The Southeast Asia region is in the midst of a banking evolution. Digital banks are proliferating across Southeast Asian countries on the back of favourable regulatory changes, market liberalisation and enhanced digital penetration by consumers. Further, smartphones, now becoming an indispensable part of people’s lives, are emerging as a socio-economic tool to bridge the technology divide and promote the digital banking ecosystem. The rising smartphone penetration has also led to substantial growth in e-payment solutions. This has steered a strong regional appetite for digital financial products.

Digital banking adoption is growing across the region. While Singapore’s digital banks are expected to go live in 2022, the Philippines has also recently issued digital bank licences. Across the causeway, in Malaysia, roughly 40 parties registered their interest in Bank Negara Malaysia’s digital banking licence. Furthermore, Indonesia plans to clarify digital bank regulations by end 2021. Meanwhile, the Covid-19 pandemic has further augmented this trend.

A look at digital banking uptake in various Southeast Asian countries…


In early December 2020, the Monetary Authority of Singapore (MAS) announced that four organisations had obtained digital banking licences. According to the MAS, these four digital banks will begin operations by early 2022. There are two types of digital bank licences provided – digital full bank licence (DFB) and digital wholesale bank licence (DWB). Two DFB licenses were awarded to the Grab-Singtel consortium and the Sea Group. Meanwhile, two DWB licences went to Alibaba’s fintech affiliate Ant Group, and a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong, and the Beijing Co-operative Equity Investment Fund Management.

According to industry reports, Singapore financial institutions had the largest increase in digital banking investment of around 25 per cent in response to Covid-19. The lack of options forced customers to adopt digital tools and services. In tandem, banks are also quickly finding ways to deliver the services. Going forward, the establishment of a strong digital ecosystem through cooperation with reputable partners will play an important role in realising the future of cashless payment.


As the digital adoption in Indonesia has increased, the growth of digital payment and e-commerce platforms is also accelerating. According to data from Bank Indonesia (BI), the value of electronic money transactions reached IDR 201 trillion in 2020, an increase of 38.62 per cent from the IDR 145 trillion in 2019.

On the industry front, in February 2021, Indonesia’s Bank Jago established a strategic partnership with Gojek, paving the way for the country’s first all-digital bank. The move was significant as until now Indonesia is the only country that has not obtained a digital banking licence among all Southeast Asian countries. Further, in July 2021, Jakarta’s Payfazz announced that it had obtained an e-money licence from BI. This could help the company in expanding its operations to Indonesia’s large unbanked population. In addition to Payfazz, other companies have also obtained e-money licences in Indonesia. For instance, online retailer Shopee has obtained the licence through its parent company Sea Group. In June 2021, Japan-headquartered line in collaboration with Bank KEB Hana Indonesia and LINE Financial Asia, launched a digital banking platform. According to LINE, it plans to expand the range of products to include loans, partnership loans and QR payments.

The Philippines

In June 2021, the Philippine central bank awarded two more digital banking licences to Sequoia India-backed Tonik Digital Bank and Singapore-based UNObank. They join state-backed Overseas Filipino Bank, which got a licence in March 2021. Going by the current activity the country is likely to have its first purely digital bank by 2022. Meanwhile, the willingness of the country’s central bank to onboard foreign players signals a very promising growth of digital payment services which is still at a nascent stage.


Similar to other Southeast Asian countries, the future of finance in Myanmar is also digital. While, at present, the digital money ecosystem is nascent, the rapid adoption of smartphones and digital uptake across regions will drive growth in the future. The digital payment ecosystem is also attracting attention from international investors. Myanmar presents an ideal environment for growth of digital payments ecosystems as it offers low financials and high levels of cash utilisation. In November 2020, Singapore-based Bank-Genie partnered with Australia’s Cufa to implement digital banking solutions with 23 credit unions and customers in rural Myanmar. The solutions will be implemented through Bank-Genie’s product BanqIn, an all-in-one digital banking platform for microfinance institutions, credit unions and thrift banks. Meanwhile, Ant Financial announced plans to invest $73.5 million in Myanmar’s digital payments platform, Wave Money.


Vietnam used to be one of the world’s largest cash-dominated economies; however, as technology became more reliable and secure, Vietnam is now fast adopting digital payments. According to IDC, the number of mobile transactions in Vietnam is expected to increase by 400 per cent from 2021 to 2025. This will mainly be due to the significant growth in mobile payments. Besides, the development in digital banking is also accelerated due to the rapid adoption of the fintech ecosystem and the booming e-commerce industry. Moreover, the Covid-19 pandemic has only acted as a shot in the arm for the country’s digital banking space.

Rapidly changing customer behaviour is forcing banks to accelerate their digital transformation. In September 2020, Vietnam’s Tien Phong announced a partnership with digital-first banking platform Backbase. Further, Vietcombank launched its new digital banking service VCB Digibank which integrates its online trading platform. Much of this growth can be attributed to the initiatives of local telecom players, one of the key drivers in the mobile money space. Over the years, Viettel, Vietnam Posts and Telecommunications Group, and FPT have all introduced e-wallets and encouraged people to get on to the digital money bandwagon. Meanwhile, the government is also doing its bit by promoting the advancement and adoption of technology in the banking and financial sectors. To this end, the government has listed the promotion of cashless payment, digital banking and green banking as the three major industry priorities for the 2020-25 period.

The way forward

Net, net, with low penetration of traditional financial products and rising digital preparedness, the countries in Southeast Asia are ripe for digital disruption. According to BCG, since 2015, the number of digital banks in the region has grown by 190 per cent, supported by significant investment and positively evolving regulation. Further, Google and Temasek Holdings estimate that the size of  Southeast Asia’s internet economy will more than triple from $72 billion in 2018 to $240 billion by 2025, led by mobile internet services. This promises big growth opportunities in the region’s digital payment services segment. Further, increasing smartphone penetration, surging internet user base and a growing tech-savvy generation will continue to fuel this growth.