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Country Focus Note: Malaysia

Posted on by MSC

Malaysia’s success in financial inclusion has been unique among most of the middle-income countries in the world. The efforts undertaken by Malaysian authorities over the past two decades have facilitated the establishment of an inclusive financial system. Owing to conducive regulations, innovation, and strengthening of the banking sector, most households in Malaysia now have access to a wide range of conventional and Islamic finance products and services and carry out electronic payments nationwide.

While Malaysia is on track to become a high-income nation by 2020, the growing community of migrant workers and adults living in rural areas with low education levels continue to lack access to formal financial institutions and financial services. However, a combination of factors like the increased adoption of smartphones, greater access to the Internet, and growing comfort of using technology have given rise to new solutions. Riding on an increasing demand-side and favourable enabling environment, fintechs in Malaysia are blending financial services and technology.

Given BNM’s proactive stance and an active collaboration between fintechs and incumbent financial service providers, technology-driven and innovative solutions are expected to emerge in Malaysia, creating a differentiated and compelling suite of product and service offerings to facilitate the integration of underserved segments, including migrant workers and B40 households, into the formal financial services sector.

Country Focus Note: China

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China has made significant progress towards financial inclusion in the recent past, owing to conducive regulations, innovation, and strengthening of the banking sector. Guided by China Banking Regulatory Commission and People’s Bank of China, Village and township banks and other providers in remote regions have taken initiatives in agency banking to enable access for rural low-income customers. Private sector innovations continue to drive a noticeable shift towards digital financial services in China.

China is home to four of the world’s largest fintech ‘unicorns’. Fintech activity is on the rise in online lending, digital payments, insurance, and personal wealth management. Highly efficient and lower-cost P2P lending platforms are also addressing the significant gap in the SME sector. However, it is estimated that significantly larger number of people are underbanked. Internal migrants, usually low income, are at a particular disadvantage due to the strict residential registration system in China that prevents them from settling in cities and accessing financial services.

The banking sector has been undergoing significant reforms to accelerate the access to and use of formal financial services, particularly for the under-banked population. Technology-driven and innovative solutions are expected to emerge, which will further augment meaningful financial inclusion in the country and facilitate the integration of underserved segments into the formal financial services sector.

Country Focus Note: Bangladesh

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Bangladesh is both an inspiration and a challenge for policymakers and development practitioners. While efforts in poverty reduction to date have been extraordinary, Bangladesh still faces daunting challenges with nearly 51 million people living below the poverty line. Basic access to banking services and products remain a challenge in Bangladesh.

However, the government has shown firm commitment through conducive policies aimed at advancing financial inclusion. The microfinance movement has led the way in terms of reaching out to the masses. Since poverty remains acute in Bangladesh, the importance of microfinance is crucial – especially for the lower-income segments located in the northern and southern part of the country.

With the rapid adoption of mobile phones in the country, the MFS sector has experienced significant growth in the number of users as well as agents that provide mobile money services. However, the MFS market in Bangladesh is yet to move beyond basic transactions, such as cash-in, cash-out, and payments – many of which are conducted over-the-counter by unregistered users. Fintech players in Bangladesh, primarily led by the MFS players, have a huge potential to address the key constraints that hold back financial inclusion and to facilitate the integration of underserved segments into the formal financial services sector.

Levaraging Technology for Meaningful Financial Inclusion

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Catch the highlights and takeaways from our latest Thinkshop 2013 – ‘Leveraging Technology for Meaningful Financial Inclusion’ – held in Kuala Lumpur, Malaysia. MSC organised the workshop in partnership with the Metlife Foundation. This event saw participation from prominent fintechs, banks, and market facilitators such as regulators and donors. Participants discussed the findings of our study on the potential for technology to address major financial inclusion gaps in four countries – Bangladesh, China, Malaysia, and Vietnam.

Leveraging Technology for Meaningful Financial Inclusion in Asia

Posted on by MSC

Challenges in the supply-side are a key reason for the financial exclusion of low- and moderate-income (LMI) communities, which form a large part of the 1.7 billion people who remain unbanked worldwide. Traditional banking and financial services tend to focus more on high-value, low-volume transactions by high net-worth customers and are highly capital- and labour-intensive.

Technology such as fintech presents an opportunity to remedy this situation, especially for the LMI customer segment. Fintech promises to deliver solutions through the pathway of digital distribution, which would reduce the cost of delivering financial services to the mass-market significantly. It can increase the accessibility of these financial services while disrupting traditional delivery approaches.

MicroSave conducted a study to understand the role of such technology in terms of financial inclusion for potential providers and users. The study intends to create an updated overview on enabling fintechs that offer disruptive and innovative solutions, including start-ups, mobile financial services providers, and IT solution or platform providers.

The study is based on extensive secondary research and stakeholder interviews with fintechs and FSPs across six markets – Bangladesh, China, Malaysia, Myanmar, Nepal, and Vietnam. It helped identify the key challenges in financial inclusion that have a direct potential for technology disruption in each market. The study also assessed the market readiness in supply and adoption of technology solutions. Stakeholder interviews helped us to validate the findings and to understand the specific challenges that fintechs and FSPs face in addressing the target segments. The study is supported by the MetLife Foundation.

Pradhan Mantri Ujjwala Yojana: Challenges and the road ahead

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The mere ownership of an LPG cylinder alone is not enough to make people switch from using traditional fuel and chulhas. Challenges like the high cost of refills and lack of doorstep delivery of LPG cylinders in remote locations restrict the regular use of LPG. In this video, MicroSave suggests strategic solutions to enable a complete shift towards LPG usage.