By Poomthawat Wachirapornpruet
Asia House Fellow Poomthawat Wachirapornpruet has conducted research to examine the impacts of fragmented personal data regulations on digital financial services in Southeast Asia.
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Governments in Southeast Asia are increasingly regulating the use and movement of personal data, but since these regulations are being developed independently, data rules vary across the region. At the same time, financial services in the region are becoming increasingly digitalised and reliant on personal data to innovate and tailor their offerings. However, they face fragmented regulations when operating across borders.
The research finds that:
- Businesses generally consider personal data regulations useful for fostering consumer trust. However, this fragmented regulatory landscape can lead to higher compliance costs or warrant complex workaround measures when digital finance operates cross-border.
- Yet, since this fragmentation does not currently constitute an insurmountable obstacle, businesses are not prioritising improvements in regulatory interoperability.
- For now, local providers of digital finance are focusing on domestic markets and engaging in limited cross-border activities. Meanwhile, international financial institutions are deploying workarounds like implementing privacy by design, proactively self-regulating, and outsourcing compliance workload through third parties.
- Still, regionwide interoperability of personal data rules is beneficial to digital financial service providers. It allows for data sharing and centralisation. It can improve efficiency, drive innovation, and reduce potential negative side-effects, like cyber vulnerabilities, that may stem from current workaround approaches.
- Regulators, businesses, and civil societies continue to work together to create an interoperable and effective regional personal data regulatory framework. This is materialising in the form of regional initiatives through ASEAN, the most prominent of which is currently the Digital Economy Framework Agreement – the world’s first major regionwide digital economy pact.
- Ultimately, the extent to which digital finance in Southeast Asia can benefit from interoperability also hinges on technological innovation within the industry and consumer readiness.
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