Digital Wallet Ecosystem in Promoting Financial Inclusion

Introduction

The growth in information communication technology (ICT) has created a surge of progressive technologies that has affected many sectors including financial services. These technologies have produced many disruptive innovations that are said to be the driver in reconstructing business processes and creating new business models including in the financial services industry. The recent developments in ICT have deeply revolutionised the financial service industry where this new set of technologies has played an important role in introducing FinTech, a coalescence of the word, financial and technology. FinTech redesigned a particular segment in a financial system’s value chain to alleviate the network between banks and their clients (Omarini, 2018, p.98). Areas such as digital crowdfunding, mobile payments, crypto currencies and peer-to-peer (P2P) are categorized as FinTech (Schindler, 2017; Sugiantoro et al., 2020).

FinTech began to influence our daily lives, through facilitating the process of payments and services and providing the essentials infrastructure for the financial institution’s operation. It allows the organization and modernization of financial services and at the same time benefits the customers by the efficiency and convenience that offers them access to efficient services through their smartphones (Anshari, 2020; Ahad et al., 2017). Generally, FinTech are seen as the tools and concepts for financial services delivery channels, which are through the means of internet connectivity and the encompassing adoptions of smartphone technology applied in financial sectors that aids business in managing their financial operations (Kim et. al, 2015; Hamdan & Anshari, 2020).

The rise of FinTech in the global financial market has transformed traditional credit and debit card payment into a digital transaction and digital payment, which, for instance, initiates the changes in the payment system. These transitions are also urged by the growing trends in culture including cashless payments. According to de Almeida et al. (2018), using cash to perform transactions is troublesome to consumers due to the back and forth journey to the Automated Teller Machine (ATM). This repetitive action of withdrawing money is because the limited amount of cash that consumers are able to carry and that forces them to limit their spending. Moreover, cash can be cumbersome and hence pose a threat to consumers of losing the wallet or having it stolen. Apart from that the fourth industrial revolution also took part in the development of the Internet and the formation of e-commerce. Hence, these fostered digitalization by introducing consumers with an array of e-payment choices such as credit and debit cards, electronic and digital or mobile wallets, electronic cash and contactless payment method (Chern, 2018; Anshari et al., 2019).

The phenomenon of FinTech has widespread across continents and become popular both in developed and developing countries as the success comes from the integration between ICT and finance to address real-life needs (Anshari et al., 2021a, Hamdan et al., 2020). It is apparent that ASEAN is one of the region’s leading the FinTech boom considering the exponential growth of its Internet economy. The progressive use of smartphones and Internet by the population is one of the factors that contributed to the noticeable growth of the FinTech industry in ASEAN countries. Thus, this align with the recent 51st ASEAN Foreign Ministers’ Meeting (AMM) in Singapore which aimed to build an “Innovation and Resilience” with its focal point on “utilizing disruptive digital technologies through both harnessing opportunities and managing challenges coming from it” as ASEAN citizens need to be future-ready as well as fitted-out with skills in order to cultivate capabilities towards smart cities (ASEAN, 2018).