Use of banks for financing relatively limited among Singapore youth

THE use of banks as a financing source is still relatively limited among Singapore youths, who chose banks as their fourth go-to source of funding, after their own savings, family and friends, and government support, a survey of Asean youth has shown.

The survey by Sea - fielded to 2,100 youth aged 18 to 35 in Singapore and almost 70,000 across Asean through the group's e-commerce platform Shopee and game developer Garena - found that nearly four in 10 respondents with financial constraints considered banks an "important" source of funds during the Covid-19 pandemic.

But 87 per cent reached into their savings, and about half turned to family and friends and/or tapped government support.

These findings are consistent with a study last year by Google, Temasek and Bain & Company, which found that four in 10 adults in Singapore were unbanked or under-banked. The proportion goes up to 70 per cent for the Asean region as a whole.

The "unbanked" here refer to those having no access to basic financial services such as a bank account; the "underbanked" refers to those not well-served in financial services or have unmet needs, such as a lack of access to credit cards or long-term savings products.

Although funding was not a significant constraint in aggregate - about 7 per cent of the Sea study respondents said they faced constraints - certain groups such as entrepreneurs faced greater difficulty in obtaining financing. These include entrepreneurs, gig workers, individuals in wholesale and retail trade, as well as those in the food and accommodation sectors.

The team behind the study wrote in their report: "Technology can play a key role in enabling financial institutions to assess credit worthiness of this underserved population, and the rise in digital footprint and e-payment adoption post-Covid can further propel digital lending and other digital financial services to promote inclusion."

Across the region, youth in Singapore recorded the sharpest boost in digital adoption, with 95 per cent of the respondents increasing their usage of at least one digital tool - compared to the Asean average of 87 per cent.

More than six in 10 respondents here said they expected their use of digital tools for online shopping, virtual meetings, online classes, among other things, to permanently increase. Seventy per cent of respondents in Singapore recorded a rise in use of virtual tools during the pandemic.

Still, the team behind the study expects the future of work to comprise a hybrid of physical and remote approaches.

Polled on the downsides to remote working, the Singapore respondents cited three top bugbears: household distractions, lack of motivation, and difficulties in team management.

The problems cited varied across the region, with respondents as a whole citing Internet quality, physical proximity and household distractions as their three main constraints.

Business owners surveyed also said they have been retooling in an effort to uncover new sources of growth. For instance, close to 30 per cent of the young entrepreneurs increased their use of e-commerce selling to tap new demand, while 64 per cent experimented with new business models.