In the Asia-Pacific (APAC) region, a large portion of the population remains unbanked or underbanked. According to recent statistics, only 27% of individuals in APAC have access to bank accounts, and just 33% of businesses have loans or lines of credit. The situation is particularly dire in countries like Vietnam, the Philippines, and Indonesia, which are among the most underbanked nations in the developing world.

Lack of access to financial services hampers economic growth and reduces quality of life. This issue is especially pressing for migrant workers, who are among the highest underbanked demographic in the region. However, the rise of digital financial services, supported by national financial inclusion strategies, is providing new solutions for these underserved groups.

The COVID-19 pandemic accelerated this shift, with more customers embracing digital banking channels. In countries like Malaysia, Taiwan, and Thailand, the adoption of digital payments has surged, and mobile banking is increasingly becoming the norm. As more consumers opt for digital financial services, the key question arises: how can we sustain and accelerate this growth in financial inclusion using digital tools?

Key Strategies to Accelerate Financial Inclusion

To truly drive financial inclusion, consistent innovation, digitization, and financial education are crucial. In APAC, where over 48 million migrant workers reside, less than 50% have access to traditional bank accounts. This gap presents an opportunity for both established financial institutions and fintech startups to capture this underbanked market with next-gen digital services.

Leveraging Digital Technology to Empower the Underbanked

One of the most impactful technologies in fostering financial inclusion is remote onboarding. This technology allows individuals to access banking services directly from their smartphones, eliminating the need for a physical bank visit. A seamless digital onboarding process, including efficient Know Your Customer (KYC) procedures, is critical to ensuring customers can easily sign up for services without friction. Research shows that poorly designed onboarding processes can decrease customer conversion rates by up to 50%.

By offering smooth digital onboarding experiences, fintechs and banks can simplify the entry process, increase customer retention, and foster responsible financial services. This transformation is especially important in regions where many individuals are accessing banking services for the first time.

Mobile Wallets: A Game Changer for Financial Inclusion

Mobile wallets are also playing a major role in expanding financial inclusion. With smartphone penetration at 64% and over 91% of consumers in APAC preferring digital payments, the mobile wallet space is thriving. As a hub for social payments and digital remittances, mobile wallets allow migrant workers to send and receive money easily, bypassing traditional banking systems. In 2020, remittance flows in APAC exceeded $136 billion, with peer-to-peer payments growing rapidly.

The growth trajectory of mobile wallets is undeniable, with the number of users expected to reach 2.6 billion by 2025. Banks and fintechs have a significant opportunity to enhance these digital wallets with innovative technologies, expanding their market reach while promoting financial inclusion.

The Importance of Financial Education

While technology is a key driver of financial inclusion, education plays an equally important role. It’s not enough to offer digital services if consumers aren’t aware of how to use them effectively. Financial education helps consumers understand how to manage their money responsibly and take full advantage of the tools available to them.

For example, introducing a new digital onboarding service for account creation won’t matter if potential customers don’t know it exists. Similarly, as mobile wallet usage expands, educating consumers on the best practices for security and effective use ensures these tools are utilized optimally. By combining technological solutions with financial education, we can empower individuals to manage their finances more effectively and securely.

Conclusion

The future of financial inclusion in APAC hinges on the integration of innovative financial technologies and robust financial education. Consumers in the region are eager for digital solutions, and as more people embrace mobile wallets and other digital banking tools, the potential for economic growth and stability increases.

For financial institutions and fintechs aiming to accelerate inclusion, the path forward lies in leveraging the power of technology alongside educating consumers on responsible financial management. Together, these efforts can create a more inclusive and equitable financial system, ensuring that everyone, regardless of their background, has access to the financial tools they need to thrive.