Thursday, 18 July 2024

Southeast Asia, a vibrant and inclusive fintech ecosystem

5 min read

By Kirill Kalashnikov

Bright spots emerging for fintechs in Singapore and peers in Southeast Asia offer a blueprint of what makes a modern fintech ecosystem vibrant and inclusive

  • Live fintech ecosystems have various components
  • Application programming interfaces level playing field
  • Functioning of ecosystems within superapps

A fintech ecosystem is a favourable environment for interaction between the government, financial institutions and fintech startups, working towards mutually beneficial development. Singapore is a recognised regional benchmark, but other countries are quickly catching up.

Another view is that an ecosystem implies the interaction of fintech companies with each other within a single operating space. And finally, it can be based on the interaction of products and services in a particular corporate environment.

Live fintech ecosystems have various components

A blueprint predicated on these established presuppositions might arguably consist of different components collaborating across intentions, viability, functions, industries and economics.

Steady demand is crucial as users, including small and medium-sized businesses, require easily accessible financial services lest the ecosystem become completely unviable. To attract demand, the system must be convenient, efficient and relevant, and expands in both breadth and depth to ensure the very existence of ecosystems.

Responsive feedback is vital for understanding ecosystem demand, which in today’s environment places ever-growing importance on optimising customer experience. At the same time, it is important that this ‘connecting tissue’ involves direct personal contact—something that is preferred by at least 71% of consumers, according to a McKinsey report published in 2021.

Surplus of talent is needed for proper functioning and development of fintech services. The recruitment, retention and development of qualified personnel are also becoming integral components of a harmonious fintech ecosystem. In this sense, international players are seeing a greater advantage in being able to hire high-quality staff around the world, as well as scale their experience to new markets. Local market experience is also extremely important, and the current globalisation realities allow for greater cooperation between local and foreign specialists.

Access to capital is a critical factor in the development of ecosystems. Various types of financing, such as private, public and alternative sources are fueling the growth of ecosystems in a rapidly changing environment to avoid becoming hopelessly outdated. Fintechs have to be very resourceful in finding these funds amid current realities.

Progressive regulation or government policies regarding markets, taxes, and initiatives also contribute to the development of the financial services industry. Thus, Southeast Asia (SEA) is notably becoming a very favourable environment for a majority of fintech businesses, especially in countries like Singapore, Malaysia, the Philippines, and others where financial digitalisation is a national priority.

Multi-level synergy, including business incubators, active fintech communities, specialised associations and forums, and intersectoral and international initiatives are all important components of the vibrant ecosystem, pushing its development further. These serve as clear evidence of a truly harmonious ecosystem being formed in SEA.

Embedded finance integrates financial instruments or services such as payment processing, lending, insurance, and others into the business processes of non-financial companies. Embedded finance enables the accumulation of user behaviour information, making services more personalised, and generally better.

API level playing field

Non-financial institutions can access financial instruments through application programming interfaces (API), enabling integration of apps and services using the features of programmes that were developed by other companies. Among the most popular API in fintechs are payment gateways, compliance and regulation services, anti-money laundering services, and customer knowledge.

Open banking API enables startups to freely access banking information, collect transaction data, and initiate transactions in third-party applications. This technology is used in online payments or in issuing loans with automatic credit history checks, enabling fintech companies to develop innovative services.

Banking-as-a-service (BaaS) is another fintech trend using API to provide banking services to non-banking companies while keeping the user within their ecosystem. For example, the organisation creates an API for paid access to banking infrastructure.

Other companies use API to connect applications to banking infrastructure, providing banking services like processing payments, checking balances and viewing transaction history, without rebuilding the banking infrastructure. BaaS use cases include consumer microlending on e-commerce sites, or small loans for businesses.

One of the innovations in the fintech ecosystem is fintech-as-a-service (FaaS) that provides companies with the infrastructure to develop their own financial services without creating it from scratch.

Functioning of ecosystems within superapps

There are two application models: Western, which has a separate application for each product, and Asian, which features a superapp that combines many different products and functions on one platform. SEA undoubtedly favours the latter.

Typically, superapps combine taxi hailing, food delivery, fintech products, digital banking and e-commerce for daily user interaction. However, regional superapps lack chat or social networking features due to the lack of popular local social platforms or Messenger, and people mostly use Facebook and WhatsApp.

Fintech service providers must recognise the trend of having a wide array of popular tools available in a single platform. They must expand their services independently or integrate them with larger third-party applications.

To ensure that this vibrancy continues in SEA, stakeholders’ support and engagement are crucial for robust economic growth, greater equality, and alleviating poverty amid challenging times.


Kirill Kalashnikov is the regional director for Asia Pacific at Robocash Group, a financial group of companies that provides robotic financial services in the fields of alternative lending and marketplace funding.

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