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Bank NXT Asia By Riddhi Dutta

3 ways for banks to tap into SEA’s growing digital market in 2021

Riddhi Dutta

Riddhi Dutta,
Regional Vice President, Asia at Backbase

3 ways for banks to tap into SEA’s growing digital market in 2021

A new year has everyone thinking about the 365 days ahead and opportunities they can bring.

This has me reflecting on the Vietnamese banking industry. I found it especially admirable how the government is focusing on promoting the development of non-cash payments and serving unbanked populations.

As one of the vibrant regions in the world for fintech and the adoption of digital financial services, rapid advancements in both internet infrastructure and smartphone adoption has led to the similarly speedy growth of potential customer bases.

This untapped market potential is creating growth opportunities for banks, with organisations now able to reach wider consumer demographics through mobile and digital channels.

On a related note—we’re also seeing regulatory attitudes evolving in the region, with countries such as Singapore , Malaysia and the Philippines rolling out various digital banking licensing frameworks to help address gaps and drive innovation in the sector.

So it’s not at all surprising that many banks currently on complex legacy banking systems are starting to re-evaluate and adapt their banking infrastructure and services. In doing so, they’re looking to leverage the opportunities I mentioned above and gain first-mover advantages in their respective markets. And at the same time, they’re also remaining aligned to changing customer expectations and evolving regulatory requirements.

With all that in mind, I thought it was a good time to share with you my three pillars that leading digital banking strategies should incorporate in 2021:

1. Customer (experience) is king

Customers. Think of them in everything you do—experience will be the main battleground for digital banks in the coming year and beyond.

Many banking players have already gone digital, but it’s another thing altogether to be able to offer seamless, personalised experiences for banking customers.

In the latest Backbase and IDC report 2025, we found that 70% of Asia Pacific banking customers view their banking processes as tedious, with only 30% of banking customer bases being active on digital banking channels.

If remaining competitive and relevant in a customer’s life is important to you, then it’s crucial to put the customer banking journey—such as when they are calibrating their digital investments and growth priorities—at the absolute centre stage.

This includes implementing frictionless onboarding processes that require just a few minutes for account sign-ups; leveraging data insights to provide personalised financial products that are delivered to consumers at optimal times; or integrating lifestyle offerings and solutions to cater to wider markets.

Banks must also ensure that each of their interactions with their consumers, be it digital or otherwise, are integrated into a seamless experience to reduce unnecessary complexities and friction in banking experiences. If that doesn’t sound like the bank you work at, it’s time to rethink your priorities.

2. Keep your eyes open for new customer bases

The advent of cheaper mobile technologies and data access has seen significant advancements in the adoption of digital banking, along with transaction volume.

In Vietnam alone, we’re expecting to see an increase of 400% in mobile transactions by 2025.

So now is very much the time for banks in the area to put digital first—a great example of this being TPBank.

Similarly, in the Philippines, 75% of bill payments will be done through mobile channels by 2025, up from 18% in 2019.

However, despite the proliferation of mobile technologies, significant proportions of the population remain unbanked or underbanked.

According to BCG’s Southeast Asia: Coming of the Digital Challenger Banks report, more than 50% of Indonesians currently do not have a bank account, while approximately 68% of adults in Vietnam and 65% in the Philippines are unbanked.

This means that banks have an amazing opportunity to innovate and develop alternative financial products to bridge the financial inclusion gap. Not only is this a boon for your bottom line, but it also speaks to what banks are really here for: to help make lives better.

3. Invest in innovation

To leverage on the potential of ASEAN, banks must consider investing in modern banking platforms to help them meet the unique needs of the consumers in the region.

It also allows them to benefit from lower-cost operating models as compared to running brick-and-mortar branches, particularly in a post-pandemic environment.

By building a digital stack of solutions that enables the development of open and modular digital customer experiences, you can provide support for open application programming interfaces (APIs) and microservices. This means creating agile digital platforms that can easily incorporate innovative solutions from third-party vendors, ultimately adding real value to people’s daily lives.

A case in point would be the Bank of the Philippine Islands (BPI), which had systems that were growing obsolete in the face of its growing customer base.

Armed with great foresight, the bank invested heavily into its digital banking infrastructure, while working with partners like Backbase to transform their core legacy systems into a forward-looking digital ecosystem.

The use of a modular platform by Backbase allowed them to scale their customer base from 2 million customers to now in just 4 years.

The bank also processed 1.6 billion transactions per year, which was 2X the volume prior to building up their digitalization capabilities.

It’s no surprise that they were awarded ‘The Best Bank in the Philippines’ by Euromoney in 2020 and one of the top banking brands in the Philippines in 2021.

Indeed ASEAN’s digital banking landscape is poised for great growth in the coming years.

While banks look towards enabling digital change in the ecosystem, it’s important to keep in mind the need to provide banking experiences and journeys that remain safe, reliable and convenient at their core.