Maybank Sees Sustained Growth for Singapore Internet Firms’ E-Commerce and On-Demand Services
ASEAN Fintech: A Sleeping Giant Ready to Awaken
southeast Asia’s internet giants are poised for sustained growth, with fintech leading the charge, according to a new report from Maybank Investment Bank.
While e-commerce adn on-demand services remain strong, Maybank analysts predict that fintech will be the key driver of future expansion, fueled by a large unbanked population and a growing ecosystem of digital financial services.
“As an ecosystem play, fintech cash burn could be lower while monetization could be faster,” Maybank stated in its report.
A Resurgence in 2024
ASEAN internet companies have experienced a remarkable comeback in 2024, with the sector surging 100% year-to-date. This resurgence is largely attributed to a strong performance in fintech, with revenues up 90% year-to-date.
Despite this impressive growth, fintech’s contribution to overall revenues for major players like Sea Ltd and Grab remains relatively small, currently standing at 9% to 14%.
From Payments to Lending: Expanding the fintech Landscape
Initially, these companies focused on payment services, a low-margin, highly commoditized sector. However, with their core businesses now stable, they are expanding into more lucrative areas like buy now, pay later (BNPL), cash loans, digibanks, and insurtech.
This shift towards higher-value services is driving significant fintech revenue growth, outpacing core services in the first nine months of 2024.
Untapped Potential: A Booming Market Awaits
Maybank highlights the vast untapped potential of ASEAN’s large unbanked and underbanked population. This presents a significant prospect for fintech to flourish.
Grab’s digibank operations in Indonesia and Malaysia, for example, have already begun offering lending services, and Maybank expects rapid loan book growth in these markets.
Sea Ltd’s digital financial services business is also well-positioned for growth, leveraging its massive e-commerce platform to offer BNPL and lending services.
Sea Ltd: A Top Pick for Growth
Maybank identifies Sea Ltd as its top pick in the e-commerce space, citing several key factors:
Under-penetration: E-commerce penetration in ASEAN remains low, offering a long runway for growth.
Take-rate increases: ASEAN’s take-rates are lower than the global average, providing room for future upside.
Own logistics: Shopee’s investments in its own logistics network enable cheaper delivery and a differentiated customer experience.
Live streaming dominance: Shopee has become the largest live streaming platform in ASEAN, effectively competing with global giants like TikTok and Temu.The Future of Fintech in ASEAN
With a growing middle class, increasing smartphone penetration, and a supportive regulatory environment, ASEAN is primed to become a global fintech powerhouse.
Maybank’s analysis suggests that companies like Sea Ltd and Grab are well-positioned to capitalize on this opportunity, driving significant growth and transforming the financial landscape of Southeast Asia.
ASEAN Fintech: A Sleeping Giant Ready to awaken
Southeast Asia’s internet giants are poised for sustained growth, with fintech leading the charge, according to a new report from Maybank Investment Bank.
While e-commerce and on-demand services remain strong, Maybank analysts predict that fintech will be the key driver of future expansion, fueled by a large unbanked population and a growing ecosystem of digital financial services.
“As an ecosystem play, fintech cash burn could be lower while monetization could be faster,” Maybank stated in its report.
A Resurgence in 2024
ASEAN internet companies have experienced a remarkable comeback in 2024, with the sector surging 100% year-to-date. This resurgence is largely attributed to a strong performance in fintech, with revenues up 90% year-to-date.
Despite this impressive growth, fintech’s contribution to overall revenues for major players like Sea Ltd and Grab remains relatively small, currently standing at 9% to 14%.
From Payments to Lending: Expanding the Fintech Landscape
Initially, these companies focused on payment services, a low-margin, highly commoditized sector. However, with their core businesses now stable, thay are expanding into more lucrative areas like buy now, pay later (BNPL), cash loans, digibanks, and insurtech.
This shift towards higher-value services is driving notable fintech revenue growth, outpacing core services in the first nine months of 2024.
Untapped Potential: A Booming Market Awaits
Maybank highlights the vast untapped potential of ASEAN’s large unbanked and underbanked population. This presents a significant prospect for fintech to flourish.
Grab’s digibank operations in Indonesia and malaysia,for example,have already begun offering lending services,and Maybank expects rapid loan book growth in these markets.
Sea Ltd’s digital financial services business is also well-positioned for growth, leveraging its massive e-commerce platform to offer BNPL and lending services.
Sea Ltd: A Top Pick for Growth
Maybank identifies Sea Ltd as its top pick in the e-commerce space, citing several key factors:
Under-penetration: E-commerce penetration in ASEAN remains low, offering a long runway for growth.
Take-rate increases: ASEAN’s take-rates are lower than the global average, providing room for future upside.
Own logistics: shopee’s investments in its own logistics network enable cheaper delivery and a differentiated customer experience.
Live streaming dominance: Shopee has become the largest live streaming platform in ASEAN, effectively competing with global giants like TikTok and Temu.
The Future of Fintech in ASEAN
With a growing middle class, increasing smartphone penetration, and a supportive regulatory surroundings, ASEAN is primed to become a global fintech powerhouse.
Maybank’s analysis suggests that companies like Sea Ltd and Grab are well-positioned to capitalize on this opportunity, driving significant growth and transforming the financial landscape of Southeast Asia.