Two-thirds Asians Used Fintech Services in 2019 - Study
Asia is a high-growth market for any fintech company - whether it's old, or new. With internet technology now reaching even the most rural parts of the region, financial institutions are betting big on fintechs to capture the underbanked market.
A recent survey revealed that over 60 per cent Asians applied for loans online at least once in the past year, while 67 per cent used e-payment and digital wallet services in 2019.
India and Vietnam led the pack in the most loan applications on fintech platforms, thanks to higher consumer spending, even though the two have the lowest income per capita. The Philippines recorded the lowest usage of online credit services, the survey said.
Most people who applied for a loan online did so due to an immediate, unexpected need, the study said. Borrowers in India and the Philippines were mostly the ones looking for urgent fintech financing, versus other countries.
But only one in ten people across the region borrowed online regularly, owing perhaps to mostly high interest rates in the region.
Other fintech services, like e-wallets and online payment services fared better than lending, with more than half the people surveyed making digital payments more than two times a week.
Digital investment services did the worst, with only 8 per cent using fintech platforms to make any sort of investments, mostly because the average daily wage in Asia is lower compared to that in the West.
The survey highlights the fact that even though Asia is adopting fintech services and platforms quickly, some financial services still don't have takers. In the poorest parts of Asia, daily wages are still handed over in the form of cash, which earners then store as cash itself, to be spent only when needed.
However, that could improve with financial literacy and inclusion, the research suggests.
The study by Robocash Group was conducted in the second half of January 2020, and covered India, the Philippines, Vietnam and Indonesia.
Fintech in Asia
Of the 400 million adults that live in Southeast Asia, only 104 million are fully “banked”, and have full access to financial services, which leaves 198 million people that do not have even rudimentary access to financial institutions, a joint study by Google, Temasek and Bain & Co showed.
Very basic problems like infrastructure costs, absence of public registers and reliable credit information, along with stringent financial regulations, make it difficult for institutional banks and insurers to penetrate the region in a meaningful way.
Fintechs have tried to plug that gap, and using Asia’s rapid tech innovation, boomed into a multi-billion dollar industry in the region, serving tech savvy millennials, and undocumented Asians alike.
Digital payments are expected to cross $1 trillion by 2025 in Asia, and account for nearly one in two dollars spent in the region. The market for e-wallets is expected to grow even faster, from $22 billion in 2019, to $114 billion, a more than fivefold jump, by 2025, the Google joint study said.