According to the World Bank, more than two billion people, globally, have no access to banking services, whether payments or lending. A year ago, my KPMG colleague, Jan Reinmueller, published an article on Fintech opening the door to the unbanked and underbanked population in Southeast Asia (SEA). He highlighted three areas where fintech could make an economic impact – providing basic mobile banking services, providing micro loans, and using data and analytics to help small businesses make better decisions.

This year, I challenged my team in KPMG Singapore to re-visit this and assess the extent of fintech’s true and measurable impact on the unbanked and underbanked people of SEA. To look at this issue, I posed the following questions:

• Are there clear examples of success stories? What are their measures of success?

• What is stopping these successes from becoming widespread/pervasive across borders?

• Can more be done and by whom to promote/attract these successful business models into South East Asia?

• How do we make these sustainable for the next generation?

We think that while there are clear success stories, such as Wing in Cambodia (mobile payments and remittances) and Lenddo in the Philippines (micro-lending), there is much more than needs to be done. To this end, the best lessons will be learned from similar emerging markets elsewhere, such as Africa or India.

We believe that it takes a village (eco-system) to raise a successful child (digital innovation). The key players would be: providers of capital to build the infrastructure (i.e., the government for incentives and regulations to attract the best ideas/talent), providers of capital to execute the ideas (VCs and corporates), adopters of the ideas (corporates, consumers, banks) and finally, collaborators (research agencies, academia, technology platform providers, consultants)..

Similarly, for the issue of underbanked or unbanked populations, we need to create a supportive and complete ecosystem instead of relying fintech companies alone to move the needle.

We have seen governments in the SEA region actively promote the need to address the unbanked segment, and provide significant development assistance , such as education, cheaper loans disbursed through traditional channels, access to assistance schemes. What we have not seen them so is work specifically with fintech companies to aggressively address the single most important catalyst in the micro-SME’s business, the availability of cheap micro-loans.

In Africa, mobile wallet providers are allowed to provide nano-loans (very small loans that are repayable in one or two months -- a product that doesn’t compete with banks or even other traditional micro loan providers). In SEA, banking regulators are still debating and finalising their regulations on mobile wallets and micro-lending. Perhaps, a simplified set of rules governing nano-loans through mobile wallets can be developed quickly which will attract many established providers to enter our markets (usually in partnership with a local telco or bank). Also, just like incentives to banks for adoption of innovation, regulators should also provide grants/incentives to fintech companies to build capabilities such as BaaS and open-APIs which will help lower the cost of entry into these cost challenged segments.

Another key player in Africa has been the Venture Capital firms, such as Irrational Innovations and Omidyar, which have been actively supporting this area of fintech innovation. Foundations and NGOs such as the Bill and Melinda Gates Foundation and IFC/World Bank have also been aggressively supporting fintech development for the underbanked. Whilst these VC firms and foundations are also willing to invest to extend the work to SEA, more can also be done to galvanise our local/regional VC firms as well as large local conglomerates to play an active role here in provide risk capital to allow more funds to be made available to this segment.

Today, every country aspires to be a Smart Nation or have a Smart City…but in order not to leave the unbanked behind, we need to also create a framework for a “Smart Financially-included Nation”.

Tek Yew is Head of KPMG in Singapore’s Financial Services Advisory practice and a member of our Global Fintech Leadership team, where he leads engagements with clients on areas such as fintech innovation, digital transformation and customer growth strategies.