Digital financial services from lending to asset management are expected to generate at least $38 billion of annual revenue across South-East Asia by 2025, more than tripling from $11 billion in 2019, according to a new study by Bain & Co, Google and Temasek Holdings. Online lending will comprise about half that total for the region, which houses some of the world’s fastest-evolving internet and mobile industries. Growing smartphone penetration promises to unlock internet-based services such as insurance to more than 70 per cent of an adult population neglected by traditional banks, according to the report.

Indonesia and Vietnam are projected to grow fastest in terms of digital financial services revenue, according to the report by the three companies, their first on the region’s digital financial services industry.

Their expansion already underpins a $100-billion South-East Asian internet economy, the firms said in a broader survey published earlier this month.

South-East Asia, a region that houses more than 600 million people, is rapidly warming to online finance as governments craft investor-friendly policies to encourage everything from blockchain start-ups to digital banking.

Investors poured a record $735 million into fintech ventures in Singapore alone in the first nine months of this year, according to research from Accenture. Liberalisation is key to the region’s rapid adoption of online financial services. Singapore and Thailand have instituted so-called sandboxes, or systems that let companies experiment under regulatory supervision.

Both countries have also established standardised QR codes for mobile wallets. Digital payments in the region are projected to exceed $1 trillion by 2025, from $600 million in 2019.

Depending on how the region’s governments approach fintech regulation, digital financial services revenue could conceivably reach $60 billion by 2025, well above the $38 billion estimate, the studys authors added.

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