For the unbanked, digital banking needs fiscal support to take off

REPORTS are pointing to a harsh reality when it comes to the unbanked in this part of the world: that digital banking cannot breach that gap when it comes to those excluded from the financial system, especially if there is no public digital infrastructure support on the fiscal front.

In looking at the potential of digital finance for the South-east Asian market, the latest Temasek e-Conomy report reflected rosy growth figures for this burgeoning region. Digital payments are expected to cross US$1 trillion by 2025, up from US$600 billion in 2019. Digital lending should also hit US$110 billion by 2025, more than four times from US$23 billion now.

But a clear line was drawn between the underbanked and unbanked. Of the nearly 400 million adults in South-east Asia, about 98 million - roughly one in four - are underbanked, the report this month showed. This means that they have a bank account but suffer from insufficient access to credit, investment and insurance.