How the rise of fintech in Southeast Asia is powering financial inclusion

Dr Ming Gu still remembers the difficulties when FinVolution, a Chinese fintech service provider, set up operations in Indonesia in 2018 amid the first wave of Chinese companies flocking to this country of 267 million people.

The growth of fintech in Southeast Asia was a key talking point at the 2025 Asian Financial Forum in Hong Kong

Those were the early days of a fintech revolution in Southeast Asia, particularly Indonesia, which has a vast unbanked population according to World Bank data.

“In 2018, when we first arrived, the lack of individual credit histories was a major roadblock,” Gu said during a workshop at the 2025 Asian Financial Forum (AFF) in Hong Kong, held on 13-14 January. “People couldn’t access loans because there was no reliable way to assess their creditworthiness,” he said.

This was a classic “chicken-and-egg” problem, where individuals needed loans to build credit, but they couldn’t get loans without credit histories. FinVolution saw an opportunity to change that by creating a new avenue of financial inclusion.

Tackling the ‘creditworthiness’ problem

According to a report by Electronics Payment International, a data service provider, Indonesia’s unbanked population fell to 48% in 2018 from 63.9% in 2014.

Although many Indonesians, especially those in rural areas, are steadily being integrated into the formal banking system, the increases in financial service provision still could not keep up with the surging demand. This created opportunities for fintech players like FinVolution.

Tracing FinVolution’s journey, Gu recalled its establishment in 2007 as a tech-driven firm focused on bridging the digital gaps between lenders and borrowers.

“Fintech is creating new pathways for underserved populations to access credit and financial support, empowering them to invest in their futures,” he said.

Historically, banks often overlooked individuals and small businesses lacking credit histories. FinVolution tackled this issue by leveraging non-traditional data and advanced digital credit assessment models.

These models, which remain in use till this day, enable first-time borrowers to establish creditworthiness and integrate into mainstream financial systems.

FinVolution’s expansion into Indonesia in 2018 provided an opportunity to validate its technologies and business model in a new market.

Despite the initial challenges, the company’s solutions steadily improved credit-scoring capabilities, helping to expand financial access to underserved populations in Indonesia, and later also in the Philippines.

By Q3 2023, the company had supported over 6 million borrowers and facilitated more than $3 billion in loans outside China. These efforts have focused on empowering underbanked young workers and small business owners across markets like Indonesia and the Philippines.

At the AFF, Gu told of an NGO leader from the region who faced a cash crunch while running canteens for elderly residents. When traditional financial institutions failed to meet his urgent needs, FinVolution stepped in with a critical loan, enabling him to continue his vital services.

Stories like these illustrate the tangible impact of fintech on individuals and communities, Gu explained.

This anecdote also mirrors a broader trend in Southeast Asia, where digital lending has emerged as the “biggest revenue driver, representing around 65% of total revenue” generated by digital financial services, according to a 2024 survey by Google, Temasek and Bain & Company.

The study also finds that “the widespread adoption of QR codes and increased access to app-based credit solutions are keeping digital finance on a strong trajectory”.

Adoption of fintech services is accelerating across the region, encompassing e-wallet payments, lending technology, AI-powered risk assessment, and smart loan recovery systems.

Laying a solid foundation

Elsewhere in Southeast Asia, Cambodia’s recent uptake of fintech, coupled with its economy growing at 5% a year, has captured global attention.

Dr Phan Phalla, Secretary of State at Cambodia’s Ministry of Economy and Finance, unpacked the story around his country’s rapid progress in fintech at the 2025 AFF in Hong Kong.

Once primarily used in corporate applications, fintech has now penetrated daily life, with QR codes becoming ubiquitous even in wet markets.

Government initiatives and platform systems have laid a solid foundation for seamless financial transactions, supporting payment interoperability for both Cambodians and international visitors.

Additionally, the government’s regulatory sandboxes provide a controlled and safe environment for testing new technologies, Phalla told the forum.

Surprisingly, Cambodia’s proactive approach has positioned the country as an emerging leader in Southeast Asia’s fintech scene.

Phalla envisions an even brighter future for the industry, as innovation helps promote financial inclusion and digital literacy in a country of 17.64 million people.

Accomplishing this task will boil down to the wider use of digital technologies. Both Phalla and Gu emphasised the pivotal role of AI and big data in advancing fintech operations. FinVolution, for one, leverages these technologies across the credit lifecycle, from risk assessment and loan matching to fraud prevention and customer service.

Today, the company’s AI and big data analytics not only enhance service efficiency and accuracy, but also empower financial institutions to reach broader audiences with mitigated risk.

Banking and digitisation

When asked about the technologies favoured by banks’ digital custodians or treasurers, Daniel Li claimed that his bank mainly focuses on two trends: generative AI as well as blockchain and tokenisation.

As the Chief Digital Officer of Personal Banking and Wealth Management at the Bank of China (Hong Kong), Li said he and his team are working on products that leverage these technologies to improve customer experience and operational efficiency.

With 25 years of experience working in Singapore for global and regional banks, Li noted that digitisation is the way to go in Southeast Asia, just as in other parts of the world.

However, it cannot replace the role that quality service plays in optimising the customer journey and retaining the personal touch in banking.

As such, his organisation is dedicating significant efforts to enhancing the customer journey. A key part of this process involves integrating banking more seamlessly into people’s daily lives, so they don’t have to seek out a branch.

“At the end of the day, technology is just a tool to enable,” he concluded during the 2025 AFF. “The goal is to deliver banking services and products that meet customer needs [more effectively].”

Li’s words resonate in an era when technological upgrades offer only part of the solution to addressing Southeast Asia’s prolonged financial and digital divides.

A national survey on financial literacy and inclusion, conducted by Indonesia’s financial watchdog OJK, shows that the country’s financial literacy and inclusion index rose to 85.10% in 2022 from 76.19% in 2019. The OJK expected the rate to reach 90% in 2024.

Despite the region’s rapid increases in financial inclusion, challenges remain. The lack of credit histories persists, and deepfake-related fraud poses a growing threat to asset security.

To tackle these challenges, FinVolution’s Gu advocated for a symbiotic relationship between regulators and fintech firms.

In his opinion, achieving sustainable growth in Southeast Asia requires not only adhering to stringent regulatory standards. It also entails building robust compliance frameworks, integrating AI-driven risk management, and prioritising user privacy.

Scaling in Southeast Asia

As fintech continues to reshape Southeast Asia’s economic landscape, Cambodia’s digital payment advancements and FinVolution’s innovative experience in Indonesia serve to exemplify the sector’s potential to democratise access to financial services.

Despite the tremendous inroads fintech has made in Southeast Asia, Phalla believes there is still huge scope for fintech to drive further growth and empower communities in the region.

“We’ve seen lots of developments in the fintech industry [from this region], but again, we still have 290 million people without bank accounts,” Phalla remarked. “Expanding the scope of financial services to those people will undoubtedly create significant opportunities.”

Gu stressed Southeast Asia’s potential as a key growth market for fintech, driven by its booming economy, young population, e-commerce growth, and credit-driven consumption habits.

“Very few regions in this world can meet all these criteria,” he said. “Digital lending always goes hand in hand with the growth of e-commerce.”

“Indonesia is the place to watch over the next five to 10 years,” Gu added. “We are very bullish on Southeast Asia.”