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20 April –

Why South-East Asia is at the heart of a digital banking boom

Forward-thinking regulators, high mobile penetration, and a greater emphasis on digital services mean banks have an opportunity to grasp

Alexander Hamilton

South-East Asia has experienced a renaissance when it comes to modern and digital banking, driven largely by changing customer preferences and regulatory action.

The Monetary Authority of Singapore (MAS) epitomises this. At the end of August 2019, it announced the availability of two digital full bank licences and three digital wholesale bank licences. MAS subsequently saw a huge diversity in applications. This included entries from e-commerce firms, technology and telecommunications companies, and fintechs.

Singapore’s regulator isn’t the only one in the region. In December 2019, Malaysia’s central bank announced its plans to issue up to five licences to new online banks. The Philippine central bank published its digital banking framework in September 2020.

South-East Asia is an increasingly important global market, especially when you consider its population growth. The region will number 542 million people by 2030, behind only China, India, and the EU as the most populous regional markets globally.

With such a growing, young population, emphases are changing among incumbent banks’ userbases. While only 42% of total users in South-East Asia expect an easy-to-use mobile banking experience, 100% of millennials do.

Mobile is key

Mobile penetration is key when examining the region. Almost 70% of the adult population is underbanked or unbanked. Yet 4G accounts for 54% of mobile connections, rising to 76% by 2025. By the end of 2020, 1.6 billion people subscribed to mobile services, representing nearly 60% of the region’s population.

Two-thirds of people in the South-East Asia region are interested in digital banking, with numberless cards (60%) and smart checkouts (67%) being the most popular forms of new interactions with financial services.

Banks in the region have pivoted to embrace these changes in customer behaviour. Once, institutions had the reputation for prioritising systems maintenance and ensuring maximal output for legacy platforms. Now they are looking at ways to supplement their workhorse core systems, or even replace them with cloud-first, next-generation systems.

Yet the proactive regulatory environment means that traditional banks have little time to sit on their hands. As competition becomes fiercer in coming years, and more digital entrants make their move to connect customers to agile, flexible services, fragmentation of financial services becomes likelier.

Meeting the challenge

To quickly grasp the opportunities that come with rapid change in the market, financial institutions can look to rapid deployment of cloud-based services on an outsourced basis. Through this, new challenges are met easily while deeper preparations are made for the future.

Finding the right partner is as simple as connecting to the right technology-as-a-service (TaaS) supplier. A prominent example of this is Ping An associate OneConnect, which offers software and platforms to banks in the region. This enables rapid deployment and product creation.

Pismo is a recent addition to the portfolio of software and services offered by OneConnect. We have also cemented our presence in the region with a new office in Singapore. Why not get in touch with our team today to discuss how our next-generation platform could drive your institution into a new future?

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