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.
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