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The Singapore FinTech Consortium - Introduction to Financial Inclusion in Southeast Asia



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In recent years FinTech, has grown tremendously and is making its presence felt across the globe. The Singapore FinTech Consortium presents our slide deck: Introduction to Financial Inclusion in Southeast Asia to give you a preview of our research in the Southeast Asian landscape.

If you are keen to learn about P2P Lending, please view our slide deck at:

If you would like to receive a pdf copy of any of our slide decks, please drop us an email at info@singaporefintech.com and we'll be happy to oblige. For more information about us and our service offerings, please visit our company website at www.singaporefintech.com.

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The Singapore FinTech Consortium - Introduction to Financial Inclusion in Southeast Asia

  1. 1. Introduction to Financial Inclusion in Southeast Asia July 2015
  2. 2. Global Views on Financial Inclusion 2 “It is critical that regulators create an open and level playing field for mobile money services, as there is evidence that regulatory barriers can slow down both market uptake.” Simone de Castri, Director of Advocacy & Regulation of GSMA “Financial inclusion can help individuals cope better with poverty, especially the challenges of irregular income and occasional large bills.” Joseph Torbey, Chairman of the World Union of Arab bankers “For so many people living in poverty, lacking access to finance and not having the means to be productive is a significant hindrance to improving their standard of living.” Ann Miles, Director of Financial Inclusion of The MasterCard Foundation “Financial inclusion also coincides with greater local economic activity and decreased economic inequality at the macroeconomic level.” Robert Cull, Lead Economist of the World Bank
  3. 3. Defining Financial Inclusion “The provision of accessible, affordable and relevant financial products and services to individuals, households or groups.” 3
  4. 4. Other Definitions to note: Unbanked – Situation where an individual (>15 years old) does not have their own bank account. Underbanked – Situation where consumers have limited to no access to any financial services, which are normally offered by banks. Scope of Financial Inclusion Bank Accounts Immediate Credit Savings Products Remittances and Payments Services Insurance Mortgage Financial Advisory Services Entrepreneurial Credit Types of Financial Services Offered by Banks in Developing Countries 4
  5. 5. Lack of Financial Infrastructure • Weak Laws & Regulations to allow banks to share information or set up public credit registries. Lack of Personal Documents • Without much personal documentation, no proof of credit worthiness of borrower. Restrictive Regulations • Fear of exploitation of the poor while requiring financial institutions to stick to good credit, limits banks’ incentives to seek business with the poor. Unsuitable Financial Products • Banks fail to tailor their products accordingly to the needs of the poor. Hence, with lack of knowledge and understanding, the poor are reluctant to adopt such products.Logistic and Delivery Challenges • Due to the remote areas the poor live in, it makes the financial services costly as banks factor in the expense of travelling. 5 5% 13% 19% 20% 23% 25% 30% 0 5 10 15 20 25 30 35 Religious reasons Lack of trust Lack of documentation Too far away Too expensive Family member already has an account Not enough money Adults without a bank account (%) Barriers to Financial Inclusion Other Cited Reasons by Survey Reports (2014) Source: Global Financial Inclusion, Standard Chartered Research 2014. Reasons for Being Unbanked or Underbanked
  6. 6. Though more have been financially included, there is much room for improvement in less developed countries such as Myanmar and Cambodia. Possible Areas of Improvement: 1. Need for affordable and financially viable financial products, which are country relevant. 2. Strengthen regulatory environment to support financial inclusion. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Singapore Malaysia Thailand Indonesia Philippines Vietnam Cambodia Myanmar Southeast Asia Banked Population % of Banked Population in SEA (2011 & 2014) 6 2011 2014 Source: (Global Findex) Database, World Bank 2014.
  7. 7. '10 '11 '12 '13 '14 Sub-Saharan Africa North America Middle East and North Africa Latin America Europe Commonwealth of Independent States Asia Pacific 2,798 3,013 3,210 3,463 3,636 Mobile Phones Penetration Mobile Penetration in the SEA region has enabled provision of Financial Services to the unbanked & underbanked. Southeast Asia Mobile Penetration & Penetration Growth Rate (YoY, 2014) Source: The Mobile Economy 2015, GSMA & Digital, Social, And Mobile In APAC 2015, We Are Social & IAB. Unique Subscribers by Region (Millions, 2014) 7 -20% 0% 20% 40% 60% 80% 100% 120% 140% 160% 0 20 40 60 80 100 120 140 160 Singapore Thailand Vietnam Cambodia Malaysia Brunei indonesia Philippines Laos Myanmar PenetrationRate(2014) PenetrationGrowthRate(YoY) Penetration Rate (2014) Penetration Growth Rate (YoY)
  8. 8. Mobile Money Mobile Insurance Mobile Savings Mobile Credit 8 Allows transferring of money and making payments via feature phones. Provides micro- insurance services through feature phones. Allows consumers to save by using their feature phones. Provides credit services via feature phones. Mobile Financial Services Insurance Investments/ Long- Term Savings Borrowing Electronic payments starting with everyday needs like P2P payments and bill payments Secure transactional account that is used to receive and store funds (eg., salaries, remittances, benefits) Pathway to Full Financial Inclusion More complex needs, order may vary by market Basic money management – foundational for all markets Hierarchy of Consumer Financial Needs Source: A Progressive Approach to Financial Inclusion, MasterCard, MasterCard Advisors Analysis 2014.
  9. 9. Big Data & Data Analytics Mobile transactions in financial services such as payments and repayments are recorded. Predictive analytics on the data collected, can improve providers’ insights about customers’ needs leading to more suitable products for the unbanked. Big Data A person’s mobile airtime and mobile money is used as part of a decision process to decide the creditworthiness of the individual. Better screening and predictive analytics produces relevant financial products, which reduces risk of lender and reduce premiums charged to clients. Operational efficiency translates to cost savings for both service provider and customer. Mobile data serves as a strong source of data capture for emerging markets. The diffusion and adoption of mobile phones has created billions of data-generating devices across emerging markets. High penetration of mobile phones in the unbanked and underbanked regions helps to support financial services and the collection of data. Data Collection Solution to Financial Inclusion Data Analytics Credit Risk Assessment 9
  10. 10. GDP PC $6,728 72.7m 256m 36.1% 121% INDONESIA GDP PC $3,383 44.2m 31.3%101m 113% PHILIPPINES GDP PC $64,584 5.4m 96.4% 4.45m 152% SINGAPORE GDP PC $17,748 30.5m 80.7% 20.1m137% MALAYSIA 35m 64.9m 78.1% 150% GDP PC $7,907 THAILAND GDP PC $2,589 41.0m 31.0% 90.7m 141% VIETNAM 2.6m 51.4m 22.8% 26.0% GDP PC $1,040 MYANMAR GDP PC $1,818 3.8m 22.2%15.4m 157% CAMBODIA GDP PC $2,054 0.85m - %6.8m 103% LAOS 53.1%1.27b 75% INDIA 243m GDP PC $2,653 98.9%23.8m 126% AUSTRALIA 21.2m GDP PC $67,035 99.5%4.57m 125% NEW ZEALAND GDP PC $31,999 4.16m Total Population (m) Mobile Penetration Rate (%) Population with a bank account (%) Total Internet Users (millions) GDP Per Capita (PC) ($US) *As of Q4, 2014 10 Market Potential
  11. 11. https://www.facebook.com/FinTechSG Singapore Fintech @ Tanjong Pagar 26 Duxton Road Singapore, 089490 Singapore Fintech @ One-north Ayer Rajah Blk 79 Singapore, 139995 For futher information, visit our website at www.singaporefintech.com For research and inquiries, email us at info@singaporefintech.com https://www.linkedin.com/company/singapore-fintech-consortium @SGFinTech Contact