Economic Downturn Fears Grip ASEAN Consumers Amidst Surging Digital Banking Adoption, Reveals UOB Study

The UOB ASEAN Consumer Sentiment Study 2023 highlights growing concerns about an economic downturn across ASEAN countries due to rising inflation and increased expenses. However, the study also shows a significant uptick in the adoption of digital banking and payment channels. Over 70% of respondents expect an economic downturn, and mobile banking app usage increased by 55%, while e-wallets and QR code-based payments gain popularity.

22 August 2023 – Singapore-based United Overseas Bank (UOB) has released its flagship ASEAN Consumer Sentiment Study (ACSS) 2023, revealing that fears of an impending economic downturn across ASEAN nations are on the rise due to increasing inflation and higher expenses. Simultaneously, the study showcases a robust surge in the adoption of digital banking and payment channels, underlining the region’s growing receptiveness to the digital era.

Conducted in collaboration with global management consulting firm Boston Consulting Group, the fourth iteration of UOB’s ACSS took place from June 1 to June 26, 2023, encompassing insights from 3,400 respondents across Singapore, Indonesia, Malaysia, Thailand, and Vietnam. This year’s study marked UOB’s maiden partnership with Boston Consulting Group, further enhancing the depth and breadth of the analysis.

A pivotal revelation from the ACSS 2023 was the stark sentiment among respondents concerning economic prospects. Over 70% of participants expressed their apprehension about an impending economic downturn within the next year, signaling a notable continuity in downbeat sentiments from the previous year. The sustained cautious outlook underscores concerns related to escalating inflation and rising household expenditures, which 63% and 57% of respondents respectively identified as pressing worries. Particularly acute in Singapore, these fears are mirrored with 71% of respondents concerned about inflation and 64% about escalated household expenses.

However, the survey also highlights a distinctive surge in digital banking adoption. The study records a preference shift towards digital banking modes, including mobile banking apps and innovative payment methods like e-wallets, QR code-based payments, and mobile wallet debit or credit cards. A notable trend is the consistent rise in usage of mobile banking apps by over 55% of respondents over the past year, while internet banking through web browsers saw a substantial 35% increase in usage. Additionally, consolidated financial data platforms witnessed a 20% regionwide rise in usage. Respondents from Thailand and Vietnam exhibited the greatest enthusiasm for adopting these technologies.

The study further delves into the realm of payment preferences. E-wallets and QR code-based payments were the most favored regional payment modes, garnering usage among 56% of respondents. Following closely, e-commerce payment platforms and mobile wallet credit or debit cards registered usage rates of 49% and 48% respectively. Singapore stood out in payment habits, where traditional methods like physical credit and debit cards remained predominant, preferred by 62% of respondents. Nonetheless, the study revealed an eagerness to embrace the upcoming trends, as 20% of Singaporeans expressed their intent to experiment with mobile wallet credit or debit card payments in the coming year.

Amidst concerns of an economic downturn, the study underscores a contrasting wave of optimism. Around three in five respondents across the region anticipate improved financial conditions by the next year. Leading the charge, Vietnamese respondents exhibited the highest level of optimism at 76%, closely trailed by Indonesia at 74% and Thailand at 68%. UOB aligns with this optimism, projecting a brighter sentiment for the second half of 2023 as regional interest rates stabilize and economic growth remains steady.

Commenting on the findings, Ms. Jacquelyn Tan, Head of Group Personal Financial Services at UOB, emphasized the study’s relevance for both consumers and businesses to adapt in the current uncertain economic landscape. The insights from ACSS 2023, she noted, would aid UOB in better understanding customer behavior and needs, supporting them in navigating the evolving banking and digital realm.

In conclusion, UOB’s ASEAN Consumer Sentiment Study 2023 underscores a blend of economic caution and optimism while shedding light on the accelerating trend of digital banking and payment adoption across the ASEAN region.

Author: Terry KS

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