Seizing Opportunities: The Race Toward Digital Banking in ASEAN

The Southeast Asia (ASEAN) stands as one of the compelling markets for digital banks to grow due to its large population and fact that financial inclusion still be an issue for the region. Within the region, Commercial banking is still the backbone of the region’s financial system, but Regulators in various Southeast Asia countries have started to issue guidelines for digital banking licenses in their respective countries. We found that in general, there is a different regulatory approach in Southeast Asia in which the requirement is less stringent during the initial start-up period versus the commercial banks such as Indonesia, Singapore, and Malaysia. Several countries such as Singapore and Malaysia also limit the issuance of digital banking licenses. Additionally, regulators also seem to give some business restrictions for the pure digital bank during the initial period to prove the business model and limit the potential impact should they fail. We also conducted a country-level analysis to identify the readiness of ASEAN members bloc to adopt digital banking using two dimensions, which are room for growth and state of readiness. The findings have highlighted ASEAN is a highly diverse region.