#20 GKC | 🏦 Financial Inclusion In Southeast Asia

Happy Friday! It’s November, aka two more months to year end. How are you doing with keeping up to your 2024 resolutions? I’m working hard on my health goal 💪

Continuing our Know Your Investors Series, in collaboration with Turbo Net Zero.

Turbo Net Zero is a pure-play sustainability consultancy company focuses on delivering ESG value-creation solutions for corporates and investors.

We’ll discuss about the evolving field of impact investing across Southeast Asia in three parts.

1. Overview of global impact investing frameworks

2. Sector-specific impact themes within SEA (Today’s Episode)

3. Case studies of successful impact investors and companies in SEA

Let’s get started!

Overview of Financial Inclusion & Empowerment In Southeast Asia

In Southeast Asia, financial inclusion remains both a challenge and an opportunity, despite impressive economic growth. Large populations, particularly rural residents and marginalized groups like women, youth, and the elderly, remain without access to formal financial services. This gap limits their ability to engage fully in economic activities and hinders personal advancement.

Demand for financial services among underserved groups is growing, yet remains largely unmet. According to Oliver Wyman, the payments and transfers gap alone exceeds $180 billion across Indonesia, the Philippines, Cambodia, and Myanmar, exacerbating poverty cycles and restricting investments in education, health, and business opportunities.

Unlocking Financial Inclusion Opportunities in Southeast Asia

SEA presents a unique opportunity for impact investors looking to make a difference through financial inclusion and empowerment. Key investment themes include expanding access to essential financial services, empowering underserved populations, sector-specific financing, financial literacy, and sustainable financing.

i. Microfinance & Microcredit

Microfinance institutions (MFIs) provide small, collateral-free loans to individuals who are typically ineligible for traditional bank loans. These loans often target low-income entrepreneurs, particularly women, enabling them to start or expand small businesses.

Microfinance has been especially effective in empowering women, who are often excluded from formal financial systems. Women who receive microloans use the funds to start or expand small businesses, generating income and financial independence. In turn, they reinvest in their families and communities, promoting educational, health, and economic benefits that have a ripple effect across society.

The instrument also contributes to broader economic development by creating a cycle of growth within low-income communities. When entrepreneurs can access credit to build their businesses, they create jobs, stimulate local economies, and foster economic resilience. This helps reduce poverty levels, improve children’s educational outcomes, and drive long-term social stability in SEA, where the need for inclusive growth is high.

ii. Digital Financial Inclusion (Fintech Solutions)

Innovations in digital financial services could lower providers’ distribution and servicing costs for basic financial services by making possible alternative platforms and channels.

By offering fast, affordable, and accessible financial transactions, fintech helps people securely save, access credit, and make payments, empowering them to better manage daily expenses and unexpected financial needs.

The widespread use of smartphones and the increasing availability of affordable internet access have enabled fintech companies to offer digital financial services to millions of previously unbanked individuals. 

For those earning less than $2 a day, fintech access can raise incomes by 10% in countries like Indonesia and the Philippines and by up to 30% in Cambodia. This income increase contributes directly into enhanced food security, better education opportunities, and improved healthcare access.

Financial Inclusion Investment Landscape in Southeast Asia

Investment Trends and Accelerators

Fintech companies, including digital banks and financial service providers, are leading this transformation by innovating to fill gaps in access to credit, savings, and payments.

Recent trends indicate strong investor commitment from groups like 500 Global and Gobi Partners, who are focused on early-stage, high-growth fintech startups driving financial inclusion across the region.

In addition, SEA governments, particularly in Indonesia, Thailand, and the Philippines, have introduced supportive policies to expand financial access. Regional frameworks like the ASEAN Financial Inclusion Initiative also promote cross-border partnerships and investments.

Notable FinTech Investors

• Accion: A global nonprofit organisation with a $152.5M Accion Digital Transformation Fund to serve MSMEs in South and Southeast Asia, Latin America, and Africa.

• International Finance Corporation (IFC): The private sector arm of the World Bank that develops innovative funding solutions to boost access to finance for women-owned microenterprises.

• Amartha: An Indonesian microfinance fintech platform that facilitates peer-to-peer lending and connects rural women entrepreneurs with lenders.

• ErudiFi: A SEA-based education financing platform for underserved communities.

• Akulaku: A leading fintech company in Indonesia, offering digital financial services such as online lending, digital banking, and virtual credit to underserved populations.

Key Takeaways

Southeast Asia's diverse population and rapid economic growth, combined with significant disparities in access to financial services, create a pressing need for inclusive financial solutions.

Investing in financial inclusion can empower the unbanked and underbanked groups by reducing inequality and thus boost economic growth.

Again, thank you Turbo Net Zero for this amazing content collaboration. (Check out our other collab content!)

If you are an impact investor looking to implement ESG strategies OR corporates exploring impact measurement strategies, hit Kenny up!

~~

Hope this is helpful! 🙂 

Feel free to reach out via LinkedIn or email if you have more questions.

References

• Accelerating Financial Inclusion in South-East Asia

• Key Approaches to Accelerate Financial Inclusion

• Financial Inclusion and Consumer Empowerment in Southeast Asia

• How to close Southeast Asia’s financial inclusion gap

• Empowering Women Through Peer-to-Peer Lending

• First-Ever Impact-Focused Southeast Asian Financial Inclusion Report

• Financial inclusion in ASEAN countries

Free Notion and Unlimited AI

Thousands of startups use Notion as a connected workspace to create and share docs, take notes, manage projects, and organize knowledge—all in one place. We’re offering 3 months of new Plus plans + unlimited AI (worth up to $3,000)! To redeem the Notion for Startups offer:

1. Submit an application using our custom link and select Beehiiv on the partner list.

2. Include our partner key, STARTUP4110P67801.

Learn More