Integrated finance can help underbanked Asian countries

OpinionDigital bank

Fintech has grown significantly in recent years, with embedded finance in particular revolutionizing the space and allowing non-financial businesses to add financial services to their businesses.

Image source: Pexels/Jegathisan Manoharan

The world’s largest economies are emerging in Southeast Asia, to accommodate the region’s growing population. The region is renowned for its adoption of technology and its open attitude to innovation, which has partly led to its technological breakthrough rate.

Smartphone usage is among the highest on the planet, with the number of users in Southeast Asia expected to reach 326.3 million throughout this year, and even more by 2026.

Euromonitor’s 2022 report predicts that e-commerce sales in the Asia-Pacific region will double to $2 billion by 2025.

The report’s author also said, “There is a significant appetite and opportunity here for digital transformation and bringing integrated finance and e-commerce together makes perfect sense,” confirming that the combination of fintech and e-commerce is a step in the right direction and businesses are ready to take advantage of it.

The need for integrated financing

Due to both a lack of awareness and a lack of confidence in banking services, 60% of Southeast Asians are currently underbanked or completely unbanked.

In regions like the United States, Europe and Japan, a credit card is the easiest way to pay online, but in Southeast Asia, where the market works very differently, only 3 out of 100 even have a credit card.

This presents a huge void in the market that banks are simply unable to fill, hence the rise of integrated finance.

With integrated financing, businesses can now send money to family overseas, pay overseas suppliers, and purchase insurance and other services needed to run a business, without using map. Banking as a service can also enable various forms of investment options, so consumers can have a complete one-stop-shop for their finances.

Integrated finance has created opportunities for those who have never had a bank account, which means they can now access finance digitally. Business owners simply need a phone to board, go through security and transact online, eliminating the need for banks.

E-commerce is essential for SMEs

In Southeast Asia, 85% of transactions are made through social commerce, conversational commerce or marketplaces. Across the region, SMEs need help, especially when it comes to supply chain finance. This is where e-commerce becomes crucial.

E-commerce enables the movement of data that is integrated across the supply chain. The digitization of SMEs gives them an online presence, but it is equally important to include small businesses in the supply chain to give large companies visibility into the companies they finance and ensure the supply of necessary goods. .

E-commerce provides SMEs with access to loans, credits and assistance with data and inventory management. With this layer of financial flows, SMEs can now exist in a very different ecosystem that pushes small businesses to venture into areas that were previously unavailable to them.

The combination of fintech and e-commerce drives innovation forward

With integrated finance allowing business owners to access finance without the need for a bank and with e-commerce creating a wide variety of opportunities for small businesses, it is clear that digitalization is completely transforming the way businesses operate.

Merging the two sectors makes it easier for SMEs to access capital, credit and any other financial services they need, while working hard to gain a foothold and grow as a business.

Not only does this merger expand the e-commerce space, but also the entire fintech industry as a whole, due to the many opportunities it creates for businesses and by fostering innovation. What makes an e-commerce and fintech combination particularly powerful is that it enables businesses to grow faster and embrace digitalization, and proves that technology can encourage new ideas and ways of thinking.

Although it may seem like a revolutionary idea, any segment merging with fintech is a natural phenomenon. By offering financial services, we can both help the local economy and keep more of the economy moving on our platforms. Companies like Amazon have started to introduce payments and financial services, and it shows that the combination will become very popular very soon, it’s only a matter of time.

We are catalysts for both fintech and e-commerce and we want to be part of the movement to democratize financial services. By combining fintech and e-commerce, we will be involved in most of the day-to-day activities of an SME, which is why the synergy is so powerful. And the positive reaction to the suit so far in Asia shows we have to be onto something.

The views and opinions expressed are not necessarily those of AltFi.

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