SINGAPORE - Funding for financial technology or fintech firms in Asean is surging on the back of the region's young and underbanked population.
Asean has more than 630 million people, with around 50 per cent of that under 30 years of age.
But more than half of these adults do not have access to banking services, a gap that widens in rural areas to 74 per cent.
This makes a fertile field for fintech firms.
Investments in the region's fintech market was just US$14 million in 2012 but that had shot up to US$190 million in 2015, US$252 million last year and US$338 million in the first nine months of 2017, according to a State of FinTech in Asean report.
The report was produced by United Overseas Bank, with insights from EY and support from the Singapore FinTech Association and the Asean FinTech Network.
"Asean as an engine of economic growth and prosperity has caught the eye of global investors and there is an abundant supply of early-stage funding in the region," it said.
Payments and mobile wallets are attracting the highest level of funding, up from US$8 million in 2012 to US$83 million in 2015.
The report noted: "This innovation push is underpinned by high-levels of mobile usage and rising rates of internet penetration, an increasingly urban, tech-savvy, literate and young population and a segment of the community underserved by traditional banking."
Singapore is home to the lion's share of the 1,228 fintechs in Asean, at 39 per cent, said Tracxn, a start-up data provider.
They are drawn by the ecosystem of diverse players, conducive regulatory environment and its web of international links that promote the exchange of ideas, the report said.
"Singapore's developed financial infrastructure and supportive regulatory policies have positioned the country well to compete with other global fintech hubs, such as Hong Kong and London," it said.
Indonesia, Malaysia and Thailand are fast catching up, supported by high levels of mobile adoption, rising rates of internet penetration and an increasingly urban, literate and young population.