Tapping the potential of SEA's digital financial services

  • Tapping the potential of SEA's digital financial servicesTapping the potential of SEA's digital financial services
Share: Share to Facebook Share to Twitter Share to LinkedIn


In South-east Asia, only 12 per cent of investments today are done through digital platforms. The percentage has not grown in the past five years.

For comparison, more than half (55 per cent) of such assets are invested via online platforms in the United States and United Kingdom.

But this is set to change dramatically, fired by a booming South-east Asian economy predicted to reach US$4.7 trillion in gross domestic product (GDP) by 2025, according to a recent report "Fulfilling Its Promise: The future of Southeast Asia's digital financial services" on the region's digital financial services by Google, Temasek Holdings and Bain & Co (the "report").

Today, more than seven in 10 of the 400 million adults in the region lack sufficient access to financial services such as investment products, credit cards and insurance, said the report.

This is reflective of the financial landscape – cash remains king in ASEAN societies, as only 40 per cent of transactions are cashless, compared with 84 per cent in the US and UK, it added.

Small and medium-sized enterprises (SMEs) are also on the cusp of broader digitalisation, as the majority remain underserved in financial services. A whopping 80 per cent of surveyed SMEs need to borrow but lack access to affordable credit, based on the report. Many SMEs are also not yet on the digital investing trend.

But the report noted that the region is on the brink of change, given the high smartphone penetration and engagement in South-east Asia. E-commerce and ride hailing are already thriving in markets like Indonesia, opening the doors to mobile-based digital financial services.

In particular, one key growth area is in digital investing. Investments via digital platforms are poised to see a compound annual growth rate (CAGR) of 31 per cent – second among the other digital services of remittance, lending and insurance, said the report.

It also predicts the penetration rate of investments via online channels to increase almost fourfold in the next five years, from 3 per cent of the population now to 11 per cent by 2025. This means a spike from $10 billion to $75 billion of assets under management, second only to digital lending in total amount.

The report added that technology which automates investment allocation decisions while lowering cost and barrier of entry, as well as pooling consumer funds for investments, will open access to those unable to meet minimum investment asset threshold requirements.

This is likely to bode well for SMEs in the region as well, which the report said are at an inflection point on digital adoption – their use of digital financial services is set to skyrocket in the coming years.

Within the context of these developments, a corporate robo-advisory service such as UOBAM Invest will be a boon to businesses in the region – enabling them to quickly receive customised portfolios based on their corporate financial goals, risk appetite and investment timeframe quite literally at their fingertips.

This document is for your general information only. It does not constitute investment advice, recommendation or an offer or solicitation to deal in Exchange Traded Funds ("ETFs") or in units in any Unit Trusts ("Unit Trusts", ETFs and Unit Trusts shall together be referred to as "Fund(s)") nor does it constitute any offer to take part in any particular trading or investment strategy. This document was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The information is based on certain assumptions, information and conditions available as at the date of this document and may be subject to change at any time without notice. If any information herein becomes inaccurate or out of date, we are not obliged to update it. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of any Fund or UOB Asset Management Ltd ("UOBAM") and any past performance, prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of any Fund and the income from them, if any, may fall as well as rise, and may have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in any Fund involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited ("UOB"), UOBAM, or any of their subsidiary, associate or affiliate ("UOB Group") or distributors of the Fund. Market conditions may limit the ability of the platform to trade and investments in non-Singapore markets may be subject to exchange rate fluctuations. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the respective Fund’s prospectus. The UOB Group may have interests in the Funds and may also perform or seek to perform brokering and other investment or securities-related services for the Fund. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing. You may wish to seek advice from a financial adviser before making a commitment to invest in any Funds, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. Any reference to any specific country, financial product or asset class is used for illustration or information purposes only and you should not rely on it for any purpose. We will not be responsible for any loss or damage arising directly or indirectly in connection with, or as a result of, any person acting on any information provided in this document. Services offered by UOBAM Invest are subject to the UOBAM Invest Terms and Conditions.

Invest in your mind. Receive our curated insights in your inbox.