Incumbent or traditional banks typically have had decades to build up their customer bases, implement thorough and rigorous processes, and solidify their market positions. But times have changed. COVID-19 has shaken things up by drastically accelerating digital adoption rates among consumers. Customer expectations have shifted significantly, and incumbent banks are racing to keep up with customer expectations. Here are some of my views and actionable insights that traditional banks can take to keep up with today’s digital age.
Embrace an agile mindset
Digital challengers are looking to claim a piece of the pie by offering innovative value propositions and superior customer experiences. Instead of trying to replicate these new entrants, traditional banks should be asking: What can I do to get up to speed faster, while retaining my hard-won customer base?
The answer is agility – in mindset, technologies, and operations.
According to our Fintech and Banking 2025 IDC report, 50% of Tier 1 banks in the APAC region have implemented agile frameworks. This allows them to speed up their go-to-market times.
One example is the Bank of the Philippines Islands (BPI), which was guided by the belief that the future of banking lies in innovating faster than the market’s changing needs. In 2016, its leaders foreseen the need to develop foundation capabilities that would allow the bank to quickly respond to market changes. This now allows BPI to roll out products and services that meet and exceed its customers’ demand within weeks instead of months. BPI had seen tremendous growth – even during COVID-19 times -seeing more than 100% growth in their digital customer base.
Focus on long-term viability
What’s more important: the short-term or the long-term?
While senior bankers I met shared their long-term vision, their digital efforts tend to fall short as many focus on meeting immediate technological needs. In fact, we have seen banks who focused on siloed digital initiatives a few years back, going back to the drawing board to figure out how platforms can help to orchestrate the entire customer journey.
Looking at Tien Phong Commercial Joint Stock Bank (TPBank), they knew they needed to stand out in a hypercompetitive landscape. With out-of-the-box widgets and the shift to new architecture, TPBank quickly implemented digital innovations without affecting operations or causing service disruptions. Its efforts have paid off – this year, it was awarded both ‘Best Digital Bank’ and ‘Best Process Automation Implementation.’
By moving away from legacy technology and systems, banks stand a greater chance of establishing strong foundations to succeed in the new digital era.
Today, instant conveniences are no longer luxuries but expectations – and traditional banks who don’t adapt will have a hard time keeping their hard-won customer base.
With the availability of services, fast turnaround times and empathy cited as the top three factors in driving customer loyalty, banks need to focus on enhancing the capabilities of their banking channels to meet these demands.
ÜBank, the digital-only bank powered by FE Credit and VPBank, understood that customer engagements shouldn’t be limited to single transactions. In addition, banks that successfully embed themselves in a customer lifecycle journey will gain lifetime customers. This was a deciding factor for the bank to make its app the starting point of every customer journey, thereby improving customer engagement.
Getting started – understand that there is no single path to modernization
The new digital era is filled with constant shifts and disruptions. A huge advantage that traditional banks have over challenger banks is the gained trust from loyal customers. One of my advice is to truly listen to your customers, understand their needs, and build a roadmap that not only satisfies their expectations in the short-run but also quickly adapts to market changes in the long-run.
Every bank is at a different stage of their digital transformation journey, but how does your bank look in 2030? As a new generation of digitally savvy customers looks for their next financial services provider, incumbent banks that are able to build strong foundational capabilities and learn to be customer-obsessed will win loyal customers.
About The Author
Riddhi Dutta is the Regional Head for ASEAN & South Asia 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’s , 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.