Millennial males continue to define the face of South and Southeast Asian consumers of fintech lending, the same as a few years ago. However, there has been a clear change, increasing uniform coverage of the population with online financial services.
How people got more involved with fintech
Seven to eight years ago, only a select few customers borrowed money online. Some were “innovators”, enticed by the emerging prospects of global digitalisation.
They were keen to experience all the benefits of digital financial services, speed, accessibility and convenience then and there, long before they would become an essential part of life (or not).
With no readily available options, others were indeed in a serious need of money, knocking on the doors of banks and other financial institutions.
Borrowers combining traits of both archetypes were the most common customers of the first online lenders. This group mainly consisted of tech-savvy male citizens who had pronounced spending tendencies. The data from our services show, for example, that over the past five years in Vietnam, 71 per cent of applicants were men; in India, 89 per cent.
The urban youth, among others, is the base driver of fintech development in the region. Various experts have claimed this, one of which was the Singapore-based banking corporation UOB and their 2017 analytics.
Indeed, the generation of 25-35-year-old urban millennials, as the most consumer-active and tech-savvy of all, became the segment’s defining audience for years to come. This is especially true for Asia, considering the overall youthfulness of its population: the average age in South Asia is roughly 28, in Southeast Asia, 30.
Still, online loans quickly grew in popularity, attracting new segments of the population. They benefited from the swift Internet penetration and other regional specificities. A significant contributing factor, especially in the Philippines and Indonesia, was geographic disunity, which made Internet technologies the only viable way to access financing for the citizens of remote regions.
The predominantly low yet developing urbanisation also played its part. In the face of growing consumption, a common lack of employment, and consequently, no access to banking services, the rural population also turned to online lending.
The rising client mobility cannot be overlooked as one of the long-term trends defining the customer portrait of digital financial services. The smartphone is becoming an increasingly versatile tool of today, directly affecting the fintech sector.
Also Read: How this homegrown fintech is helping Singaporeans with alternate investing
For instance, across the Robocash Group footprint in South and Southeast Asia, at the beginning of 2018, every second loan application was received from a mobile device. According to more recent data, two out of three loans were received through smartphones.
The simplicity and speed of receiving funds anywhere with a smartphone have added to the popularity of online lending, making it accessible to everyone.
What comes next?
The global development of fintech certainly did not leave South and Southeast Asia behind. The penetration of banking services, in general, is on the rise (in the Philippines, for example).
More and more banks are shifting towards the digital. At the same time, regulation is being improved upon (evidenced by the recent emergence of special licences for digital banks in Singapore, Malaysia and the Philippines).
Of course, COVID-19 has affected this process. Due to the proximity of the pandemic’s epicentre, Coronavirus had increased the rate of development of digital financial solutions in Asia.
For instance, India experienced a sharp improvement in financial inclusion with the emergence of entire “digital districts”. Due to the drop in consumption during the first and second waves of the pandemic, a surge in accumulated demand will likely increase the use of financial products, primarily lending.
Suitable options are becoming increasingly common to find online. The bottom line is that the Indian national financial technology sector promises to grow by an impressive US$100 billion to US$160 billion by 2025, showing an annual CAGR of 22.7 per cent (2020-2025). The impressive growth rates and bright development prospects also apply to fintech at the macro-regional level.
Thus, fintech services are becoming more and more widespread in South and Southeast Asia.
What changes may this bring to the customer portrait of online borrowers?
The ratio of males to females remains approximately the same (58 per cent/42 per cent in our holding for 2022). The millennial generation also remains the most active audience.
The younger generations have begun to show more engagement, and the average age of our applicants in the Robocash Group averages 32.4 years old. The new borrowers are actively adopting modern financial technologies.
However, the increasing involvement of the older population in digital lending will be the defining factor in the mid and long-term. On the one end, the natural ageing of returning borrowers will become more consolidated.
On the scale of Robocash Group, about 80 per cent of loans are now issued to repeat borrowers. On the other end, the older generations will generally become more involved in the internet space.
Also Read: 6 fintech startups you should keep an eye out for
By 2025, the age structure of internet users in India will change. The main share will consist of 35-54 year-olds, while the 55+ generation will also become significantly more active. Indeed, this trend is already emerging in Vietnam, where, according to our data, men aged 36-50 are more likely to borrow money than others.
Notably, the lending services themselves are changing, which entails a client transformation. The BNPL loans, which enable the purchase of goods in equal instalments, are gaining popularity.
Thus, according to UnaPay, the Robocash Group’s BNPL service in the Philippines, its average client today is still the same millennial (23-38 years old, 84 per cent), and two-thirds of the clients are women, who are more inclined to consume “here and now”.
Final thoughts
Shortly, we will see the evened-out distribution of fintech services among customers in terms of gender and across different age groups. This could be attributed to the inevitable global growth of digitalisation, which includes the financial sector.
In the developing countries of South and Southeast Asia, with their huge potential for growth in consumer activity and internet penetration, the trend promises to manifest itself especially clearly and rapidly.
–
Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.
Join our e27 Telegram group, FB community, or like the e27 Facebook page
Image Credit: freedomz
The post How the global growth of fintech defies age and gender appeared first on e27.