In my last blog, I looked at how fintech is poised to change the economic foundation of Southeast Asia – from providing basic mobile banking services and short-term loans to unbanked and underbanked populations to providing simple data and analytics to small business owners.
For companies looking to invest in fintech in the region, however, the key to being successful may not be the innovative nature of the technologies and tools being offered. Instead, it could well be the simplicity of the service offering.
That’s because Southeast Asia has a long way to go when it comes to the maturity of the market. While smartphone penetration is on the rise, the reality is that most of the unbanked and underbanked populations require services that can be managed through less sophisticated means.
Traditional banks looking to invest in fintech, or fintech startups looking to take advantage of the significant unbanked population in Southeast Asia, should consider the main characteristics of the population as they design any fintech service offerings. Key things to consider include:
Solutions should be needs-based
When it comes to providing alternative banking services in Southeast Asia, the ones that will get the most uptake will be the ones that respond to the basic needs of the unbanked and underbanked populations. For many in the region, these are not sophisticated requirements. Payments and low cost remittances likely top the list of basic needs, followed by micro-loans.
Solutions should be easy to use
The maturity of consumers in Southeast Asia is quite low, with education rates substantially lower than in other regions of the world. As a result, any banking solutions being offered in this region should be simple to use and simple to access regardless of location. For example, should an individual wish to remit money from one country to another, the transaction needs to be simple for both the person sending the money and the person collecting it. The more complicated the process, the less likely it will be to be successful.
Solutions should be accessible
As mentioned above, while smartphone access is increasing in Southeast Asia, many of the unbanked and underbanked likely do not have access to smart technologies. As a result, fintech offerings targeting this population should be based on simple technology and useable on less technology-advanced feature phones.
Companies that want to target the underbanked population need to focus on increasing the volume of transactions more than the dollar value per transaction. This requires providing the broadest range of access for currently underserviced or non-serviced populations. To do this, companies need to focus on identifying the simplest ways to provide access to the broadest range of the population. By providing needs-based, easy to use and accessible services, fintech companies will be better positioned to succeed in the unique and diverse market that is Southeast Asia.
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Jan Reinmueller heads the digital village and innovation ventures program at KPMG in Singapore. As the lead of innovation ventures, he is responsible for turning opportunities into customer-centric products and serves as an innovation partner for corporate clients. His focus is on maximising commercial impact and optimising time in bringing products to market. He drives innovation out of the digital lab by contextualising and commercializing start-up innovations to address new market opportunities. Jan brings international experience and knowledge of markets in US, Europe, India and ASEAN.
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