Home to one of the fastest rates of digital payments adoption, Southeast Asia has a strong foothold in the growing digital financial services industry which is slated to hit US$1 trillion by 2025. Strengthened by the region’s internet economy of 400 million internet users, Southeast Asia’s strong digital demand has promoted healthy competition and growth in the digital financial sector—making the region an incubator for digital finance and innovation. 

With online shopping and contactless payments becoming an integral part of our everyday lives, we have seen a movement of offline to online and physical items are receiving digital treatment. As a testament to its progress, the region has witnessed the rise of digital gold startups and even ride-share super app Gojek venturing into digital gold investments. 

Culturally, gold has always had a strong significance for many in Southeast Asia, holding an important role in customary traditions such as weddings, and is often passed down as a family heirloom and revered as a symbol of wealth for generations. With Southeast Asia’s deepening the demand for gold and rising digital finance landscape, will the region move a step closer to becoming a digital gold haven?

Interested in fintech stories from around the region? We’ve got you covered. Read our interview with ABC Technologies to find out more about their plans for SEA.

Regulation and governance

Over the past few years, Southeast Asia has cultivated its tech startup ecosystem with experts viewing the region as the next Silicon Valley of the East. Its strong tech foundations were laid by the attractive regulatory landscape and robust governmental support that has proliferated the growth of new innovation and healthy competition. 

Singapore’s favourable technological infrastructure and regulatory framework were key in nurturing innovation while ensuring consumer protection, anchoring its position as a fintech hub. Its booming fintech innovation amassed over S$1.2 billion in fintech investments in 2019, more than double the investments from the year before, painting an attractive fintech landscape with strong growth potential. Amidst the ongoing coronavirus pandemic, the Singapore government has also pursued digital finance as a means of reducing contact to stamp the spread of the virus, accelerating the growth of the digital payments and finance industry. 

Neighbouring Malaysia has also actively developed its fintech landscape by promoting greater adoption of e-wallets and digital payments through a digital stimulus that gives eligible Malaysians a one-off RM30 incentive to spend with selected service providers. Most recently, Malaysia issued an updated exposure draft on the licensing for digital banks, simplifying the regulatory framework and reducing the liabilities on promising new entrants with strong value propositions. 

Despite the unfavourable economic forecast brought upon by COVID-19, the outbreak is expected to boost the adoption of digital payments throughout Southeast Asia. The region’s digital financial landscape may flourish under the new socially distant circumstances, edging Southeast Asia a step closer to becoming a fintech powerhouse. This has sparked the growth of innovative products that blend traditional commodities and digital technologies such as digital gold. 

Mapping out culture and society

With the region’s strong governance and regulations, Southeast Asia is quickly reaching the pinnacle of its digital revolution and is already overshadowing China as the world’s mobile economy hotspot. When it comes to financial evolution, approximately 49 percent of urban Southeast Asian consumers are already using e-wallets with their commercial bank providers and the growing pool of digital payments consumers is expected to hit 84 percent by 2025. With the growing number of digital finance users, consumers in the region already have a keen interest in exploring digital assets in their everyday business and lives and it comes to no surprise for consumers to considering other forms of traditional stores of value such as gold.  

Digital gold has been gaining traction in the Southeast Asian market, especially with the yellow metal’s predominance in the region’s cultural fabric. Collectively, ASEAN countries have consumed 309 tonnes of gold in 2018, making the region the third-largest market for gold in the world. Sitting at the intersection of digital finance and traditional investments, demand for digital gold has been rising due to the increased accessibility through digitisation and the affordability of purchasing in increments, which have been key reasons for its growing demand in countries such as Indonesia. With Indonesia’s growing demand for digital gold, Singapore’s reputation as a safe-haven storage location, and Thailand becoming the third-largest gold trading hub in Asia, it is safe to say that Southeast Asia is a booming gold haven.

Who are the key fintech players in Southeast Asia? We look at them and their impact on the region.

Growing gold innovation

As the region’s digital gold landscape is still in its nascency, the industry still has much to grow. Southeast Asia has been a keen supporter of distributed technologies, incorporating the benefits of blockchain into its tech ecosystem through various supportive regulatory schemes. Blockchain has played an active role in developing the digital gold industry, providing an automated, decentralised and secure process for industry players and consumers alike. It’s distributed, immutable and transparent characteristics have polished the outlook of digital gold, creating a new avenue for consumers to purchase the precious metal. 

With the region’s unique combination of progressive regulations, cultural practices and surging digital adoption, Southeast Asia is shining its reputation to quickly become a digital gold haven and there is still ample opportunity for the industry to further grow its roots. As we venture into a new post-COVID chapter, there is no doubt that the industry will continue to be moulded to satisfy the needs of today while exploring uncharted territories and securing customers of tomorrow. 

Contributed by Shaun Djie, COO & Co-Founder of Digix

About the author

Shaun Djie is the Co-Founder and Chief Operating Officer of Digix. His vision to democratise gold landed Digix as a 2020 winner of the S&P Global Platts Global Metals Awards. Digix was previously shortlisted as a nominee at the Microsoft Singapore Partner Award and a finalist at the Monetary Authority of Singapore’s Fintech Award. As a Board Member at the IT Standards Committee, organised by the Infocomm Media Development Authority and Enterprise Singapore for Blockchain and Distributed Ledger Technologies, Shaun is reshaping the age-old precious metals industry, making it more accessible and affordable by digitising gold on the blockchain. He has been selected as a Regional Partner at Kenetic Capital, an institutional platform for blockchain advisory, technology and investment. Besides his successful career as an entrepreneur and innovator, Shaun is a writer, having co-authored Cryptocurrency Wizards, a book covering the testimonials from the leaders in Asia’s crypto space.