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Expert's Insight: Fintech Lending Industry in ASEAN

12 July 2023

Expert's Insight : Fintech Lending Industry in ASEAN


With the rise of technological development of devices such as computers and smartphones, the online lending business has played a crucial role in the consumer finance market.

"Digital lending platforms, such as Peer-to-Peer (P2P) lending, have gained popularity with the proliferation of online lending by reaching out to people with lower credit scores and those in smaller towns and rural areas. These platforms connect borrowers directly with lenders without a middleman (such as a bank or a non-bank financial institution) disbursing loans quicker than traditional players and even offering tailored products to borrowers.

According to the research by Precedence Research, the global P2P lending market (covering both consumers and businesses) is expected to grow by around 27% from 2022 to 2030, with the Asia-Pacific region leading the growth."

Source: SPEEDA Industry Report - Consumer Finance (World)

This article is written based on the answers from our Expert network Service - FLASH Opinion, gathering insights from experts in the fintech lending market focusing on ASEAN to understand the current trends, challenges, and what lies ahead.

Learn more about FLASH Opinion Service here.

Insight: Fintech Lending Industry in ASEAN 

The Impact of Tight Capital Markets on Credit and Lending Innovation in Developed Economies

Tight monetary policies and the slow money supply have led central banks to limit the amount of credit available to banks, making it hard for banks to lend money or give new loans to borrowers.

For individuals and families, higher interest rates and stricter rules make it tough to get loans for things like homes, personal needs, or credit cards, which will reduce their spending. For companies, less consumer spending can result in lower income, which means more money is required to run operations for their business. Also, getting funds for growth or investment for innovation becomes a challenge for businesses, slowing down their progress. High interest rates can be a risk for companies with loans, as their business might need help financially.

Normally, these tight situations and high interest rates last 3 to 4 years, but things start improving in the third year when interest rates drop, and more money is available.

This has stifled innovation for business. In Malaysia, in order to gain a competitive advantage, some lenders used grants (no need to pay back) from the government to gross their lending up to NPL levels and used them to train their credit risk model rapidly.

Predicting the Market's Future and What to Expect

It's hard to say exactly when the markets will return to their long-term average because various factors influence it, including economic conditions, monetary policy, and global events. However, as economies recover from the effects of the pandemic and market conditions stabilise, we expect capital market liquidity and lending activity to improve slowly and facilitate credit and lending innovation, especially focusing on these points in fintech.

  • Technology adoption: Especially playing a significant role in the credit & lending space
  • Regulatory environment: Expected to evolve in the lending landscape
  • Collaboration: Connecting traditional financial institutions with FinTech players
  • New payment methods:  Buy Now Pay Later (BNPL)

Key Players in Fintech Lending in ASEAN

Fintech is still developing in ASEAN, with some players leading the market. Touch 'n Go, a major player from Malaysia, offers various services like deposits, insurance, lending, and cross-currency payments. They've quickly reached out to Small and Medium-sized Enterprises (SMEs) using technology and strategic collaborations.

One exciting sector is BNPL. The systems facilitate collaborations between e-commerce platforms and major financial institutions, enabling deferred interest-free payments over short periods. Although still relatively new in ASEAN,  robust consumer demand can be seen in contrast to more mature markets.

This technology connects online shopping with big banks, making it attractive to the younger workforce market. Even though it's still developing, it's a great opportunity for fintech entities to establish connectivity between technology and conventional banking institutions.

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