State of open banking in Southeast Asia (SEA)

The next wave of open banking in SEA

Open banking in SEA is on the brink of rapid expansion in 2024, though progress varies across countries. With a population of 570 million and a projected GDP of USD 4.7 trillion by 2025, the region’s financial services sector offers significant growth potential. Regulatory frameworks are evolving to promote competition and innovation, driving collaboration between traditional banks and fintech firms.

Financial institutions are embracing open banking to improve customer experiences and expand financial product access. Fintechs, using APIs, are driving innovation in payments, lending, and wealth management. Increased smartphone use and internet access are fueling demand, though challenges like data security and API standardization offer opportunities for collaboration.

As digital payments in the region are expected to exceed USD 1 trillion by 2025, other services like lending and insurance are poised for substantial growth as well.

To unlock the full potential of open banking, supportive regulations, investment in technology, and partnerships will be critical. If the right conditions are met, Southeast Asia’s digital financial services industry could generate USD 38 billion in revenue by 2025, driving the region toward a more connected and competitive financial ecosystem.

SEA’s digital battlefield

Infrastructure readiness

Mapping open banking progress

Leaders and laggers in SEA

The champions league of open finance

Who’s setting the bar?

Illuminating the path of open finance in SEA

The rising tide of open finance growth

• Open finance market is projected to reach USD 7.85 billion by 2029
• Unbanked population is approximately 2%
• 65% of bank revenue is generated by embedded finance services in 2024
• 78% of total Gross Transaction Value (GTV) is expected to be digital payments, reaching USD 2200 billion by 2030
• 14% of loan disbursements will be digital by 2030
• Projected digital wealth Assets Under Management (AUM) of USD 410 billion by 2030
• Projected revenue of USD 23 billion from SUPERAPPs by 2025
• 310 million SUPERAPP users in SEA as of 2024

Source: Google SEA Economy report, Paypayers, Twimbit analysis

Open finance playbook

Singapore is leading in the region

Tides of transformation

Key drivers of open finance in Southeast Asia

• #1 Regional integration

ASEAN payment connectivity

Five ASEAN countries (Thailand, Singapore, Malaysia, Indonesia, Philippines) launched real-time payment linkages.

Key achievements:

1. Thailand-Singapore: PromptPay-PayNow linkage successful for 3 years
2. Malaysia-Indonesia: DuitNow-QRIS integration adopted for 2 years
3. Singapore-Philippines: PayNow-InstaPay connection announced

Cross-border standards

Project Nexus: Singapore’s MAS leading initiative connecting real-time payment systems,

Regional API standards development:

1. Singapore has a government backed API Exchange platform
2. Indonesia’s SNAP (Standard National Open API) adoption by 16 banks
3. Malaysia’s Financial Sector Blueprint 2022-2026 emphasizing API standardization

• #2 Technology advancement

Cloud adoption

Cloud market in SEA is projected to reach USD 12.5 billion by 2025

Key developments:

1. Singapore: 60% of banks migrating core systems to cloud
2. Indonesia: OJK guidelines allowing cloud services for core banking
3. Thailand: BOT cloud guidelines enabling broader adoption

Digital currencies

Central Bank Digital Currency (CBDC) initiatives:

1. Project Orchid (Singapore): Retail CBDC infrastructure
2. Project Dunbar: Multi-CBDC platform for international settlements
3. Bank Indonesia’s Digital Rupiah development
4. Thailand’s retail CBDC pilot with 10,000 users

AI/ML implementation

AI adoption in financial services:

1. Singapore: Most banks implementing AI for risk assessment
2. Indonesia: Significant growth in AI-powered lending solutions

• #3 Business model innovation

Embedded finance growth

Market size:

SEA embedded finance market projected growth: USD 7.85 billion by 2029

Key segments:

1. Embedded payments: ~USD 2,100-2,400 billion GTV by 2030
2. Embedded lending: ~USD 200-300 billion loan book balance by 2030
3. Embedded insurance: ~ USD 7.5 billion APE & GWP by 2030

Banking-as-a-Service expansion

BaaS providers:

1. Singapore: 15+ licensed providers
2. Indonesia: All major banks offering BaaS
3. Malaysia: All major banks with BaaS offerings and sandboxes

Market growth :

1. 40% YoY increase in BaaS adoption
2. Average of 300 APIs per bank
3. 70% reduction in customer acquisition costs

SUPERAPP evolution

Market leaders:

1. Grab Financial: 41.9 million MTUs
2. GoTo Financial: +74% Year on Year Growth on GTV
3. Sea Money: USD 615.7 million revenue from financial services

Integration trends

1. Upto 60% of users using financial services within SUPERAPPs
2. Major increase in financial service adoption through SUPERAPPs

• #4 API monetisation

1. Accelerating innovation and time to market: APIs standardize interfaces and provide reusable components to accelerate innovation cycle.
2. Enhancing customer experience: APIs enable seamless platform integration, ensuring data consistency for personalized experiences.
3. Expanding business reach and partnerships: APIs let businesses extend their services to partners, fostering broader collaboration
4. Improving operational efficiency: APIs enhance efficiency and productivity by automating seamless data exchange across systems and departments.
5. Enabling data-driven insights and analytics: API integration enables businesses to collect real-time data from various sources for analysis and strategic planning.