Financial Inclusion for Micro-Entrepreneurs: Designing Digital Banking for the Unbanked and Underbanked in Southeast Asia

Understanding the Micro-Entrepreneur’s Journey

Micro-entrepreneurs and informal small businesses are the backbone of Southeast Asia’s economy, representing over 90% of all enterprises and nearly 70% of the workforce. Yet, a significant portion of this segment remains unbanked or underbanked, excluded from the formal financial system. Their journeys are shaped by unique life events—starting a business out of necessity, managing fluctuating incomes, and supporting families through economic uncertainty. Ethnographic research reveals that their financial needs evolve as they move through life stages: from first jobs and family formation to business ownership and growth. Throughout, they face persistent challenges: limited access to formal credit, reliance on cash, and a lack of tailored financial products.

The Barriers to Financial Inclusion

Traditional banks have struggled to serve micro-entrepreneurs for several reasons:

Documentation and Credit History: Many micro-entrepreneurs lack formal documentation or credit records, making risk assessment difficult for banks.
Slow, Inflexible Processes: Loan approvals can take weeks or months—far too slow for businesses that need quick access to cash.
One-Size-Fits-All Products: Standardized offerings fail to address the specific needs of micro-entrepreneurs, such as integrated payments, accounting, and cash management.
Physical Access: In rural or remote areas, the absence of bank branches further limits access.

As a result, over 85% of SME customers in the region are now considering alternatives to traditional bank loans, including fintechs and digital-first providers.

The Power of Customer Archetype Research

A deeper understanding of micro-entrepreneurs’ life journeys and archetypes is essential. Publicis Sapient’s research identifies several archetypes among the unbanked and underbanked, including:

New workforce entrants relying on cash and informal loans.
Independents with basic bank accounts but limited financial literacy.
Struggling families dependent on informal community lending.
Micro-entrepreneurs who may have some savings in banks but still face barriers to credit and business growth.

By mapping these archetypes, banks can design products and experiences that meet real needs at each stage—whether it’s building financial literacy, enabling digital payments, or providing flexible microloans.

Digital Onboarding and Mobile-First Solutions: Breaking Down Barriers

Digital innovation is transforming financial inclusion in Southeast Asia. Mobile-first solutions and digital onboarding are making it possible to reach micro-entrepreneurs at scale, even in remote areas. Key examples include:

CIMB’s OCTO App (Philippines): Enables customers to open accounts in just 10 minutes, with no initial deposit or maintaining balance required. This removes traditional barriers and brings banking within reach for those previously excluded.
TMRW’s Video Onboarding (Thailand and Indonesia): Uses video calls for identity verification, allowing customers to open accounts remotely. TMRW’s 24-hour chatbot, available in local languages, provides ongoing support and guidance.

These innovations demonstrate how banks can leverage technology to simplify onboarding, reduce friction, and provide always-on support—critical for micro-entrepreneurs who may not have the time or resources to visit a branch.

Actionable Strategies for Banks

To truly serve micro-entrepreneurs and informal SMEs, banks must move beyond digitizing legacy processes and embrace a customer-centric, inclusive approach:

Reimagine the Customer Journey: Start with the micro-entrepreneur’s perspective. Design intuitive, end-to-end digital experiences—from onboarding to daily transaction management—that address real pain points.
Leverage Data and AI: Use alternative data sources (such as transaction histories, mobile usage, and even social media activity) to assess creditworthiness, personalize offerings, and automate risk assessment.
Adopt Open, Modular Platforms: Build flexible, cloud-native banking platforms that can quickly integrate with fintech partners, accounting tools, and local service providers.
Foster Ecosystem Collaboration: Partner with logistics, e-commerce, and technology providers to deliver holistic solutions—enabling micro-entrepreneurs to manage payments, payroll, and cashflow from a single platform.
Empower and Educate: Provide financial literacy resources and self-service tools, helping micro-entrepreneurs build confidence and control over their finances.
Start Small, Scale Fast: Launch minimum viable products (MVPs) to address immediate needs, iterate based on feedback, and scale successful solutions across markets.

Building Trust and Long-Term Relationships

Financial inclusion is not just about access—it’s about building trust, transparency, and long-term value. Banks that succeed will:

Deliver predictable, transparent processes.
Offer greater visibility and control to micro-entrepreneurs.
Evolve beyond transactional relationships to become trusted partners in growth.

By embracing digital transformation and customer archetype research, banks can unlock new growth opportunities, close the financial inclusion gap, and help Southeast Asia’s micro-entrepreneurs thrive in the digital age.

Ready to lead the next wave of financial inclusion? Connect with Publicis Sapient to accelerate your digital transformation journey and design banking experiences that truly empower micro-entrepreneurs.