Financial Inclusion in Post-COVID Southeast Asia

The Centre for Impact Investing and Practices (CIIP), in collaboration with the United Nations Capital Development Fund (UNCDF) and Helicap, supported by 60 Decibels, developed this report on financial inclusion. Understanding the state of financial inclusion in post-COVID Southeast Asia is more important than ever as investors and organizations work to support millions of people rebuilding their lives.

This study covers Southeast Asia as a region, with particular focus on Cambodia, Indonesia, Philippines, and Vietnam. It shares insights from interviews with financial services providers (FSPs), investors, and industry associations, enterprise-level business and loan book data, and a customer survey with over 6,500 customers across the region. 

Key Insights

• Women are more positively impacted by credit access and likelier to use loans for business and household well-being purposes. Lending to women in the region can drive transformational change and be a crucial sector for gender-lens investing. 
• There is strong correlation between the depth of impact and high customer satisfaction across Southeast Asian FSPs. Amidst growing competition, high customer satisfaction presents a compelling business rationale for embedding impact practices in business operations.
• There is a significant untapped market for holistic financial services in Southeast Asia. While insurance and savings are popular services, business-related services such as business development and e-commerce services are particularly valuable to female, FinTech, and urban customers.
• FSPs can achieve both impact and commercial viability through innovation and cost reduction solutions. FinTechs have shown a promising ability to reduce operating expenses, with weighted average OPEX/revenue dropping by close to half in the last four years. Traditional non-banking finance institutions serving the underserved have also remained profitable, indicating that impact-oriented FSPs can target commercial returns and still ensure business sustainability.

In total, 60 organizations contributed their time and energy to the study.

Between October 2022 and May 2023, we conducted 50 industry interviews, collected enterprise data (enterprise survey and anonymized loan data) from 27 FSPs, and surveyed over 6,500 end-customers of 28 FSPs across Southeast Asia. 

This study offers clear indications of the promising investment opportunities and most successful business models and practices to accelerate positive impact for underserved customers through access to credit. Southeast Asia continues to be well-positioned to make strides in financial inclusion. Moving ahead, we look forward to working with stakeholders to drive the sector forward, together.