Fintech in Southeast Asia: An Opportunity for Women’s Financial Inclusion & Economic Growth

By Kim Mai Tran —

A woman operating an Android tablet at a cafe in Ubud, Indonesia on the island of Bali. Access to fintech could empower women throughout Southeast Asia. Source: Smagdali’s flickr photostream, used under a creative commons license.

The movement by all Southeast Asian economies to embrace the “digital revolution” presents a tremendous opportunity to empower women, especially financially. Intentional and unintentional biases against women in the region have, for too long, excluded women from having access to traditional financial services and thus a meaningful participation in the economy.

Southeast Asia is not always thought of as the most gender unequal region in the world. Women’s participation in the formal workforce is at 42 percent, higher than the global average of 39 percent. Governments across the region have established quotas over the past two decades to increase gender diversity in government agencies and state-owned or state-linked enterprises. Still, with the lone exceptions of the Philippines and Singapore, respectively ranked 10th and 27th, all Southeast Asian countries are ranked in the bottom half of the 144 countries surveyed by the Gender Gap Index in 2018. East Timor and Malaysia are ranked especially low (128 and 104 respectively). This inequality is particularly striking in financial inclusion. However, new developments present a chance for a significant shift. Today, financial technology or, fintech, services are becoming important providers of financial services and bypassing traditional banking. Fintech banking services have the capacity to incorporate more data points going beyond credit scores, revenue, and age; they give a fuller picture of the borrower and her business. These tools present new options for women to gain deeper traction in essential financial areas.

However, deeply-rooted beliefs continue to hinder Southeast Asia’s gender inclusion. Governments and companies have prioritized growth, internationalization, meritocracy, and wider social inclusion and cohesion in their policies, at the expense of gender diversity.

With almost full primary gross enrollment for girls, Southeast Asia has nearly achieved a critical Millennium Development Goal (SDG 4). With the exception of Cambodia, female enrollment in tertiary education exceeds that of men. In Malaysia, 62 percent of university graduates are women; Indonesia and Vietnam have achieved gender parity for university graduates. However, women still predominantly occupy positions in social and health work, education, administrative, and domestic work, deepening the shortage in badly needed skillsets Southeast Asia faces today despite policy blueprints and strategies for “digital economy” transitions. Furthermore, automation and robotization in manufacturing industries will disproportionately affect women who traditionally perform more routine and codifiable tasks in sectors that are more prone to automation.

Access to traditional financial services can prove difficult for women, especially for women at the base of the pyramid in the economy. Women, more than men, face entry barriers such as financial literacy, government regulations on account opening and identification verification, and cost and quality of financial services. These financial barriers make it difficult for women to meet eligibility criteria for loans: the governments of Indonesia, Cambodia, and Myanmar do not offer government financing programs for women entrepreneurs and women have a hard time accessing loan programs in banks in Brunei, Laos, and Vietnam. Women are also less likely to own land; in some parts of Vietnam, 80 percent of the land is owned by men despite the law requiring both names of spouses to be registered on land use certificates.

In many areas, Southeast Asia lacks customized products and services that account for family responsibilities and cultural practices that can restrict women’s access to traditional financial services. For example, according to the IFC, globally, women prefer dealing with women third-party agents or finance providers, yet, most agents are men. Finally, Southeast Asia’s gender gap in technology access is still high. Women have lower technology adoption rates that men, especially in rural areas, and have lower levels of financial literacy. In Indonesia, research has shown that less than 30 percent of women are financially literate whereas 40 percent of men are. By comparison, in the United States similar research indicates that about 58 percent of women are financially literate.

Despite high rates of education and competence, women in Southeast Asia are often relegated to the informal economy wherein they do not have access to legal protection or benefits. The World Economic Forum shows that almost 70 percent of women in Vietnam are engaged in informal work; 57.5 percent in Indonesia and 38 percent in Malaysia, against a global average of 42 percent. In one of the most connected regions in the world, fintech is a way for “unbanked” women to have access to financial services and enjoy the convenience of digital money in Southeast Asia.

Fintech platforms make it easier for women to receive government and business payments and remittances. Vietnam’s Bank for Social Policies has plans to develop a mobile banking service to provide greater access to low-income populations. Indonesia’s InstaPay, a B2C online payment platform, allows small and medium enterprises to accept payments and invoice their customers through WhatsApp or Line. The Philippines’ central bank has launched a similar platform.

In many ASEAN countries, fintech services have expanded beyond payments to include insurance, lending, and savings. Mary Ellen Iskenderian of Women’s World Banking argues that savings and insurance, rather than credit will facilitate women’s transition from the informal to the formal economy and allows women to reinvest in health and education. BIMA, for example, provides affordable insurance and mobile health services for underserved families for an average price of $0.02 per day and now operates in Malaysia, the Philippines, Cambodia, and Indonesia.

Another key area that fintech facilitates is making remittances accessible. Several Southeast Asian countries, notably Thailand, Cambodia, and the Philippines, have been using financial applications to receive domestic remittances which benefit women, as primary recipients of remittances, directly. In the Philippines, MoneyGram partnered with GCash, a subsidiary of the Philippines’ major telecommunication service provider Globe, to allow easier remittance sending and receiving through the GCash mobile application. As recipients of 60 percent of international remittances, women hold a critical economic power in Southeast Asia.

Efforts to develop and spread digital financial services to serve women will only increase women’s participation in the economy and benefit Southeast Asian economies.

Addressing formal barriers to women’s financial inclusion through digitization allows progress to happen faster and give women access to formal financial services, specifically payments, savings, credit, and insurance and will reduce the gender gap in Southeast Asia and foster national economic growth.

Ms. Kim Mai Tran is a Research Associate with the Southeast Asia Program at CSIS.

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