The case for Open Finance in Southeast Asia

Open Banking is part of a larger, more extensive Open Finance movement.

The idea of Open Banking revolves around banks allowing third-party platforms to access consumers’ financial data, with their consent, and leverage it to provide them additional services or perform transactions on their behalf.

Open Banking allows consumers—both individuals and businesses—to unlock access to better-tailored financial products through a secured exchange of data. However, although important, banks only represent a small part of the financial ecosystem. As Open Banking only involves the sharing of financial data by banks, its use cases are limited to products offered by the banks such as loans and credit cards.

Open Finance is the next step. It will bring us closer to Open Data, a data-driven world that will connect all ecosystems from finance to tech, allowing consumers to fully own their data streams and derive benefit from them. Open Finance allows the exchange of data to occur between a wide range of financial companies, creating a more holistic and accurate assessment of an individual’s digital financial footprint.

The increased sources of financial data also translate to more use cases where consumers can leverage their data to make more informed decisions and improve their financial wellbeing.

Open Banking readiness in Southeast Asia 

As Southeast Asia is digitising rapidly, it has the potential to move to the forefront of innovation and become the global leader. Through Open Banking, the interlinks between banks and fintechs will foster the growth of the national digital economy and increase the efficiency of payments, driving financial inclusion.

Regulators in Southeast Asia are now seeking to create legislation where an Open Banking ecosystem can flourish in their markets. As such, sandbox-style collaborations between banks, fintechs, and regulators have pushed forward discussions about the direction that Open Banking activities should take and accelerated the development of APIs in the region.

As part of Indonesia’s push towards financial inclusion, the Financial Services Authority (OJK) is developing progressive guidelines in the fintech space and has released its Integrated Payment Systems Blueprint 2025. Bank of Indonesia (BI) also released an Open API specification comprising data, technical, security, and governance standards to enable a more seamless data-sharing framework.

Meanwhile, the Philippines Central Bank has approved guidelines on an Open Finance Framework that will advance the development of financial products and services for Filipinos using their consumer data. This move to a regulated Open Finance model will give customers not just uniform access to all of their data, but also guarantees a common level of customer protection, in which their financial data will be secured.

While Indonesia and the Philippines are pushing ahead with regulatory frameworks, regulators in countries such as Singapore and Malaysia are still adopting a market-driven approach to Open Banking—preferring to let market demands dictate the pace of adoption.

Open Finance: financially inclusive

While there has been regulatory support for Open Banking initiatives across the region, it is just the beginning. What comes next is Open Finance, as part of the larger vision of building an Open Data Economy.

As Open Banking only involves banking data, the unbanked are left out. In emerging markets like Southeast Asia, this is a serious issue because over 70% of the region is underbanked or unbanked. Therefore, the efficacy of Open Banking in Southeast Asia would be limited.

As the majority of their financial data lies outside the banking system, accessing them can be difficult due to the multitude of digital platforms a consumer transacts on. With Open Finance, the scope of accessed data is significantly increased. Besides banking, data from other platforms that constitute an individual’s digital financial identity is aggregated too. 

These data sources are diverse, including payment gateways, energy utilities, gig- and creator-economy payouts, health information, telcos, and others. As compared to Open Banking, data accessed through Open Finance is more detailed and, crucially, inclusive. 

The implementation of Open Finance includes the unbanked. Everyone would have equal access to financial services, driving financial inclusivity. Therefore, Open Finance platforms play an important role in aggregating this data for financial institutions and fintechs to access.

Conclusion

Banks in Southeast Asia are being rapidly driven into Open Banking schemes to keep up with the innovation and growth coming from fintechs. Besides building more inclusive financial services, Open Finance also opens up more use cases for consumers to leverage their data.

While Open Banking is the right model to focus on first for highly banked regions such as North America and Europe, Open Finance should be the go-to framework for fintechs and financial institutions within Southeast Asia to drive inclusion for the unbanked. 

The goal is to create a seamless end-to-end Open Finance experience where consumers can freely access any number of service providers and benefit from financial services tailored to them and their life goals. It is feasible that Southeast Asia will reach this point before any other region in the world.

Southeast Asia could make its financial services industry even more innovative and dynamic than Europe’s. Financial inclusion has been one of the major concerns and a priority in the governments' agenda. Therefore, a hybrid approach where regulators and the private sector can collaborate innovatively is essential to create an Open Finance ecosystem that is more inclusive, where no one is left behind.

At Finantier, we believe that infrastructure enables innovation. As the region’s leading Open Finance platform, we are on a mission to build a more inclusive data infrastructure to democratise access to financial services for all.

About Diego Rojas

Diego Rojas is the Co-founder and CEO of Finantier. He is a software engineer with more than a decade of experience building fintech products across the US, Europe, and China. He previously worked closely with the founders of LendingClub (US) and Dianrong (China) in the P2P lending space. He was also CTO of several Fintech startups in Southeast Asia.

About Finantier

Finantier is the leading Open Finance platform for Southeast Asia, providing infrastructure and data products for fintechs and financial institutions to access consumer data from a wide range of sources across the region. With a mission to drive financial inclusion in the region, we empower businesses and consumers by helping businesses provide better financial services and transforming consumers’ lives with better access to them.