UOB’s flagship ASEAN Consumer Sentiment Study (ACSS) 2023 has found that rising inflation and increased expenses fuelled fears of an economic downturn in ASEAN, while adoption and usage of digital banking and payment channels saw ebullient growth.
Over 70 per cent of respondents of UOB’s ACSS 2023 said they expect their country to experience an economic downturn in the next year, putting a lid on recovery hopes as the downcast sentiment remains relatively unchanged from last year.
The study also revealed an increasing preference for digital banking modes such as mobile banking apps, as well as newer payment modes like e-wallets/QR code-based payments, e-commerce payment platforms and mobile wallet debit or credit cards.
In its fourth year, UOB’s ACSS study was conducted from 1 to 26 June 2023 and surveyed 3,400 respondents online from Singapore, Indonesia, Malaysia, Thailand and Vietnam. This was also the first time UOB partnered with global management consulting firm Boston Consulting Group on the study.
“While UOB’s ACSS 2023 shows that ASEAN consumers have a cautionary view on outlook as inflation in Singapore and other developed markets remain high, we are happy to see that the enthusiasm on the push for digitalisation and receptiveness to the new tech era is not losing steam,” said Ms Jacquelyn Tan, Head, Group Personal Financial Services, UOB.
“As a barometer of regional sentiment towards the economy as well as pertinent areas of interest such as spending and financial behaviour and technology, the findings from UOB ACSS 2023 offer valuable insights for consumers and businesses, to adapt and poise themselves to navigate the current uncertain economic environment.”
Inflation dampens economic recovery hopes, but optimism remains
Rising inflation is a key area of concern in ASEAN with 63 per cent of respondents expressing worry about it, while 57 per cent fret about increased household expenses. Singaporeans are the most concerned with these two, with 71 per cent and 64 per cent of respondents worrying about rising inflation and increased household expenses respectively.
The top three financial concerns for the region are the ability to set aside money for saving (37 per cent), ability to afford essential items (31 per cent) and the ability to maintain current lifestyles (28 per cent). Utility bills (42 per cent) and household groceries (34 per cent) are the top two items that consumers have spent more on, followed by food delivery/takeaway and child education at joint third (31 per cent).
For discretionary spending, most people cut back spending on jewellery (38 per cent) and dining (34 per cent), followed by homeware and furniture (32 per cent).
That said, optimism picks up as three in five within the region expect themselves to be financially better off by June next year, with Vietnam (76 per cent) leading the pack followed by Indonesia (74 per cent) and Thailand (68 per cent). This resonates with UOB’s outlook for the second half 2023, that sentiment will set to improve as regional interest rates stabilise and economic growth holds steady.
In Singapore, the top two most worrying financial situations are the ability to set aside money for saving (42 per cent) and the ability to plan ahead for retirement (37 per cent), with the ability to afford essential items and ability to maintain current lifestyles at joint third (31 per cent).
43 per cent of consumers surveyed indicated they had spent more on utility bills in the past year, with 34 per cent reporting an increase in household groceries expenses and 32 per cent shelling out more for their daily commutes.
More than a quarter of Singaporeans are also budgeting more for their expenses, a growth of six per cent from last year. Consequently, consumers are setting aside less for savings, with 23 per cent declaring as such.
Gen Z is the most conservative demographic with 48 per cent planning to save more this year compared with the national average of 35 per cent, while Gen Y priorities investments with 30 per cent putting their money to work versus the national average of 24 per cent.
Adoption of digital banking and payment channels gathering pace
ASEAN consumers are increasingly banking on their mobiles to serve their financial needs, and are more receptive to technologies such as consolidated platforms for their financial data. Almost 55 per cent of respondents had increased usage of their mobile banking app over the past year, with Internet banking via web browser coming in second at 35 per cent.
Separately, consolidated financial data platforms clocked a 20 per cent increase in usage regionwide. Thailand and Vietnam are the most enthusiastic adopters across the region, while in Singapore, one in five Gen Ys have increased usage of platforms such as SGFinDex, which provides a consolidated view of users’ financial information.
Another notable data point is that bank branches saw a 17 per cent rise in usage regionwide, an indication that consumers still valued face-to-face interaction as a complement to the multitude of digital channels available. In Singapore, more than half prefer to use digital platforms for simple services such as applying for credit and debit cards and checking rewards statuses, but prefer an offline or a combination of channels for more complex transactions such as high-value transactions, applying and refinancing their bank loans as well as purchasing insurance.
In the payments space, ASEAN consumers have shown to be savvy adopters of the latest technologies. E-wallets/QR code-based payments topped regional payment modes, with 56 per cent of respondents using it in the past year. E-commerce payment platforms was second at 49 per cent, with mobile wallet credit or debit cards coming in third at 48 per cent. The latter is the payment mode that consumers are most interested in trying out, with 22 per cent expressing a desire to do so in the next year.
In Singapore, consumers still preferred to pay via bank platforms rather than third-party ones, with physical credit and debit cards the top preferred payment mode at 62 per cent. Mobile wallet credit and debit cards and Peer-to-Peer payment services ranked joint-second at 50 per cent. Like their regional counterparts, Singaporeans are most keen in trying out mobile wallet credit or debit card payment in the coming year, with 20 per cent indicating that they would do so.
Banking on Personalisation
A significant majority of ASEAN consumers are open to sharing their financial data with banks, and are in favour of their information being used to curate products and services personalised to their needs and wants. Over 70 per cent of respondents are comfortable sharing financial data to be consolidated by banks in one platform, with 83 per cent preferring to do so via banking apps versus other app service providers like e-commerce/shopping apps and multi-service apps.
Of these respondents, more than 90 per cent expressed a preference for receiving personalised product and service offerings in their banking apps. The strong demand for personalisation is also consistent across all age groups, income levels and genders surveyed.