Banking the Unbanked with Financial Technology

By some estimates, only 27% percent of individuals in APAC have a bank account,

and about 33% of businesses have a loan or line of credit. In fact, according to the
recent metrics by Statista, only about 71% of APAC’s population has steady access to
formal financial services. 

Of the large number of unbanked or underbanked populations across APAC, Vietnam,

the Philippines, and Indonesia top the list of the 10 most underbanked developing
countries, meaning people and businesses that don’t have access to a formal bank
account. As we know, being excluded from financial systems and unable to access
financial products and services has a significant impact on people’s quality of life and
overall economic growth in a country. For instance, access to financial services is
particularly important for migrant workers in the private sector, and while they remain
one of the highest underbanked segments, modern digital financial services supported
by national financial inclusion strategies are now providing them with new ways to
bank.  

However, driven by maturing markets, supportive regulatory framework, standard-

setting bodies, and turbocharged acceleration due to COVID-19, Asian countries have
recently witnessed a surge in customers utilizing digital banking channels in the
financial sector and an increase in financial inclusion.  

For instance, in Malaysia, NFC payments have risen by 288%, over 65% of customers
in Taiwan now prefer contactless payments over cash, and Thailand reported $9
Billion in mobile banking transaction volume.   

For banks and financial institutions who are eyeing greater financial inclusion and
financial literacy, these developments raise a critical question. How can we sustain
and accelerate this increase in financial inclusion using digital financial services?  

The question is well-founded, and the answer is clear. Consistent innovation,

digitization and financial education.  

With over 48.4 million migrant workers across the APAC region, and with less than
50% of them having bank accounts across leading banking hubs such as Malaysia and
Singapore, the reality is that formal banks just can’t provide this demographic, and
others like them, with frictionless and swift banking experiences.  

The opportunity thus exists for incumbent financial institutions and fintechs to capture
this underbanked group with the help of next-gen digital services.  

Leveraging Modern Financial Technology 

One such service is remote onboarding which is one of the first steps in financial
inclusion, allowing people to avail themselves of a banking service from their mobile
phones.  

Digital Onboarding and KYC are the first touchpoints that a customer encounters.
Data unequivocally shows that clunky, broken CX flows, and confusing, unnecessary
KYC checks decrease customer conversion by up to 50%.  

By leveraging technologies that enable fintechs and institutions to give their

customers swift, simple, and effortless digital onboarding and KYC processes,
aspiring digital leaders can disrupt a broken piece of the digital financial landscape
and dominate customer conversion and retention. Digital onboarding helps financial
institutions reach out to new customers and offer them responsible finance options as
well as consumer protection in their services.  

A second avenue where disruptive technology can be used to supercharge financial

inclusion is the mobile wallet space. With smartphone penetration at 64% and with
over 91% of people preferring digital payments over conventional ones, the numbers
undeniably show that eWallets are stress-tested propositions that are proven to appeal
to consumers within the APAC region.  

Keeping in mind that APAC has 20% of the world’s migrant workers, fintechs and
banks are enabling social payments and digital remittances through eWallets. In 2020,
over $136 billion worth of remittances were exchanged across Asian countries, and
peer-to-peer payments peaked by triple-digit percentage points.  

In fact, mobile wallets are an area for significant growth, with estimates of 2.6 billion
adopters by 2025. In revamping digital wallets with market-leading technologies to
provide consumers with frictionless social banking propositions, aspiring leaders can
hit two birds with one stone and capture market share whilst accelerating financial
inclusion.   

Embracing And Expanding Financial Education  

However, while it is true that state-of-the-art technology can drive financial inclusion,
it is of equal importance that aspiring leaders empower consumers with appropriate
and timely financial education on an equal footing.  

The reason behind this simply being consumers need to gain proper knowledge about
the tools they have access as to, in order to properly utilize them.  

To understand this better, let’s take use an example. For instance, if your customers
are unaware of the recent digital onboarding service you rolled out in favor of remote
creation of bank accounts, it directly translates to the fact that they will be unable to
properly leverage this feature.  
Another case in point can be, as you expand the coverage of your eWallet services
across regions, it is crucial that you educate your users about the best practices of
using your eWallet to ensure not only safety and security but also peak performance.   

In Conclusion  

At its core, technology is the prime mover for financial inclusion, but it must come
with adequate education on financial products and using them responsibly.  

Consumers in APAC have displayed their appetite for digital propositions, and in turn,
these propositions have shaped and cemented their preferences and expectations. For
aspiring digital leaders and stakeholders who want to accelerate inclusion, they must
embark on leveraging the combined prowess of modern financial technology and
financial education to carve the roadmap for driving financial inclusion.