Even during a period of slowing global growth elsewhere, the Asean economy – the Association of South-East Asian Nations – has averaged expansion of 4.6 per cent a year. Only China and India beat that.

Asean countries offer relative economic stability, a rising middle-aged population, urbanisation and increasing domestic financial participation. Trade is also being diverted there because of China-US tensions. But less recognised is the region’s rapid digital evolution.

Asean has its USD1 billion unicorns, but is also awash in start-ups. Southeast Asia’s internet economy is forecast by Google, Temasek and Bain to grow from USD32 billion in 2015 to USD300 billion by 2025.

E-commerce, ride-hailing, internet gaming, online travel and financial technology are growing quickly, thanks to high rates of mobile-phone penetration and improving mobile infrastructure. Asean’s transformation ranges from retail to transportation to financial services.

Financial technology there has focused on e-wallets and payments, but cash accounts for the vast majority of transactions in much of the region, and many people lack access to basic banking services.

Only a quarter of adults in Southeast Asia enjoy full banking services. Another quarter just have a bank account while half remain unbanked. But, in a digital era, payments, remittance, lending, investment and insurance could be transformed.

Digital wallets are already adding financial products and many fintech companies have ambitions to move beyond payments into other banking services.

Southeast Asia’s internet economy is substantially smaller than that of more-advanced markets, but it is catching up fast. Digital payments could exceed USD1 trillion by 2025, and account for most consumer transactions by value.

The heart of the digital economy is data. Rising internet availability, cheap smartphones and technological advances have fuelled data growth. The proportion of customers in the Philippines with 3G and 4G, for instance, has more than doubled to 85 per cent since 2014.

Although still low, Asean internet penetration is rising rapidly as mobile broadband connections surge. Southeast Asia has more than 400m internet users – 63 per cent of the population – but that still gives substantial scope for increase.

While Singapore has high average mobile internet connection speeds, other Asean countries lag far behind. Many still require investment in infrastructure and ecosystems to support growing data usage and the region’s average digital skills rank is only 26 in the World Economic Forum’s global competitiveness report – well below the midpoint of 71. The region lags in R&D; barring Singapore, it registers few patents and trademarks.

It isn’t surprising then that Singapore has emerged as a hub of innovation, with a thriving start-up scene and substantial government support. Several companies use it as a home base to access other markets in the region.

However, don’t count out the rest of Asean. Indeed, Indonesia is the largest internet economy by sales, followed by Thailand, then Singapore and Vietnam with Malaysia close behind, while the Philippines is smallest. Indonesia, Vietnam and the Philippines are likely to have the highest growth rates in the region.

Some of the most exciting technological and business-model innovation is taking place in the least developed economies. Financial technology in particular holds promise for the region’s large number of people who lack access to basic banking services.

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