partnerships

First of all, what is digital banking?

Pauline defined it as the fintechs that challenge traditional banking from 2 main categories:

  • Challengers with banking licenses such as UK financial technology firm Monzos;
  • And neobanks, which have a partnership with a bank or have a quasi-license that allows them to keep deposits like Wealthfront.

Over the past 10 years, there has been a lot of investment in fintech and traditional banking challengers.

Traditional financial institutions reported that their global market value had increased from 100% to 80%.

The rest of the 20% was taken over by booming fintechs and incumbent challengers.

Dictionary time: A company incumbent most often refers to an industry leader. For example, a company may have the largest market share or exert additional influence within the industry.


However, from what Sheyantha can see on the ground, most of SEA’s fintechs are not challenging the traditional banking industry.

They focus their services on consumers and businesses.

This is because the SEA markets have a large unbanked and underbanked population, both on the consumer side and on the SME side.

For example, the markets in India and Malaysia are 85% unbanked, 40% of which are underbanked.

Dictionary time: Unbanked people usually pay things in cash or by prepaid debit card.

Underbanked people are people who have a bank account but rely on alternatives like short-term borrowing instead of credit cards to manage their finances and purchases.

Investopedia / Investopedia

Therefore, these challengers are not trying to clutter up an already crowded space in the banking segment, but to serve the needs of customers and small businesses at the bottom of the pyramid.

Respond to funding for young people, millennials and startups

Eduard suggested that fintechs target young people and millennials who want to embrace digital banking solutions as part of their lifestyle.

Indeed, young graduates entering the labor market generally do not want to work in large companies.

Instead, they are more inclined to start their own businesses and will eventually turn to opening bank accounts for their startups.

So we should look at them differently and serve them from a personal point of view or a startup bank. There are also a lot of synergies and we can offer them services that they cannot get from incumbents.

Eduard Fabian, CTO and Vice President of Razer Fintech

EES SMEs lead digital banking adoption

Pauline said the digital banking scene in SEA is already flourishing by leveraging access to digital banking for customers and SMEs.

Particularly in the retail, telecommunications, e-commerce, ridesharing, online media and financial services sectors.

She further underlined that by 2030, SEA in terms of GDP will be the largest in the world.

From the point of view of the population, it will become the 4th largest after China, India and Europe.

For example, the online banking population in the Philippines and Vietnam already has an adoption rate of 65%.

“We are tackling cash and going digital. So this is really where fintech companies should be tackling and targeting disadvantaged people like young people, ”she said.

Don’t compete against Alibaba’s global dominance

Before ending their discussion, William asked one final question about how they plan to compete or coexist with a competitor like Alibaba, which intends to become the world’s largest financial services platform.

Razer Fintech had no plans for such lenses yet, according to Eduard.

He further explained that there is a niche for every consumer, where FinTech companies can customize their services to meet them.

“I think the other parties are not competing with the incumbents, but partnering with them and really building an ecosystem because that’s where customers will gain value,” he said.

Sheyantha said, “It’s not as easy to spread your wings on a big market spending very quickly as other types of digital industries.”

When building a great fintech brand in any market, regulators need to be market specific and take the market context into account.

He shared that taking a more modest approach in local contexts is extremely important when it comes to licensing and partnerships.

William then ended the session by sharing that COVID-19 triggered an incredible development.

He shared that Alibaba’s platform took a long time to reach 2 million users, but reached 20 million users in the last 5 months of the pandemic.

“This is a massive acceleration and adoption of digital banking, especially when it comes to financial services and payments, because no one wants to touch dirty money,” he said.

It is surely a very exciting time to watch the acceleration and adoption of digital banking and online payments through SEA in the future.

  • You can read more about Wild Digital here.
  • You can read more about what we wrote about Wild Digital SEA here.

Featured Image Credit: Eduard Fabian, CTO and Vice President of Razer Fintech, on Linkedin

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Jothi Venkat

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