The Rise in Fintech and Cashless Payments in Southeast Asia

Abstract

Southeast Asia is recently witnessing a surge in fintech businesses which attempt to provide solutions to the numerous challenges that this region has been facing, including financial inclusion issues such as the low penetration of bank accounts, limited physical access to banking services, and low credit card usage. With the spread of the internet and smartphones in this region, fintech companies are making use of these technologies and finding new ways to serve the people.

The technology and business models that the fintech companies in Southeast Asia rely on mostly originate from mature economies as well as China. Fintech for them is merely a tool to solve issues, and whether it is a copy from others is not regarded as that much important. Another interesting point seen in many fintech services in this region is that while they adopt the latest technologies, enjoying the socalled“ leap-frog effect” or latecomers’ advantage, they are embracing low-tech as well.

Within the various fields in fintech in Southeast Asia, mobile payment is the most active. Numerous companies are providing mobile payment services so that the people can enjoy cashless transactions. Governments in Singapore, Malaysia and Thailand are also promoting cashless payments, one achievement being the 24/7 instant fund transfer using smartphones, a service still not fully introduced in Japan.

However, one must not be over-optimistic in the future of fintech in Southeast Asia. There are several issues that the region must overcome so that fintech can truly flourish, one being security issues. Only then will fintech become widely accepted, contributing to solving financial issues as well as moving the region towards a cashless society.