How payment solutions can build a brighter forex future in Southeast Asia

The retail forex market in Southeast Asia (SEA) is at a tipping point. More and more forex businesses are showing interest in the region for many reasons, including the sheer size of its economies, as well as the comparative lack of financial technology and infrastructure.

This presents an opportunity. With technology uptake growing -- as seen with rising adoption of smartphones and digital wallets – the market’s potential is significant, especially as financial technology becomes more widespread.

In our latest whitepaper, Retail forex development in South East Asia, we offer a deep dive into the challenges and opportunities of the region, and how alternative payment methods (APMs) like digital wallets can help build a brighter forex future in SEA.

Here, we share a brief overview of some of the key trends impacting retail forex growth in the region.

The current state of forex development in SEA

First, it’s important to note that the 10 countries within The Association of Southeast Asian Nations (ASEAN) are in different stages of forex development – with our whitepaper breaking these down market-by-market.

In terms of the broader picture, a huge portion of SEA is unbanked, and an even greater number of people only have simple bank accounts.

This provides a significant opportunity for financial organisations to break through financial exclusion in the region, and consolidate themselves as a top choice for retail forex brokers.

And while the future looks bright for forex development in SEA, there have already been green shoots of growth. Retail forex trading has increased in recent years, and Singapore has established itself as a major player in international forex, with several of the largest banks in the world basing their regional forex trading teams in the country.  

Challenges of retail forex development in SEA

While the outlook for forex development in SEA appears promising, challenges remain. Brokers are establishing themselves all over SEA but with varying levels of legitimacy and regulation.

Inflation fears are strong, with the US Federal Reserve likely to continue to raise interest rates.  Meanwhile, the dominance of the US dollar is also an issue, as fluctuations have a huge effect on the world economy.

Extreme disparity in wealth is another issue, even within the same country, particularly in countries such as Malaysia and the Philippines. For context between countries, minimum wage in Laos sits at $116, whereas in Singapore it’s at $802.

Payments, meanwhile, offer both a challenge and opportunity in the region.

The power of digital wallets in retail forex development

Forex brokers require some form of bank transfer to their platform to begin trading. With many consumers in SEA unbanked, and cash a mainstay for everyday transactions, this can make payment into forex platforms a significant challenge, especially as digital banking hasn’t been as widely adopted as in other regions.

Thankfully, while many consumers in SEA are unable to pay a deposit into a forex broker account using a bank account, digital wallets such as Skrill or NETELLER offer an alternative that can help forex businesses tap into the market’s opportunities.

Digital wallets offer better rates and in many cases are easier to use. They also offer peace of mind regarding security -- allowing individuals to make payments without sharing bank details. With mistrust in forex brokers rife in many SEA countries, this is an attractive perk.

With retail forex set for huge growth in SEA, the full potential of the region can be realised as brokers provide users with the means to transfer money in a way that suits them. With this in mind, digital wallets can be crucial to witnessing the bright future of retail forex in SEA.

To learn more about retail forex development in SEA, check out our whitepaper, Retail forex development in South East Asia.