According to analysts from Singapore-based fintech service provider UnaFinancial, the neobanking market in Southeast Asia is predicted to grow by 50% in 2021. Across the APAC region, the market will grow by 24%.
The study says higher financing and the resumption of neobank plans after pandemic disruptions will push more digital-only banks to debut or obtain licenses this 12 months.
While it was noted that the pandemic slowed down the expansion of digital-only banks in 2020, it created loads of potential for the expansion of this segment, UnaFinancial said, and one in every of the aspects contributing to this emerging growth is the delayed entry of recent players into the market last 12 months.
“In January 2020, 21 companies applied for digital banking licenses in Singapore and 4 companies applied in Malaysia. However, the pandemic thwarted these plans: in Singapore, only 4 licenses were issued, and in Malaysia, the licensing process was completely suspended and postponed to 2021,” the study reads.
By the tip of 2020, more licenses were approved and more neobanks debuted. Accordingly, five neobanks have already entered the South and Southeast Asian markets, and in 2021, a minimum of 10 corporations have followed them. This means a resumption of neobank development for the foreseeable future, UnaFinancial said within the study.
“Society’s demand for online banking services has also contributed to the event of neobanking. Despite general caution, online banking has increased in popularity as a consequence of lockdown and distant working restrictions,” the study said.
Following this upward trend, neobank financing in APAC in 2020 also increased by 22.8% in comparison with 2019.
On this basis, UnaFinancial said it has estimated growth in neobank financing in 2021 and expects the market to grow by 24% within the APAC region and by 50% within the SEA region.
In SEA, the segment’s development will likely be led by Indonesia, Singapore, Malaysia and the Philippines; while in South Asia, India will likely be the leading country.
