Reducing the Risks of Insolvency for Payment Institutions
December 29, 2020
Monetary Authority of Singapore issues ban for market misconduct
April 15, 2021Introduction
In business, if you’re not constantly adapting, you’ve already fallen behind. No wonder then that APAC banks are increasingly embracing digital transformation.
This shift is revealed in the second edition of the Fintech and Digital Banking 2025 in Asia Pacific report. The research covers issues such as the challenges behind digital acceleration, areas of strategic investments and growth priorities for the next five years in Australia, Vietnam, the Philippines, Indonesia, Thailand and India.
Reasons Behind the Appetite for Digital Transformation
According to the report, some of the reasons behind this appetite for digital transformation include:
- Digital banking growth – Digital banks are seeing three times the growth in their customer-bases compared to those of traditional banks. Over three-fifths (63%) of conventional banking clients are willing to move to neobanks.
- Increasing digital transactions – Traditional banks are under pressure to adapt due to a 50% growth in the quantity of digital customer transactions.
- The pandemic effect – The commercial setbacks created by COVID-19 has increased the drive for digital interactions and competition. Indeed, the report suggests that companies unable to adapt to the challenges created by the pandemic will leave the market, with over 100 new banks and fintechs with more powerful remote customer service systems set to join the market by 2025.
- Changing customer priorities – The report revealed that 70% of clients view transactions as “tedious” and only 30% are active on digital banking channels due to the sector’s reliance on legacy systems.
Whether it is remote customer service or increasing compliance risks, banks – particularly those in the APAC region – are seeking to actively address their challenges through digital transformation.
What the Future Looks Like
The report highlights a number of key points likely to shape the next few years:
- Increasing competition (due to at least two digital banks in each APAC market) making conditions more challenging for existing companies.
- Rising competition between traditional banks and neobanks in digital services.
- The high level of return on investment in digital channels and payment infrastructure
- An increase in operational and compliance risks.
- 44% of the leading 250 banks in APAC will leverage platforms with componentised modernisation and API-enablement.
- 60% of banks in the Asia Pacific will harness artificial intelligence or machine learning technologies for data-driven decisions. This is a notable increase when compared with 48% from the previous year.
The Fintech and Digital Banking 2025 in Asia Pacific report clearly highlights the need to respond quickly to emerging challenges and opportunities. However, achieving success in a complex business landscape is about survival of the fittest, not just the fastest.
Companies are more likely to maintain a competitive advantage by ensuring their approach to digital transformation is driven by a well-informed strategy, rather than the rush to adopt new technologies and platforms.
Conclusion
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