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Banking on millennials – the ASEAN wolfpack comes of age

After China and India, it’s time to take a look at what’s happening with banking at home and with our neighbours. I had the opportunity, after 10 years, to spend 2 weeks in Vietnam in July for various conferences and meetings and I was really surprised by the modernization of the country and the numerous infrastructure projects that were popping up in the city. The plethora of shopping malls sporting the big brand names was delightful to see.

It’s not just Vietnam that’s exploding in terms of growth. Indonesia, Malaysia and the Philippines are all following suits, not wanting to fall behind in the race for economic growth. US companies seek to reconfigure their manufacturing and supply chains amidst its trade spat with China.

ASEAN has a 650 million population base and a higher GDP/capita as compared to India. This has helped this region emerge as a key contender for investments in the global internet economy. If it were one country, we would be the third most populated country in the world and ranked 7th in nominal GDP.

Source: Twimbit, Google Temasek Study, EY ASEAN Fintech Census, IMF

The fintech industry in ASEAN saw cumulative investments of approximately US$770 million in 2018 with Singapore accounting for close to 40 percent of the total. The payments industry saw the bulk of the investments as startups see that as a gateway into the world of financial services.

Three distinct megatrends will shape the future of digital financial services in the region:


Indonesia, the Philippines and Vietnam have a very young population that is growing up in a mobile-first world. Many of these countries have some of the highest daily mobile internet consumption. Tech giants, as well as startups, look to develop focused offerings for these users. The existing banks have also jumped into the fray.

Singapore’s UOB launched a new brand “TMRW” (pronounced as “Tomorrow”) and became ASEAN’s first digital bank focused on the millennials. It was first launched in Thailand, where a pilot program has already garnered more than 1000 users. It aims to launch in a second market in later 2020 which includes Indonesia, Singapore, Malaysia and Vietnam. The market encompasses a customer base of between 3 million and 5 million users in the next five years.

According to UOB, 60 per cent of ASEAN is under 35 years old. And, more than 70 per cent of ASEAN consumers already go online to browse or purchase items. The bank aims to create a different banking experience for a generation that has a varied set of expectations when it comes to the consumption of digital services. It must be simple and engaging! It is creating a unique customer experience by integrating gaming into the app by connecting with 3rd party Fintech providers.

In addition, the TMRW app has the ability to learn customer usage behaviour. Thus, it has the ability to provide customized services over time. By seeking to maximize the time spent/user on the app, the bank hopes to drive the revenue/user up! Well, I am not a millennial by far but I might just give TMRW a try tomorrow! And I am sure the other banks will jump on the millennial bandwagon soon

Unbanked population

A digital-savvy and smartphone ready population awaits the world of financial services. Financial inclusion can have a 2 to 3 percent impact on the GDP of the country. And, it is a priority in every single country and with the right regulation. It is very possible to address this long-standing challenge in the next five years.

Startups leverage technology to address issues such as lack of personal documents, poor financial infrastructure, logistical and delivery challenges. They look for creative ways despite restrictive regulations in serving the needs of the rural customers in developing ASEAN. For e.g., Indonesia and Vietnam have more than 50% of their population unbanked. However, both countries have a relatively high smartphone penetration at about 70%.

Furthermore, the median age in those countries is just 30. And, all these factors open up a huge opportunity for ASEAN banks and Fintech with digital ambitions. Already Indonesia boasts the second largest number of Fintech startups in ASEAN, mostly in the payments related segment. DBS, the “World’s Best Bank 2019” has also sought to cash in on the young unbanked population armed with a smart phone by launching its Indonesia digibank service in 2017, a completely mobile app-based bank.

ASEAN Economic Community(AEC)

It was formed with the intent of making this a single market and production base to serve the global economy. In many ways, the digital economy leaders such as GRAB, Gojek, Lazada, SEA Group have demonstrated the potential that ASEAN as a single market offers. The establishment of simple, clear and consistent regulations across the region is much needed if the goals of AEC are to be met. Some initial steps were made last year. The ASEAN Financial Innovation Network launched the world’s first online, cross-border and open-architecture platform – API Exchange – in November 2018 to connect financial institutions (FIs) and FinTech firms through a globally curated marketplace. It also aims to facilitate experiments in a sandbox among financial industry players.

At home in Singapore, the local banks have responded extremely well to addressing the opportunities arising from the megatrends. DBS bank’s digital initiatives have grabbed global attention with their winning of many awards including the recent “Best Global Bank” by Euromoney.

It’s very inspiring to see the CEO, Piyush Gupta personally leading the charge to make DBS a tech company, bringing capabilities in-house, driving open banking initiatives and leveraging digital to expand in the region. Its initiative to offer banking without branches in India gained considerable accolades as well as success in customer numbers. Personally, it has been quite a journey for me with DBS, with whom I started banking when I was a 10 year old, with a pocket money savings passbook account via its subsidiary POSB at a branch near my house – affectionately called the friendly neighbourhood bank, to what has now become a sophisticated tech company who happens to also be in the banking business. 🙂

It’s been more than a year since I went to one of their branches as my current banking experiences are centred around their all-encompassing mobile app – I literally “Live more and Bank less”! UOB and OCBC, the big local banks, have made equally great progress. These banks, working together with their Fintech partners, have an incredible opportunity to drive exponential growth in the coming decade. This will need more than a technology strategy. It needs to be combined with a sound financial and partnership strategy which has been the critical success factor for the Unicorns of the digital world.

Given this perfect storm of opportunities, I would expect the ASEAN wolfpack to come of age in the coming years and take center stage globally!