Southeast Asia’s thriving digital economy is driving a rise in financial inclusion and helping more people in the region.
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Southeast Asia’s digital economy is on a steady growth trajectory, as users in the region continue to top digital engagement in various categories, such as time spent online, mobile internet usage and mobile app usage.
In terms of figures, the size of the digital economy has passed a significant milestone of US$100 billion in revenue in 2023, or US$139 billion in gross merchandise value (GMV). The long-term growth prospects remain strong, as it stays on track to hit US$600 billion in GMV by 2030, while some experts even predict it can go as high as US$1 trillion.
The growth is driven by several factors such as a growing working population, room for income growth and remaining urbanization potential. In addition, this trend can also be attributed to three main factors:
Digital inclusion: More than 90% of people in the region have access to the internet. And most people use mobile phones to go online, with smartphone penetration at around 90% for Southeast Asia.
COVID-19: The pandemic has jump started consumer behaviour to normalise the purchase of goods and/or services using their phones.
Digital payments: This service is replacing cash in more than 50% of transactions and will exceed US$1 trillion in transaction value by 2025.
Reason #1: Southeast Asia has a very high internet access and smartphone penetration rate.
Reason #2: People in Southeast Asia has grown accustomed to buying goods or services with their phones.
Reason #3: Cash is no longer king, with the rise of digital payments.
Digital payment is just one aspect of the entire ecosystem of digital financial services. The other services—lending, investment and insurance—are still emerging, with huge potential to grow by more than 20% annually. Digital financial services can help 50% of the population in Southeast Asia who are suffering from financial exclusion, as they do not have access to a bank account. This can now be mitigated with digital financial inclusion, defined broadly as digital access to formal financial services by excluded and underserved populations.
According to the World Bank, digital financial inclusion is a growing need that will help to eradicate poverty. As the President of the World Bank Group explains: “Universal access to financial services is within reach—thanks to new technologies, transformative business models and ambitious reforms... As early as 2020, such instruments as e-money accounts, along with debit cards and low-cost regular bank accounts, can significantly increase financial access for those who are now excluded.”
More and more people in Southeast Asia can now access the financial services they need from the convenience of their mobile phone. Even those without a bank account can now get a loan or buy insurance to protect themselves. This is especially important among the gig economy workers, who find it difficult to show a stream of steady income needed to secure financial services.
For example, gig economy workers can buy microinsurance to protect themselves when they work. They can procure the protection when they have income and stop paying for the service when they are not working, something not possible with a conventional insurance contract.
Hitachi believes in financial technology and how it can help to transform our society. This is the underlying belief that drives Hitachi to work with banks and insurance companies to help more people with their financial needs.
Hitachi’s digital payment solutions, ibSuiteTM, plays a pivotal role in the Philippines, enabling banks to make the shift from traditional to digital services. This aligns with the government’s vision to achieve financial inclusion for 70% of Filipino adults.
Hitachi is also collaborating with established insurance companies as they expand their footprint in the region. Hitachi’s digital insurance services use gamification to educate their audiences about the importance of insurance and how it can improve their lives.
Hitachi also places great emphasis on the user experience when it comes to offering digital payment technologies.
Hitachi offers a range of digital financial services, including using gamification to help an insurance company to engage with their audience.
Hitachi is helping with supply chain financing, as well as microservices for small- and medium-sized banks.
In addition, Hitachi is helping with supply chain financing, as well as microservices for small- and medium-sized banks. Hitachi also places great emphasis on the user experience when it comes to offering digital payment technologies.
Furthermore, Hitachi is collaborating with AEON Credit in Malaysia, which has been providing credit financing to people from diverse backgrounds for the last 28 years. Through Hitachi’s technologies, AEON Credit is implementing a robust cloud infrastructure and will launch an enhanced loyalty system designed to provide tailored rewards that better meet customer needs.
Hitachi believes in the role of technology and how it can create an inclusive society, one full of possibilities for everyone in the region.
This is social innovation in action.
Date of Release: December 2024
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