Southeast Asia is the best market for fintech

Mekebeb Tesfaye

December 31, 2018 2:28 PM

This story was delivered to Business Insider Intelligence " Fintech Briefing " subscribers. To learn more and subscribe, please click here .

Countries belonging to the Association of Southeast Asian Nations (ASEAN) represent the greatest opportunity for fintech development in the near term, according to a new report by Deloitte and Robocash cited by Crowdfund Insider.

Distribution of Fintech Companies in ASEAN Business Insider Intelligence

Fintech investments in ASEAN countries in 2018 will exceed the $5.7 billion invested in 2017 by 20% to 30%, according to the report, which surveyed more than 60 private fintech firms. Online lenders and fintechs that facilitate access to credit are identified by the report as the most promising areas.

Underlying this continued growth is insufficient financial inclusion that opens up an opportunity for the fintech industry.

Here are some of the key takeaways from the report:

89% of those surveyed say low penetration of banking services in the region makes ASEAN countries ripe for fintech.In Southeast Asia, 73% of the adult population lacks a bank account, according to KPMG . This lack of traditional financial services offers fintechs a huge addressable market without the competitive pressures fintechs in developed economies have to contend with.
ASEAN customers openness to fintech products is also a crucial driver.Of the respondents, 82% say ASEAN customers' willingness to use fintech products, compared with 77% in North America, 76% in Europe, and 49% in Latin America, also contributes to making the region attractive for fintech development. As well as consumer behavior, respondents cited regulatory initiatives as being crucial for helping to develop a more fintech-first ecosystem in the region.

The entry of major firms into the region supports the findings of the report.Southeast Asia is home to 350 million internet users, and the internet economy is anticipated to increase by 44% in 2018, topping $72 billion, per Googles e-Conomy SEA report.

A number of major firms are now investing in startups in the region or launching fintech incentives to tap into this growing market. In October, Chinese tech giant Tencent joined private equity firm KKR in a $175 million deal for a minority stake in Philippine fintech Voyager, while regional ride-hailing giant Grab partnered Mastercard as it continues to branch out into fintech.

Heading into 2019, we expect to see fintech funding to the region, both in terms of size and deal numbers, continue to grow robustly.