While the world is still reeling from the far-reaching economic, social and health consequences of the pandemic, it must be acknowledged that it was a catalyst for transformative change in many areas, most notably in digital banking innovation.

Southeast Asia has experienced particularly strong rates of growth in these new financial technologies, especially when it comes to financial services like digital payments and e-wallets. In a region where cash has always been considered king, the impact of this change has been felt broadly, not least in levels of financial inclusion.

We share how the fintech trends that Southeast Asia is following will help with sustainability

Pre-2020, Southeast Asia had concerningly high levels of financial exclusion, with as much as half the population considered unbanked (and a further large portion ‘underbanked’ or under-served by financial institutions).

Despite the best efforts of numerous, years-long government-led initiatives dedicated to improving this situation, it took a pandemic of global proportions to make a significant dent in levels of financial inclusion across the region.

Digital financial services have a direct positive impact on financial inclusion

In the last couple of years, we have witnessed an astronomical rise in the use of digital payments across Southeast Asia, with new technology making it easier and cheaper for people to send and receive money quickly and conveniently from their smartphones. This is of particular importance to people living in rural and remote areas, or those who don’t hold a formal bank account. For many consumers, the next-gen fintech that facilitates digital payment services has enabled them to join the formal economy for the first time.

Beyond improving the ability to send and receive money, innovative new digital financial service providers are also improving access to savings accounts, personal loans and other forms of credit, and even insurance products, enabling individuals to break the cycle of poverty and improve their long-term financial prospects.

And while the impact at the individual level has been immense, it is the collective impact of financial inclusion on communities and entire nations that have been most transformative. Improved financial inclusion has a multitude of benefits that reach far beyond each individual consumer, and results in increased employment opportunities while also encouraging business growth. Improving access to financial services and financial literacy also improves the overall standard of living, lifting whole communities out of poverty.

MSMEs – the backbone of Southeast Asia’s economy

For businesses, the impact of next-gen fintech innovation has also been incredibly positive. Not only has it made the process of receiving payment for products and services easier and cheaper, but it has also enabled businesses to grow their customer base, launch into new markets and even create new revenue streams more effectively.

New digital financial services have enabled the steady flow of cash, while also streamlining the systems and processes required to secure credit to fuel growth. Small business owners no longer need to meet onerous admin requirements to have loans approved, ensuring businesses can keep operating even when times are tough.

Micro, small and medium enterprises (MSMEs) form the backbone of the Southeast Asian economy and have been amongst those that have benefited the most from new fintech innovations post-pandemic, with the benefits of reduced costs, greater convenience and simplicity keenly felt by these small operators.

A number of forward-thinking and customer-centric banks and financial institutions across Southeast Asia have enthusiastically embraced the possibilities that cloud-native next-gen fintech can offer. Companies including GoTyme Bank and UNOBank in the Philippines, TNEX, Cake and Timo in Vietnam, Bank Jago and Bank INA in Indonesia and Bank Islam in Malaysia have all made it their mission to leverage technology to improve financial inclusion within their own communities.

Malaysia’s Bank Islam launches new digital-only app ‘Be U’ aimed at digital natives

Bank Islam Malaysia Berhad, is Malaysia’s first Shariah-compliant financial products and services provider. As a fully-fledged and pure-play Islamic bank, Bank Islam provides banking and financial solutions that strictly adhere to the Shariah rules and principles and are committed to the ideals of sustainable prosperity and ESG values. 

In mid-2022, Bank Islam launched an innovative cloud-native digital banking app called Be U by Bank Islam (Be U). This next-gen, customer-centric digital banking app is targeted at young, digital native Malaysian consumers who have come to expect a seamless, digital experience when it comes to controlling their finances.

Bank Islam focuses on broadening financial inclusivity and improving financial literacy in the country. Its digital-only proposition, Be U, leverages the latest in fintech to be engaging and user-friendly, with the goal of helping customers better understand and manage their finances.

Noor Farilla Abdullah, Group Chief Digital Officer at Bank Islam, said: “Be U is a game changer for us. It is a unique, customer-centric, tech-enabled app that will offer consumers a whole new experience in banking. Mambu’s agile cloud banking platform provides the technological foundation of Be U, with AWS providing cloud hosting.”

Be U features a first-of-its-kind technology stack and is a unique Malaysian Islamic Finance market offering. By harnessing the potential of the rapidly changing fintech landscape, Be U offers consumers access to an affordable and easy-to-use financial solution they can access in the palm of their hand.

Cake serves up innovative financial solutions to Vietnam’s unbanked 

CAKE by VPBank is a fully digital bank launched in January 2021 in Vietnam. CAKE identified a gap in the market for a full-service digital bank for Vietnam’s young and digitally-savvy population, a large proportion of whom are unbanked, and subsequently looked to improve access to financial services for these young Vietnamese consumers by developing a full suite of digital banking services.

Today, a little more than two years after its launch, CAKE offers a wide range of services to its 3 million customers, including transfer, payment, savings, investment, consumer loans, and other innovative financial products.

In terms of customer tally, transaction volume, and savings deposit amount, CAKE is currently Vietnam’s largest digital bank. In 2022, CAKE was ranked as Vietnam’s market leader for digital solutions 2022 by EUROMONEY Market Leaders and was also honoured with “Vietnam’s best bank for digital solution” by ASIAMONEY.

Financial inclusion helps break the cycle of poverty

Enhanced financial inclusion, encompassing improved access to financial services and financial literacy, can have a measurable and immediate effect on the socioeconomic status of communities and even entire nations. It can provide individuals with the tools they need to improve their personal financial situation, while also creating new jobs and sparking economic growth. By leveraging next-gen financial technology to offer improved access to financial services, financial literacy, microfinance, and services such as digital payments and e-wallets, financial service providers across Southeast Asia can enable consumers to break the cycle of poverty and look forward to brighter financial futures. 

The article titled “How next-generation fintech is enhancing financial inclusion across Southeast Asia” was contributed by David Brady, Sales Director Southeast Asia, Mambu

About the author

David Brady, Sales Director Southeast Asia, Mambu

David Brady is the Sales Director SEA at Mambu, the SaaS cloud-native banking and financial services platform, where he is responsible for driving revenue growth and managing key accounts. With over 10 years of experience in Asia, David has spent 8 years focusing on data analytics and banking transformations, working with a broad range of businesses including international banks, neo-banks, fintechs, and conglomerates. He is passionate about leveraging cutting-edge technologies to empower banks in offering their customers better financial experiences.