It’s been awhile since my last update with several developments since.
I’ve selected 7 of the top stories in the industry over the past 2 months. They all point toward the same trend: a digital future for banking
Digital banking in the Asia Pacific (APAC) is set to be widely adopted with over three in five customers (63%) willing to make the switch to neobanks and challenger banks in the next five years and 100 new players expected to emerge in the region, according to the ‘Fintech and Digital Banking 2025’ report by Backbase and IDC.
The unprecedented pandemic has also brought into question the industry readiness towards digital banking as a significant majority (70%) of APAC banking customers continue to view banking processes as tedious. A result of incumbent banks’ extreme focus on legacy systems and disregarding digital-first integration, only 30% of the banking customer base in APAC are active on digital banking channels.
As featured in Forbes, incumbent banks across APAC are faced with the pressing need to up the ante on digital-first banking due to intensified customers’ need for availability, access, and control of digital channel interactions.
In Thailand, banks are preparing to migrate 50% of their new digital workloads to public cloud in the next five years to meet the digital demands. Read the full article here.
Between the Lunar New Year and mid-March, cashless payments grew by 76%, leading experts to conclude that the pandemic could lead to a boom in digital payments. Some banks are adapting their online services and telephone apps to include major grocery chains, allowing shoppers to order and pay without leaving their homes.
This level of adaptation shows how Vietnam has no problem at all keeping up with digitization and staying ahead of the pandemic. This trend is also in line with what Backbase and IDC predicted in our recent report, which highlighted that mobile transactions in Vietnam are expected to increase by 400% by 2025.
However there is still some way to go. Associate Professor Doctor Đinh Trọng Thịnh, a senior lecturer of the Academy of Finance, said that service providers and banks needed to continuously improve on safety measures, while modernising technology and equipment. Read the full article here.
In my interview with CDOTrends, I share that a large part of the problem in banking today is not the technology but legacy attitude. Neo and challenger banks take a different path. They get superb at solving specific problems, and then work with partners or an ecosystem to offer the rest of the value proposition. Never do they try to do all or be all for everyone.
In our report findings, 80% of the top 250 banks still prefer to own the entire value chain of banking, with third party-contributed business at a mere 2%. It’s time for banks to start loosening up some parts of the value chain by allowing fintechs to grow together with them – creating a win-win ecosystem. Read the full article here.
While most organizations may have been caught off guard by the sudden shift to online activities due to the coronavirus diseases 2019 (COVID-19), in the case of UnionBank, it was a swift and near-seamless adjustment. While others were worrying about the functionality of their basic bank processes online, UnionBank was implementing measures to counter transaction overload and cyberfraud. Read the full article here.
According to Backbase and IDC’s report, it is key for banks in the Philippines to accelerate their digital transformation, as the country is expected to have the largest share migration in the Asia Pacific region, as customers move toward digital-first banks.
As featured in Forbes Vietnam, mobile transactions in Vietnam are forecasted to increase by 400% by 2025. According to the report by Backbase and IDC, 25% of banks in Vietnam will actively pursue modern digital platforms while the top eight banks will use intelligent automation in account origination to gain a 50% growth in new accounts.
As the recovery from 2020’s challenges unfolds, the market’s digital evolution will be evident in the semi-private bank segment. These banks will make proportionately higher IT investments, particularly in mobile channels and mobile experience, branch digitalization, and optimization to support increasingly digital consumers. These are the digital-first banks to watch. Read the full article here.
Till the end, digital is the answer. Financial transactions made through KPlus jumped 8% from the end of last year to 700 million as more people shifted to digital banking on the heels of the coronavirus outbreak, said senior executive vice-president Wirawat Panthawangkun. Read the full article here.
Thai customers will quickly adopt digital capabilities if they prove to be beneficial to them. Thailand has seen record-breaking numbers for growth in digital payments, use of digital IDs, and use of social media for banking. The next area primed for growth is platform-based banking, where banks cooperate with third parties to offer a unique value proposition to the customer.
By 2023, around 40% of bank customers in Indonesia will enjoy direct bank account registration services, digital verification of customers, or registration via third-party services. Backbase and IDC’s Fintech and Digital Banking 2025 (Asia Pacific) report also highlighted that Tier 1 and Tier 2 banks in Indonesia will operate in at least five lifestyle ecosystems by 2025.
Indonesian customers are expected to have several banking accounts, both traditional and digital, by 2025. To keep up with customer demands for instant gratification, traditional banks and neobanks need to retain customer loyalty by creating a perception that “my bank understands me”, which is clear that banks will begin to integrate with lifestyle ecosystems to achieve such output. Read the full article here.
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.
Interviews with senior banking leaders co-published in association with The Asian Banker.