The financial crisis and the Asian boom threatened the traditional financial services industry and allowed fintech startups and platform-based companies, that prioritized competition to provide better services for the retail consumer, flourished. Alongside consumers opting to forego visits to bank branches, the more innovative players in banking focused their digital transformation efforts on the utilization of information technology and big data to offer digital payments and advisory services.
The speed at which these digital technologies were adopted was at a remarkable rate and this continued to accelerate amid the Covid-19 pandemic. Of course, Asia was ahead of the curve. While financial players in the region exhibited true disruption and extended banking services to previously underbanked segments of the population, traditional institutions on other continents were left with potentially obsolete legacy technologies, unable to serve the customers they had.
To thrive in the future, incumbent banks must keep pace with the fintech newcomers and Big Tech players that have already started to gain market share in Asia. They can do so by leveraging application programming interfaces (APIs) which have enabled faster payments, simplified unbundling of services, and improved data sharing for open banking. Also, cloud computing has supported the storage and sharing of data with the aim of improving customer experience and financial accounting in areas such as payments and credit scoring.
Integration with mobile devices and digital wallets is equally crucial. In Asia, payment apps serve billions of users across the e-commerce, chat, delivery, food ordering, and ride-hailing industries. Globally, although Visa and Mastercard retain their lead in the transaction space, the likes of PayPal, Apple and Google are blossoming in the financial services industry. Further, as usage of cash declines, interest in digital currencies is increasing – with Alipay and WeChat Pay facilitating the introduction of cryptocurrencies and stablecoins in the corporate market.
Banks now recognize that the route to digital transformation starts with digital payments and digital currencies, and the evolution of digital banking in Asia provides the blueprint for other regions searching for successful paths to innovation. This Finextra report, The Future of Digital Banking in Asia, in association with Infosys Finacle and OneSpan, explores these themes with commentary from Citi, DBS, livi bank, and Mox Bank.