Digital banking meets hard realities in South-east Asia’s emerging markets

DIGITAL banks have sprouted in South-east Asia over the last couple of years, as new and nimble financial players grabbed at opportunities to make a play for “the underbanked”.

Financial inclusion is often cited as a worthy goal, as banks eye new customers out in rural areas. Running a digital network where there are few or no physical bank branches means lower overheads, and digital banks can operate at a fraction of incumbent banks’ expenses.

Governments moved with the new wave. Singapore, Malaysia and the Philippines have given out digital banking licences, while Indonesia has allowed tech companies such as Grab and Sea to buy and transform traditional institutions into digital banks.