As non-financial platforms increasingly embed financial services, the demand for sophisticated, scalable identity verification systems will surge
Another fundamental shift we have observed is the growth of embedded finance, or the integration of financial services, like payments, lending, or banking services, into non-financial platforms like e-commerce, social media, and ride-hailing. In fact, according to Allied Market Research, the global embedded finance market is set to grow from US$82.7 billion in 2023 to US$570.9 billion within the next decade.
Take Shopee, the Singapore-based e-commerce platform, for example. While users have long accessed digital payments via ShopeePay, the platform launched SLoan, a digital financing solution, across several ASEAN markets. With SLoan, users can obtain cash loans directly through the app.
While expanding financial inclusion is positive, it poses new challenges in securing customer identities and preventing fraud. The most prominent example of this was when Grab, a Singapore-based ride-hailing platform with integrated financial services offerings, was fined by the Personal Data Protection Commission of Singapore for having four data privacy violations within two years.
Grab may be the most prominent, but it certainly will not be the last. Platforms originally designed for social interaction or commerce must now protect against sophisticated fraudsters who exploit weak points in financial service integration. These complex ecosystems need sophisticated, enterprise-grade identity verification systems that work seamlessly across multiple services while maintaining robust security.
Looking ahead to 2025, we'll see more businesses adopting tailored identification verification solutions that match their specific needs and growth trajectories. Whether it's a rising fintech startup or an established platform expanding into financial services, organisations need identity verification partners who can provide scalable solutions that grow with their business while ensuring compliance and security.
AI-powered multi-modal systems will become part of the standard security protocol
The stakes in digital security have never been higher. An October 2024 United Nations report reveals that Southeast Asia lost up to US$37 billion to cyber fraud in 2023, with criminal networks increasingly weaponising advanced technologies like generative AI and deepfakes. For 2025, the UN warns that digital fraud "is rapidly outpacing governments' capacity to contain it".
Instead of relying on single-point fraud prevention solutions, businesses with plans to offer financial services must adopt holistic systems that combine document authentication, biometric verification, behavioural analysis, and device intelligence. Multi-modal authentication systems will become the standard as organisations balance robust security with user convenience.
The rise of real-time payments adds another layer of complexity, demanding instant fraud decisions across multiple verification modes. Building on ASEAN's AI adoption surge in 2024, AI systems will replace traditional rules-based fraud detection, offering real-time defence against increasingly sophisticated criminal networks.
ASEAN's regulatory landscape will shift from reactive to proactive security measures
Even as AI opens up opportunities for fintech businesses, 2025 will see the tightening of regulatory frameworks around digital payments, with the region moving from reactive measures to proactive threat prevention. This evolution reflects the increasing sophistication of financial crimes and the growing need for robust security frameworks.
According to Gartner, financial institutions are set to invest an additional US$212 billion in cybersecurity efforts by 2025, driven by increasingly stringent regulatory requirements. This substantial investment reflects the industry's recognition that security can no longer be an afterthought – it must be woven into the very fabric of digital payment systems.
Across ASEAN, we're already seeing this transformation in action. The Bank of Thailand has introduced regulations to strengthen the security of e-payment service providers, particularly non-bank institutions, to improve resilience against cybersecurity risks and enhance consumer protection; in Indonesia, the Financial Services Authority has mandated strict cybersecurity standards for e-wallet providers; and the Philippines' Bangko Sentral ng Pilipinas requires financial institutions to implement robust customer authentication measures across all digital transactions.
These regulatory developments aren't just about compliance – they're about creating a more secure and trustworthy digital payment ecosystem. As we move into 2025, the synergy between technological innovation and regulatory frameworks will become crucial in shaping the future of digital payment security.
