additiv, a global leader in FinTech and embedded finance, is delighted to announce the release of a groundbreaking report ‘Embedded Finance Opportunity in Southeast Asia’, that paints the evolving consumer landscape in the financial services sector.

Our research, based on a comprehensive study of 1,500 consumers across Malaysia, Indonesia and the Philippines, performed in partnership with leading market research firm Ipsos, unveils valuable insights into consumer preferences and behaviours when it comes to choosing financial services, both from traditional financial institutions and non-financial companies.

In a nutshell: Rapid wealth creation in Asia creates an attractive environment for companies looking to expand the provision of financial services. Our research has uncovered untapped consumer demand, with 50% of our respondents reporting that they have not used any investment products in the past year, despite wanting access to such services. More specifically, 82% of the respondents who want access to such investment services, would like access to financial advice, as opposed to fully self-service. While banks historically enjoyed a trust advantage compared to most other companies, this is no longer necessarily the case. Non-financial companies such as consumer platforms and Super Apps have an advantage both in terms of the digital touchpoints they enjoy to cross-sell other services, but also the data to be able to personalise these services. The companies that are going to capture this market, whether incumbents or non-financials, will need to find a way to cost-effectively and scalably deliver advised financial and investment services.

Highlights:

• On a weekly basis, 58% of consumers actively engage with their banking apps;
• 37% of consumers report having never used online investment platforms;
• Banks enjoy high absolute trust, trusted by 70% of respondents to deliver financial services beyond banking.
• However, while banks enjoy strong competitive advantages over other specialised financial services providers, these do not necessarily hold when comparing traditional banks to non-bank digital platforms;
• The most popular non-bank apps (Super Apps and consumer platforms) enjoy a 20% lead over banking apps in terms of engagement, giving these platforms more touchpoints with which to recommend relevant products and services, including financial services;
• Most surprising of all is that, while traditional banks are trusted more than almost all non-bank platforms, Super Apps enjoy the same level of trust as banks. In short, Super Apps have higher engagement than traditional banks and an equivalent level of trust, making them a prime contender to capture the untapped demand for wealth management services;
• 76% of consumers stated that they would be open to accessing financial services from non-financial players;
• Of the 49% of people who said they had not used an investment service in the last 12 months but would like to, 96% would be willing to use a non-financial service provider; with the big majority of consumers expressing a desire to receive financial advice, suggesting that self-service investment services are unlikely (in the near term at least) to solve entirely the problem of underprovision.
• In fact, on average, the most favored approach is a hybrid model – which combines digital with assistance from an advisor, preferred by 40% of respondents
• Long-term saving “to protect their future” is perceived as the biggest saving and investment opportunity
• More than 70% of consumers would consider switching financial service providers, with the costs and value as the primary reason for switching, and financial incentives emerging as the second compelling reason.

Conclusion: We estimate that there are over US$1 trillion investable assets in Southeast Asia that are not professionally managed today. Capturing this opportunity would translate into a multi-billion dollar in new revenues. Banks should be in pole position to address this underserved market, but we see significant opportunity for other players, including non-financial companies such as consumer platforms and Super Apps.

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