Why Emerging Markets Need Fintech

Fintech changes the world, one phone at a time

This is uncharted territory for banks in Indonesia. When a country experiences rapid economic growth, you would expect a bank to expand into areas where people still don’t have a bank account to put their new wealth, as is the case with more than 80 million Indonesians today. But these aren’t usual times. Indonesia’s banks are closing branches - over 7,000 will be shuttered by 2030 - as they retreat from a rising wave of new technology that is transforming how people save and spend money, in Indonesia and emerging markets throughout Asia.

In Southeast Asia alone there are over 400 million Internet users among the total population of 655 million, with more than 90% of users connecting via a mobile phone. Over the next few years, the widespread adoption of 4G networks - alongside early glimmers of lightning-fast 5G technology - will unlock a treasure test of digital solutions for both the wealthy and poor.

This digital transformation – coupled with unprecedented economic growth – is turning Asia into ground zero for a fintech revolution that will transform the way people live, work and play.

But before we dig into the details, let’s get a simple question out of the way.

Why is fintech so disruptive?

Fintech is disruptive for the same reason that Amazon was so disruptive to bookstores. Technology took a two-hour trip to the bookstore where there might be a few hundred books and turned it into a two-minute visit to a website where there are millions.

Now compare this to a trip to the bank. There is the same limited selection and demand on our time that we had with a bookstore, but on top of this there’s also the bank’s bureaucracy, paperwork and fees – all of it adding up to time and money that many people don’t have.

Until the arrival of fintech. Just like Amazon turned buying a book into something you could do from your home, new financial technology is turning banking into something you do with your phone. 

It’s this heady mix of speed, scale and convenience that makes fintech so disruptive. And it explains why a perfect storm of tech-friendly consumers, aggressive startups and even some conventional banks is transforming how people spend, shop and save.


Countries in Asia have some of the biggest unbanked populations in the world. Vietnam, the Philippines and Indonesia are all in the top 10 with between half and two-thirds of people without bank accounts. If we include the underbanked – the people who lack credit cards, long-term savings and other basic services – the number in Southeast Asia jumps to 7 in 10.

While it’s true some of these countries lag far behind developed nations in their use of conventional banking services, it’s often the opposite for their use of technology. The Philippines, for example, leads the world in time spent on social media, while India already has more smartphone users than the US, Japan and Germany combined.

This widespread adoption of technology is now building a bridge to the underserved poor. In Indonesia, the fintech startup Payfazz has created a network of agents throughout the island nation to serve as online connections for offline consumers who need to pay bills. 

As more people climb the technology ladder with smartphones and faster 4G networks, their demand for services grows. Fintechs are rapidly expanding their products from simple bill payments to more sophisticated offerings. 

Digital lending, insurance and investments are all growing at well over 20% a year and are forecast to exceed $1 trillion in Southeast Asia by 2025.


This year, China is expected to become the first country where sales from ecommerce overtake revenue from offline stores. China won’t have this distinction for long, as multiple countries transition quickly to the convenience of online shopping. 

Triggered by the pandemic last year, ecommerce jumped over 70% in Singapore, while next door in Indonesia online shopping spiked from just 3% of total sales to 20%. All of this is made possible by a sweeping technological transformation of how our purchases are displayed, delivered and ultimately paid for. 

online shopping
Shopping online is rapidly overtaking offline retail.

In Vietnam, the local ecommerce platform Tiki has built a dozen state-of-the-art distribution centers that use machine learning and other cutting-edge technology to provide two-hour deliveries in a country with some of the world’s most challenging traffic conditions. 

Ecommerce provided by Tiki and other platforms is usually associated with products like toys, tech accessories and groceries. But one company in India is demonstrating that the potential for online shopping has few limits. 

PharmEasy uses a network of 80,000 pharmacies to facilitate the sale of medicines online, especially in areas where access to doctors and pharmacies can be difficult. Starting with prescription drugs for chronic patients, e-pharmacies like PharmEasy are expanding their services to online consultations with doctors and diagnostics. 

The company intends to increase its network to 200,000 pharmacies in the next two years. 

The superapp and partners

We have seen how fintech has the ability to provide a blizzard of services and products for people who recently had little access to wealth or technology. But there’s a flipside to abundance of convenience.

Yes, consumers want an unlimited selection of services, but they also have just one phone and only a small number of apps that they want to use regularly. 

This is where some leading fintech companies like Grab are stepping up to bring many of these products under one digital roof. A so-called superapp can provide a single doorway to a world of services.

With one app a user can order breakfast, arrange a commute to work, arrange a delivery, pay some bills, buy insurance or make investments. This profusion of services at your fingertips gives us a glimpse of what lies out there beyond our phone as well. 

Digital commerce is connecting businesses – both startups and traditional establishments – in a highly efficient network of often mutually beneficial transactions. Grab alone partners with 60 financial institutions and banks.  Almost 600,000 small businesses joined the Grab platform in just the last year. 

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