Open Banking Progresses in Southeast Asia

Open Banking Progresses in Southeast Asia

by May 17, 2024

The open banking landscape in Southeast Asia is witnessing significant advancements and initiatives. Financial institutions are increasingly acknowledging the benefits of open banking, fintech startups are embracing application programming interfaces (APIs) to introduce new solutions, and consumers are adopting digital financial services at a fast pace, a new whitepaper by Appsynth, a Thai digital innovation consultancy, and Brankas, an open finance startup headquartered in Singapore, says.

The paper, titled “The State of Open Banking in Southeast Asia”, looks at the open banking landscape across the region, highlighting the drivers of open banking adoption and outlining the recent developments that took place in the sector.


The State of Open Banking in Southeast Asia

The paper notes that across Southeast Asia, financial institutions are recognizing the potential advantages of open banking, including improved customer experiences and access to innovative products. Many banks are actively developing APIs and partnering with fintech firms to seize these opportunities.

Second, the report says that the region’s vibrant fintech ecosystem is a critical driving force behind open banking initiatives. Young ventures in the sector are increasingly leveraging APIs to introduce novel solutions across various financial services, from payments to wealth management.

These phenomenons are arising on the back of growing consumer appetite for digital financial services, fueled by increased digital adoption, smartphone penetration and Internet access.

Challenges remain

Despite these benefits and opportunities, several concerns and challenges exist in the Southeast Asian open banking landscape.

One key challenge is the regulatory landscape, as countries within the region have varying degrees of openness and regulation surrounding data privacy and security. Harmonizing regulatory frameworks across the region would help solve this issue and facilitate consistent implementation of open banking practices.

Another challenge is the lack of standardized APIs and data sharing protocols, which is creating obstacles to seamless integration between financial institutions and third-party providers. This issue could be resolved by bringing together the industry to establish a secure infrastructure for data sharing.

Consumer trust and awareness are other critical considerations. This requires educating consumers about the benefits and security of open banking to alleviate concerns and gaining their confidence in sharing their financial data.

Finally, adopting open banking requires financial institutions to upgrade their legacy systems and infrastructure. This can be a complex and time-consuming process that necessitates significant investments and organizational changes.

Open banking in Southeast Asia


The State of Open Banking in Southeast Asia

To address these challenges and accelerate the adoption of open banking, several countries across Southeast Asia have introduced regulatory frameworks. Simultaneously, industry participants are embracing the trend at a fast pace.

In Thailand, the central bank has established a regulatory sandbox to foster collaboration between financial institutions and fintech startups. In parallel, major banks like Siam Commercial Bank, Kasikornbank, and Krungsri Bank have launched open APIs for third-party developers, facilitating innovation in banking services.

In Singapore, the Monetary Authority of Singapore has introduced the API Exchange, a marketplace for financial institutions to discover and deploy digital solutions, as well as the Singapore Financial Data Exchange, a platform which consolidates financial information, enhancing accessibility and consumer control over their data.

In Malaysia, the Financial Technology Enabler Group was established by Bank Negara Malaysia in 2016 to drive fintech and open banking initiatives in collaboration with stakeholders. Additionally, fintech companies like Curlec and Soft Space are contributing to open banking growth.

In Indonesia and Vietnam, open banking efforts have been largely driven by the industry, taking the form of partnerships between traditional financial institutions and fintech companies to enable seamless financial transactions.

Finally, in the Philippines, the Bangko Sentral ng Pilipinas launched the Open Finance Framework in 2022. The initiative aims to develop an open, interoperable and scalable ecosystem for consumers to take more control over their financial data and enable them to access a range of financial products and services from different providers.


Further Reading: Brankas also produced a whitepaper which delves into the evolving landscape of Open Finance in Asia, highlighting its critical role in reshaping the financial services sector through digital transformation. Download the whitepaper at this link.



Featured image credit: Edited from freepik