SEA’s digital banking map unveils bright spot for investors

Update (Nov. 23, 10 a.m. SGT): This article was updated to reflect new developments in the region’s digital banking industry. Our previous landscape map was published on Sept. 2, 2022.

The past year has seen a new crop of platforms and services enter the digital banking space in Southeast Asia.

Earlier this week, Indonesian conglomerate Astra International and Hong Kong-based fintech company WeLab launched a digibank service named Bank Saqu. This comes over a year after the two firms acquired Bank Jasa Jakarta for US$518 million to launch the digibank.

Targeting the younger generation, especially the 117 million solopreneurs in Indonesia, Bank Saqu offers interest rates of up to 10%. It surpasses the rates of other digital banks in the country, which reach up to 8.7%.

Last week, GXBank officially made its debut in Malaysia. The firm, which is backed by Grab and Singtel’s GXS Bank, is the first among the five applicants that were granted digital bank licenses in the country to begin operating.

In July, GoTo Group introduced GoPay Tabungan, which integrates the GoPay e-money platform with banking offerings.

The region’s growing digital banking activity is translating into sustained financial support.

Despite a funding slump in the overall fintech sector in 2023, Southeast Asia’s digital banking sector has still seen considerable amount of attention from investors, as Tech in Asia detailed in this report.

This is as Indonesian VC firms directed a significant portion of their investments for financial services toward rural banking, alongside insurtech and mortgage companies, in the first half of 2023, according to an AC Ventures and Bain & Company report. Investments in the country’s overall financial services sector plummeted to US$25 million in H1 2023 from over US$1 billion in the same period last year.

While the funding amount raised by digibanks in the region in 2023 is almost the same as a year earlier, the funding deals have seen a decline. This can be attributed to four large funding deals during this year: MariBank’s US$172 million deal, GXS Bank’s US$101 million, Ant Group’s US$188 million into subsidiary Anext Bank, and Aspire’s US$100 million series C round.

A key player in the rural banking sector is Komunal, which recently secured US$8.5 million in a round led by East Ventures.

The neobanking platform focuses on the digitalization of rural community banks. It recorded a 3.5x year-on-year growth in MSME deposits and loan transactions to reach US$118.6 million during the first quarter of 2023.

Digital banks cash in on growth

Funding aside, digibank players in Southeast Asia have also reported strong financial results this year.

Southeast Asia vs. Hong Kong