Digital Banks in Southeast Asia Struggle with Profits, But New Launches Persist
Despite the challenges, digital banks in Southeast Asia continue to attract new investors and launch operations in Thailand and the Philippines.
A Profitability Conundrum
The digital banking landscape in Southeast Asia has been marked by struggles to achieve profitability. High operating costs, intense competition, and the need for significant investments in technology and marketing have made it difficult for digital banks to turn a profit.
According to a report by Research2guidance, the digital banking market in Southeast Asia is expected to reach $13.4 billion by 2025, growing at a compound annual growth rate (CAGR) of 22.8%. However, the profitability of digital banks in the region remains a concern.
Thailand’s Digital Banking Boom
Despite the challenges, Thailand has seen a surge in digital banking activity in recent years. In 2020, the country’s central bank allowed commercial banks to establish digital banks, leading to the launch of several new digital banking platforms.
One of the most notable examples is Muang Thai Bank’s digital banking platform, which launched in 2020 with a focus on providing low-cost, high-tech financial services to Thai consumers. The platform has gained popularity, with over 1 million registered users and over 100,000 daily transactions.
The Philippines’ Digital Banking Push
The Philippines has also seen significant activity in the digital banking space, with several new digital banking platforms launching in recent months.
In 2022, the Philippine central bank granted a digital banking license to local fintech company, PLDT’s Voyager Innovations. The company plans to launch a digital banking platform that will offer a range of financial services, including lending, payment, and remittance.
New Entrants and Partnerships
New digital banks are also entering the market, and partnerships are being formed between traditional banks and fintech companies. For example, Thailand’s Kasikorn Bank partnered with fintech company, Pay Anyone, to launch a digital banking platform.
In the Philippines, digital bank, Tonik Digital Bank, partnered with local fintech company, InstaReM, to offer international money transfer services.
Conclusion
Despite the challenges facing digital banks in Southeast Asia, the region remains a key market for fintech innovation and growth. With new entrants and partnerships emerging, the digital banking landscape in Southeast Asia is likely to continue evolving in the coming years.
FAQs
Q: What are the key challenges facing digital banks in Southeast Asia?
A: The key challenges facing digital banks in Southeast Asia include high operating costs, intense competition, and the need for significant investments in technology and marketing.
Q: What is the expected growth rate of the digital banking market in Southeast Asia?
A: According to a report by Research2guidance, the digital banking market in Southeast Asia is expected to grow at a compound annual growth rate (CAGR) of 22.8% between 2020 and 2025.
Q: Which countries in Southeast Asia have seen significant digital banking activity?
A: Thailand and the Philippines have seen significant digital banking activity in recent years, with several new digital banking platforms launching in each country.
