With most of the population without access to financial services, it is not a surprise that more than 70% of SME merchants in Southeast Asia accept cash only as a form of payment. But all this can change very quickly. The same research shows that 70% of SMEs are likely to accept digital payments with the amount projected to reach $1 trillion by 2025.
Due to the region’s high smartphone penetration and engagement, which is even higher than banking penetration in most Southeast Asian countries, quick adoption of new services such as e-commerce and ride hailing is already happening. The number of opportunities to embed complementary financial services such as digital remittance, payments, lending, insurance and investments will rise.
While the research concluded that digital payments and remittances are clearly reaching inflection points now, other services including lending, investment and insurance are emerging and each should grow by more than 20% annually through 2025.
Certainly, the anticipated growth is dependent on the support and consistency of regulations and government policies in the region. Concerted regulatory push for digitisation and financial inclusion, and new digital bank licensing trends, will boost growth. Critical infrastructure, including digitised national ID systems, real-time payment systems, standardised QR codes and effective credit bureaus will help the financial services industry reach its full potential in Southeast Asia.
Chubb is leading the way for insurance providers to be a supporting pillar within digital ecosystems throughout the region. We define digital ecosystems as a community comprising overlapping services that provide customers with a one-stop, hyper-relevant shopping experience. My team has been actively seeking new partners in the digital financial services ecosystem in the region and has already launched several key partnerships.
The key digital financial services which are most in demand include remittance, consumer lending, e-Wallets, super apps, and credit card companies. Over the past three years, Chubb has onboarded several new partners across these verticals. This is an extremely exciting time of transformation for the consumer insurance industry.
Customers want to transact within robust ecosystems, and we see many new and innovative fintech platforms and capabilities coming to market.
Chubb views its role in these new ecosystems as integral. With new ecosystems come new and different risks – for both consumers and the companies serving them. That’s where insurance can have an important role to play. Just consider cyber risks alone, where both the individuals and businesses are potential targets. Chubb carefully considers the potential buyers of cyber insurance before collaborating with partners to develop relevant products. This is far more important now with the pandemic driving activities online
In addition, the fast-growing gig community and SMEs need easy access to protection. Chubb’s leadership in the gig economy is a case in point. By partnering with online gig platforms and mobile apps, we offer gig workers access to insurance options and the opportunity to top up to a better plan.
We are confident that we can accelerate the process of bringing financial services to the unbanked and underbanked in the region, and this has become even more urgent in the world we live in.