Banking on Southeast Asia’s rising middle classes | WARC | The Feed

Banking on Southeast Asia’s rising middle classes

Many of Southeast Asia’s tech giants, like Grab, Gojek, and Shopee, are competing to offer payment services such as BNPL to the region, where e-commerce spending is rocketing as incomes rise and more people have access to the internet via smartphones.

Why it matters

With consumers able to manage an increasing number of everyday services online, demand is rising for cashless payments and credit, but, for many, traditional banks are not an option. Digital buy-now, pay-later (BNPL) services are stepping in to fill the gap: sign up is fast and easy, and the choice of providers is growing rapidly.

Takeaways

• BNPL services are often part of bigger projects: PayLater, for example, is at the heart of Indonesian ride-hailing app Gojek’s evolution into a super app. Other big-tech players in the region, such as e-commerce giant Shopee, have launched their own BNPL offerings, seeing them as a potential route to becoming full-blown banks.
• Tech companies combining e-commerce and BNPL can amass a view of customers’ financial lives that is unparalleled, allowing them to collect highly granular data that helps create a detailed – and valuable – understanding of a person’s credit rating and spending habits.
• For many in Southeast Asia, BNPL may be the first time they have used a digital financial product, and the first time they’ve used credit to buy anything.

Key stat

KPMG researchers in 2019 calculated that some 73% of people in the region had no formal-sector bank account, and at least 18% had no access to credit.

Sourced from Rest of World, The ASEAN Post