South Asia, SEA have ‘greatest potential’ for fintech lending: study

South Asia’s fintechs and young population lifted its rankings.

South Asia and Southeast Asia have the greatest potential for fintech lending, according to a study by UnaFinancial.

The South Asia region secured an average score of 1.152, lifted up by its young population and strong industry fintech development.

The region has 43 incubators for alternative lending companies, and 118 funding rounds in the industry, UnaFinancial said.

This is despite South Asia having the lowest penetration. Just 37% of smartphone owners amongst internet users, and 34% of digital payment users, use fintechs lending services.

Southeast Asia ranked second, boosted by its strong digital infrastructure and over half of its population using digital payments, UnaFinancial said.

About 59% of SEA’s potential are using digital payments and 62% are smartphone owners. There are also 24 incubators supporting the growth of fintech companies.

However, the average income per capita ($42 USD) and investments in SEA are lower than in other regions, UnaFinancial said.

West Asia and East Asia showed lower growth potential. West Asia has the highest income per capita at $66, and has strong investments at $2.31b. However, it lags behind in the establishment of fintech companies and incubator support.

East Asia has the highest share of digital payment usage, at 93%, and has mobile connectivity of 124 per 100 people.

However, its smaller share of the young population and reliance on traditional financial institutions brought its rank down.

UnaFinancia’s study compared the fintech lending potential across South, Southeast, West and East Asia, based on a multivariate average methodology. 

Key indicators include mobile broadband subscriptions, average income, internet usage, smartphone penetration among Internet users, investment in alternative lending, share of young population, number of incubators for alternative lending sector, adoption of digital payments, access to bank accounts, access to formal credit, demand for borrowed funds, number of alternative lending companies, and funding rounds.