Exploring ASEAN's FinTech Landscape – An Investment Perspective

April 11, 2019


When you hear the term ASEAN, what is the first thing that comes to mind? Rapidly evolving technologies and their growing adoption, a large population, and varied, diverse cultures – all valid points, but if you thought of FinTech, you’ve hit the nail on the head. To begin with, here’s an overview of the region in terms of its demographics.

ASEAN in Figures

ASEAN is the third-largest region in Asia. Its founding members include Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Over the years, other countries in the region have gained entry to the association, thereby enjoying the benefits that come with membership. Today, ASEAN is a force to reckon with, especially when it comes to the region’s economics.

It is home to more than 630 million people with one-fourth of the population living in urban areas. ASEAN has an annual growth rate of 4.7% and has USD 119.97 billion in FDIs; it is also one of the fastest-growing regions globally and the seventh-largest economy in the world.


ASEAN’s population is young and educated with a literacy rate of over 80%. ASEAN is also cell phone-savvy with more than 0.5 phones per person and enjoys a low-to-mid unemployment rate of 0.5%–6.9%. ASEAN countries also have an average-to-high life expectancy of 69–82.7 years with a gender parity ratio of 49.9% males to 50.1% females.

Over the last few years, ASEAN has witnessed a veritable revolution in terms of FinTech innovation by a range of startups – add to that the introduction of better regulatory measures, and it is the perfect formula for VCs & angels looking to invest in the FinTech domain.

Regulation & Ownership Rules

In 2015, ASEAN economies established the ASEAN Economic Community (AEC). The AEC allows free flow of goods & services among ASEAN countries and may pressure lawmakers to introduce reforms that enable more substantial foreign ownership.

In addition, the ASEAN Banking Integration Framework – which aims to liberalize the banking market by 2020 – could help pave the way for further integration and the entry of ASEAN banks into regional banking markets. The framework will allow qualified ASEAN banks to expand their reach within the 10-nation bloc by 2020. Currently, the level of integration in ASEAN’s banking sector is relatively limited.

However, the divergence of regulations among the banking sector across different ASEAN markets is expected to hinder the establishment of a shared banking market across ASEAN. Further deviations in regulations could impact banking operations.

The regulatory environment in the ASEAN FIG sector is dynamic and constantly shifting resulting in (1) consolidation as small banks/financial institutions finding it challenging to compete with large domestic and foreign banks, and (2) foreign banks with sub-scale operations exiting the market to focus on core geographies. Regional banks with strong balance sheets and global aspirations are exploring growth opportunities in key ASEAN markets such as Indonesia, Vietnam, and the Philippines for growth.


Overall, the region is a land of opportunities for financial service firms. Household wealth and consumption are on the rise, thereby offering broader opportunities in retail banking and wealth management. Technology is enabling low-cost channels that can be used in emerging markets such as Indonesia and the Philippines to facilitate penetration into underbanked populations, while the more mature markets (such as Hong Kong and Singapore) are positioning themselves as wealth hubs for the region.

In parallel, banks are focusing on improving customer experience primarily through the use and functionality of digital, mobile, and social media distribution channels to meet changing customer needs and expectations. The growing business & financial integration within the region (Hong Kong, China, and upcoming ASEAN Banking Integration Framework) also brings greater offshore market access and new business opportunities, and the growing importance of RMB provides an opportunity for offshore RMB product offerings.


Besides, regional expansion and opportunities are accompanied by a credit-risk build-up due to rapid credit growth, high asset prices, and moderate economic growth. Emerging markets – in particular, Indonesia, Thailand, and Malaysia – have seen rapid increases in household debt, which could become a source of asset quality risk if unemployment and inflation rises. Falling oil and commodity prices could also lead to high NPLs in the banking sector, and growing linkages & investment between China and the rest of the region (notably Hong Kong, Singapore, and Taiwan) may increase banks’ risk profiles due to the Mainland’s economic slowdown. Besides, slower growth and competitive operating environment are putting pressure on margins and profitability, along with increased compliance/implementation costs from ongoing regulatory reforms.

Implications for Banks

In this environment, FinTech and digital distribution are becoming emerging themes both for entering markets as well as an efficient delivery platform to access new & unbanked customers. To attract the newly affluent segments, banks must offer more interactive and personalized services, thereby improving the user experience. Building analytics capabilities is also critical in providing a personalized user experience.

Besides, with increasing asset quality concerns, banks also need to ensure they have sound risk management, appropriate risk appetite, a robust underwriting framework, and sufficient capacity for proper monitoring; slower growth & competitive pressures mean banks must focus on sustainable efficiency and productivity gains, as well as seeking alternative sources of revenue for growth. E.g., cross-selling, fee-based products, and regional expansion. Eventually, to compete in more integrated Asian markets, smaller banks will also need to look at consolidation to gain scale and improve efficiencies.

M&A Themes

In terms of M&A, this translates into the sale of non-core assets/minority stakes by global banks; local banks consolidating and sometimes looking for foreign strategic partners for funding, global best practices/know-how & new products; regional banks (e.g., Japanese/Chinese/Korean) looking for growth opportunities in the region; banks increasingly focusing on FinTech investments & digital distribution tie-ups; and regional banks looking to explore other entry options, such as micro-finance institutions in view of limited acquisition opportunities.

A Global Player

ASEAN’s 10 member countries form an economic powerhouse. Home to over 630 million people (among which Indonesia accounts for 41%), the region has a larger population than the European Union or North America – this also translates into being the third-largest labor force in the world behind China and India.

ASEAN is projected to rank as the fourth-largest economy by 2050. If ASEAN economies operate at vastly different stages of development, they all share immense growth potential. ASEAN was able to sustain an above-average GDP growth rate in the past and is expected to grow at a CAGR of 9.8% compared to 4.4% in Europe or North America. Growth drivers include a vast & expanding labor force, a growing middle class, and productivity improvements.

The Unbanked – A Growth Opportunity in the Financial Sector

According to the Global Findex Report, a study by the World Bank reveals that 2.5 billion adults do not use formal services to save or borrow money. More than 2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East, out of which 1.2 billion reside in South East Asia, which represents a significant banking growth opportunity in the region.


ASEAN FinTech Investors – An Overview

Both FinTech-focused VC funds and sector-agnostic funds investing in FinTech have invested regionally. To illustrate this, consider the following companies that have invested in FinTechs regionally:

  • 500 Startups: 23 FinTech investments in ASEAN. E.g., Singapore (Xfers), Thailand (Omise), the Philippines (Ayannah), Indonesia, and Malaysia (iMoney Group).

  • Golden Gate Venture: 12 FinTech investments in ASEAN. E.g., Singapore (Lenddo), Thailand (Omise), the Philippines (Ayannah), and Indonesia (Jojonomic).

  • East Ventures: 11 FinTech investments in ASEAN. E.g., Singapore (MoolahSense), Thailand (Omise), and Indonesia (Moka).

FinTech-focused investors in the region:

  • GMO Venture: 10 FinTech investments in ASEAN. E.g., Singapore (MatchMove Wallet), the Philippines (DragonPay), and Thailand (Kredivo).

  • Life.SREDA: 7 FinTech investments in ASEAN. E.g., Singapore (Fastacash), the Philippines (Ayannah), and Vietnam (SoftPay).

  • TheFinLab: 4 FinTech investments in ASEAN. E.g., Singapore (Chynge) and Malaysia (HelloGold).


Do take a look at the series of articles we’ve published over the last few weeks which dive deep into the FinTech investment landscape of specific ASEAN countries, which include Thailand, Vietnam, Indonesia, the Philippines, and more. The data presented in those articles serves to emphasize and underscore just how huge a deal FinTech investments have become in the region over the years. It is evident that this trend of growth in investments will serve to boost the FinTech startup ecosystem in the ASEAN region in the years to come, and this, in turn, bodes well for the prospect of improved financial inclusion for the communities that need it the most.

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