In Southeast Asia, only a small percentage of transactions are cashless, and about six out of ten people do not have sufficient access to a bank account. As a result, there are enormous prospects for Southeast Asia's developing fintech trends to assist in resolving this problem.
The only payment mechanism regularly gaining traction in the majority of ASEAN economies is eWallet platforms, which are expanding in acceptance and popularity. The COVID-19 lockdowns' greater reliance on eCommerce has been a major factor in their growth.
As the old banking system transitions to a new era of digitalization, the Southeast Asian digital payments sector is undergoing something of a revolution.
Southeast Asia is going through a digital revolution like other places worldwide. The number of Internet users increased by 400 million in the first year of the epidemic, and 70% of ASEAN citizens are currently online.
Even if the COVID-19 pandemic has abated, the crisis has caused a rise in eCommerce as well as a desire for transfers and contactless payments. As more fintech choices and digital banks emerge, a new Google-led study predicts that the Asian digital payment market will reach USD 7.28 trillion in transaction value by 2027.
The region's digital economy is booming, with eight out of ten Southeast Asian consumers already using the internet, according to research by Bain & Company and Facebook. Online retailers in the region have a tremendous opportunity to grow as a result of the economy's fast digitization.
The Asian Development Bank has determined that the most important component in Southeast Asia's post-pandemic economic recovery is the growth of micro, small, and medium-sized enterprises (MSMEs). More digital payments are desired by 75% of the region's MSMEs, and more digital loans is desired by 50%.
The resulting convergence of variables has facilitated the development of digital financial services in Southeast Asia. In nations like Indonesia and the Philippines that have sizable, dispersed, and frequently remote populations, digital finance is proving to be highly revolutionary.
Individual customers have traditionally received priority in the development of digital financial services over small enterprises. The integration of MSMEs into Southeast Asia's developing digital financial landscape will be essential for the region's economic future as more people use virtual wallets, with banks playing a major role in attaining this goal.
By enhancing merchant payment capabilities and integrating mobile wallet payment flows across online and offline channels, they can cater to the particular demands of MSMEs and promote the micro commerce that accounts for the majority of the region's economic activity.