Following initial consultations throughout 2013, recommendations from financial inclusion market- leaders and further desk research on the constraints and opportunities in small-scale financial systems in the ASEAN region, a programme concept was developed outlining UNCDF’s strategic intent to establish a regional financial-market facilitation, technical assistance and funding facility, called – “Shaping Inclusive Finance Transformations (SHIFT)” - that aimed to deliver a rapid improvement in the level of financial inclusion1 as a means of reducing poverty and vulnerability in the Association of Southeast Asian Nations (ASEAN) region.

The SHIFT Programme Initiation Plan (PIP) launched in May 2014 with initial seed funding from UNCDF to undertake deeper market assessments and consultations with key stakeholders2 to validate need for SHIFT, to design interventions that are appropriate and relevant to the context of ASEAN, and which add value to the work of existing market players. Additional seed funding was secured in 2014 from the Australian Government, Department of Foreign Affairs and Trade (DFAT) and the Netherlands Development Finance Company (FMO).

Consultations with key stakeholders in ASEAN has validated the need for a regional response to accelerating financial inclusion in the ASEAN countries and the broad areas of intervention including data, funding and technical assistance, capacity development, and policy advocacy, while preliminary scoping and assessment of the market has confirmed the demand for and value-addition of focusing on women’s economic empowerment, SMEs, and regional funding facility and learning portal that can achieving some scale economies of working across national boundaries.

There is a growing momentum for financial inclusion among Governments and financial sector professionals across most ASEAN countries as the regional integration process takes shape. The ASEAN Deputy Finance Ministers and Deputy Governors have agreed to prioritise financial inclusion contributing to the on-going support for the region’s integration of financial markets and SME development.

Innovative models are emerging that address financial exclusion of individuals and businesses. These include innovative partnerships that drive down the cost of customer acquisition (e.g. value and supply- chain partnerships, affinity group marketing, etc.), use of big data to enable faster and more effective credit decisions (i.e. mobile phone histories, internet and social media data, payment and e-commerce transaction history and ratings, behavioural and psychometric data, and more), and raising new sources of capital through online and offline platforms to fill the finance gap.

Alternative financing vehicles including venture capital, social and impact investors, are looking at the opportunities provided by ASEAN’s 600 million consumer market that is significantly shaped by purchasing decisions women make or influence, as well as by SMEs that account for over 90 per cent of business enterprises in ASEAN, which is also the largest group of job providers in the region.

Furthermore, new demographic and social trends are increasing the demand for financial services (e.g. increasing women’s mobility, purchasing power, skilled-labour, and growth of SMEs) as a result of the regional integration, and a growing young population.