With each passing day, it seems like there is always something new that is happening to disrupt our industry. From the COVID-19 virus and open banking regulations to neobanks launching innovations every other week – trends, news, and industry updates can be hard to keep up.
That’s why I’ve decided to take some time to sift through all the noise, offering my take, and hopefully encourage some discussion among our peers.
Let’s take a look at the big news in this space, shall we?
With the current global pandemic and folks less willing to venture out, it has only further boosted the demand for e-commerce and the use of major platforms such as WeChat and AliPay across Asia Pacific. These companies have successfully integrated systems and services into their platforms using a combination of AI and purpose-built connections, to evolve from just messaging platforms to “lifestyle apps” thanks to the high penetration rate of smartphones.
Banks can learn from these mega apps. Seamless transactions and contextual payments are two innovations that banks themselves can enjoy through fintech partnerships on a modern digital banking platform that offer plug-and-plays. Throwing out the old view by banks of the need to create everything from scratch. This is what Bank of the Philippine Islands (BPI) has done with Backbase as they have put a modern digital banking platform on top of their legacy systems to redefine their customer experience.
Today, the bank is no longer the sole creator of value for its clients. Competitive strength comes from having good connections with other players and from adding or sharing value. Banks need open APIs to connect, both internally and to third parties, to ensure they can keep their customer base interested and demanding for their mobile solutions should they be home-bound for whatever reason, virus or no virus.
S&P pointed out that the key to compliance with the International Financial Reporting Standard 9 (IFRS9) for insurance companies lies in robust and efficient analytical tools based on grounded data, in order to satisfy regulators, auditors and stakeholders.
Analytical tools are only as good as the quality of data they use, and this depends on the digital infrastructure of the company to allow for the collection of sound data for analysis. With the right digital cloud platform, corporations can enhance their infrastructure to efficiently capture the right data and analyze it to meet regulatory requirements without the hassle.
With the rise of the digitally savvy millennial middle-class that is soon to form the majority in Southeast Asia, banks are acutely turning their interest towards this increasingly affluent demographic.
The largest lender in Thailand, Kasikornbank (KBank), is investing THB 17 billion in 2020 on digitalizing its core banking systems as it prepares to cater to an expected surge in digital lending and enhance its innovation capabilities. They are also aiming to expand the number of users for their mobile app and into other markets in Southeast Asia and China.
This also comes at a right time with Thailand’s Central Bank allowing eKYC for deposits thus allowing seamless onboarding & origination of customers – something which Backbase is focusing on through its process orchestration platform.
With the fintech transaction value projected to reach USD10.5 billion in the Philippines by 2022, the government is setting aside PHP 1 billion under the Philippine Innovation Act to power up the fintech ecosystem in the country.
Neobanks such as Tonik are tapping newfound opportunities in the banking market of the Philippines with digital-first strategies, an attribute that incumbent banks are catching up on.
We are seeing an increase in intergovernmental collaboration between Southeast Asia nations towards building up digital banking and payments infrastructures of their countries. The central banks of the Philippines and Indonesia announced the signing of an MOU to promote digital financial innovation and enable the interoperability of payments systems between the countries.
With digital banking and real-time payments set to be the new standards in financial services, banks need to have the right infrastructure and processes that enable a smooth transition to ride this wave of development.
In another example of cross-border collaboration that has led to innovation, Malaysian CIMB Bank’s Philippines subsidiary saw success in its digital banking service uptake in the Philippines, with 30% of their sign ups found to be completely new to banking.
Financial inclusion is one of the top agendas for the central bank of the Philippines as they target to bank 70% of the population by 2023. With the government’s investment towards fintech and open collaboration with other countries on technological development, it is only a matter of time for them to achieve that and more.
Vietnam boasts another fintech badge to their shoulder with the successful running of ViettelPay revealing an averaging payment cash flow of VND 800 billion (USD 34 million) per month from users across the country. Viettel wants to be the digital bank “for everyone, everywhere” – something incumbent banks in Vietnam should be wary of from the fastest-growing fintech app in the country.
Traditional banks need to have the agility to innovate and compete in the increasingly challenging tech landscape as more of these fintech players come into the market. One such traditional bank which has embarked on this agile innovation journey is TP Bank with their investment in Backbase to transform their consumer banking experience.
ABOUT THE AUTHOR
Riddhi Dutta is the Regional Head for ASEAN & India at Backbase.
Riddhi oversees Backbase’s sales and go-to-market success for his territory in Asia Pacific. He helps financial institutions turn their digital ambitions into reality, helping them with designing digital transformation initiatives which are feasible, tailored, and creative with instant business value.
Riddhi has an excellent track record of championing legacy modernisation initiatives in several banks across the region, where he consulted and helped banks move to open banking platforms, including modern core banking and treasury solutions. Prior to joining Backbase, Riddhi held several senior roles at Infosys Finacle, Fintellix Solutions and ITC Infotech.
Riddhi earned a Masters of Business Administration in Marketing and Systems from the University of Delhi.