How businesses can profit from ASEAN’s digital banking boom

The expansion of the digital bank sector is a clear illustration of the demand for digital financial services among consumers. An Atos survey of 10 Asia Pacific markets found that Southeast Asia customers were most receptive to banking services offered by fintechs, challengers and other new entrants.²

Regional super-apps like Grab, GoTo and MoMo are transforming the way in which consumers manage their online and offline lives, with platforms that span everything from financial services to e-commerce and social networking. Their breadth means that they naturally embed themselves into people’s day-to-day routines.

One consequence of the emergence of super-apps has been to drive demand for electronic payments and other mobile and online banking services. Payment connectivity is also increasingly a policy priority across the region, with all 10 ASEAN nations committed to expanding cross-border payment cooperation.³

By promoting the digital banking sector, governments are also hoping to boost financial inclusion by making it easier for the region’s 250 million unbanked adults to access banking services.⁴

Many young people are also under-banked, even if they have a bank account. A survey of 90,000 ASEAN people, mostly under 35, by the World Economic Forum and Shopee owner Sea Group, found that only one-fifth had access to financial services like credit, investment and insurance.⁵

The same survey found that digital payment apps and e-wallets were the most widely used mobile apps after social media.

A lack of access to sophisticated financial services is also a problem for the micro, small and medium enterprises (MSMEs) that make up almost all of ASEAN’s companies, 85% of its labour force and 45% of GDP.⁶

Digital economy push

All businesses are aware of the increasing digitisation of banking services and their ever-greater integration into e-commerce propositions. But in addressing consumers’ demands for smooth, convenient interactions, they face an array of pain points. These include ensuring that transactions can be executed quickly and easily, that a sufficient variety of payment methods are available, and that causes of frustration like payment declines – often caused by poor design leading to consumer mistakes in inputting their details – are kept to a minimum.

Having the right banking partner – one that can cater to their requirements for fast, transparent, and reliable payment methods – can make their digitisation journey easier.

Digital banking is fundamental to a broader digital economy push across ASEAN. Thailand is now in the second phase of its Digital Economy Promotion Master Plan, which runs from 2023 to 2027.⁷ The first phase, from 2018-2022, aimed to digitalise 25,000 businesses, but succeeded in transforming more than 155,000.

Singapore’s digital economy has risen to contribute 17% of GDP in 2022, up from 13% in 2017.⁸ The government’s Digital Enterprise Blueprint aims to upskill the country’s workforce, improve its cyber resilience and deploy artificial intelligence to increase efficiency.

Malaysia’s digital transformation is driven by initiatives like the National E-Commerce Strategic Roadmap and the Malaysian Digital Economy Blueprint. The country aims to increase its e-commerce market size from RM1.15 trillion in 2023 to RM1.65 trillion in 2025.⁹

How not to be left behind

Businesses in the region are responding to the growing demand for digitisation of the customer experience by ensuring that they are able to offer an experience that meets the ease-of-use expectations of their customers.

To achieve this, businesses are transforming their digital and financial architecture to support online multiple payment methods, currencies and collection accounts – as well as seamless integration into mobile or online platforms such as super-apps.

This often involves tackling the challenge of legacy infrastructure that may not be suited to today’s requirements.

An experienced banking partner can provide the back-end solutions they will need to handle cross-border payments or provide financial solutions to their customers.

“We are seeing strong demand for faster payments, more convenient financial solutions and digital trade processes that can make supply chains more efficient.”

Ease of use regularly ranks as a high priority. To achieve this, merchants are increasingly looking to partner with banks in order to more effectively communicate promotions or other offers to their customers, in a drive to provide more personalised services.¹⁰

Specialist financial services providers are also gathering pace. Supported by innovative financing facilities from HSBC¹¹, Indonesia-based Akulaku has grown into a peer-to-peer lender and digital bank offering a wide range of services and has expanded into Malaysia, the Philippines and Vietnam.

How HSBC can help

HSBC is ready to assist businesses that are looking to digitise their banking processes. HSBC is committed to helping the development of the new economy in ASEAN and has made available a USD1 billion ASEAN Growth Fund¹² dedicated to businesses that are looking to scale up in the region.

For the streamlining of wholesale trading processes, HSBC’s TradePay offers clients in Singapore and Indonesia a document-free ability to make just-in-time payments to suppliers in minutes just by uploading a payment file.¹³ The system will be rolled out in Malaysia and the Philippines in the fourth quarter of 2024.

And to support e-commerce or in-store collection needs, HSBC’s Omni Collect allows businesses to offer customers multiple payment options including eWallets and QR codes, the ability to make real-time payments, as well as efficient and fast reporting of transaction data.

The digitisation of financial services and their increasingly sophisticated integration into e-commerce is a key pillar of economic development across ASEAN. HSBC has the tools and expertise to help businesses reach their potential in this exciting arena.