Digital Banking’s Role in Shaping Financial Inclusion in Southeast Asia

Manish Bhai   
CEO, UNO Digital Bank

Manish Bhai is a seasoned expert in Finance, Tech, and Sales with a 28-year global career. He's the entrepreneurial force behind UNOAsia, UNO Digital Bank, and CoantumLeap. Known for his dynamic sales leadership, P&L management, and strategic business growth, he's also a former MD and Board Member at Citi Singapore.

Across Asia, the breakneck pace of technological innovation presents a dynamic landscape for businesses. However, Southeast Asia offers a unique paradox. Despite boasting high mobile penetration rates and a growing comfort with technology, a significant portion of the population remains excluded from the formal financial system. Here, digital banking isn’t a mere technological upgrade – it’s a transformative tool with the power to reshape the business landscape and empower those at risk of being left behind.


Legacy banks often find the unbanked and underbanked segments unattractive due to perceived higher risk profiles and higher operating costs. This, however, presents a compelling opportunity for innovative businesses. Digital banking solutions can serve as a cornerstone for inclusive economic growth by extending basic financial services to a vast, previously untapped market. By harnessing the power of digital tools, businesses can reach new customers, fostering financial inclusion and loyalty.


Simply offering a mobile app won’t suffice. The unbanked often lack formal documentation, a hurdle in traditional creditworthiness assessments. Here’s where digital innovation can shine, such as using advanced data analytics, Open Finance based APIs, and digital partnership based real-time data gathering to pave the way for novel verification and credit scoring methods. Collaborations with other fintech companies like eWallet providers extend and enhance the ecosystem, improving service delivery through integrated digital ecosystems.


However, for this ecosystem to truly thrive, alignment with national financial strategies and regulations is paramount. Forward-thinking governments play a crucial role in fostering an environment that welcomes innovative banking solutions. 


For example, recognizing the transformative potential of digital banking, the Bangko Sentral ng Pilipinas (BSP) implemented a comprehensive regulatory framework, including the issuance of digital banking licences. This not only legitimises the operation of digital banks but also sets a clear regulatory pathway for new entrants. Additionally, The Philippines also developed Philsys, a national digital ID system, streamlining account opening and KYC (Know Your Customer) processes for the unbanked. These measures, coupled with the BSP’s focus on cybersecurity and digital infrastructure, demonstrate a strong commitment to fostering a secure and thriving digital banking sector. 


When given opportunities like this in the developing nations of Asia, businesses must actively partner with policymakers to amplify the impact of such initiatives. By working together, they can create a framework that facilitates responsible innovation while safeguarding consumers. It is important to note, however, that the tenacity of the governments and regulators to see through the execution is far more important than the mere intent or passing of enabling regulations. 


Indeed, building trust in a population unfamiliar with formal banking systems requires a multi-faceted approach. Educational initiatives empower users, demystifying digital financial services and fostering confidence. Consistent messaging that highlights the benefits of the system – from secure transactions to easier savings and budgeting tools – is key. Additionally, value-added initiatives like the QR PH common code system and the aforementioned Philosys digital identity program further incentivize adoption by demonstrating the tangible advantages of joining the formal financial ecosystem.


By embracing digital banking and actively collaborating with the regulators and government, Asian businesses have the power to unlock a new era of financial inclusion. This commitment fosters broader economic growth, financial stability for individuals, and overall societal well-being.  In this dynamic region, CEOs who champion digital banking solutions position themselves not just as business leaders, but as drivers of positive social change.