The issuance of new banking licenses coupled with market liberalization is expected to create 100 new financial institutions in Asia Pacific by 2025, according to a recent report.
The emergence of online-only banks – neobanks – or other digital challengers is set to create hurdles for traditional incumbent lenders, according to a recent report co-published by banking platform provider Backbase and research firm IDC.
In Asia, the digital outlook is optimistic with over three in five customers (63 percent) willing to make a switch to a new bank in the next five years. And by 2025, 38 percent of traditional bank revenue in the region is expected to be at risk, the report added, and the aftermath of the disruption will lead to the establishment 100 new financial institutions.
Low Current Engagement
Currently, only 30 percent of APAC banking customers are active on digital banking channels. This is hardly surprising given the oft-cited qualms with poor user experience – 70 percent of respondents called the current banking process tedious.
But in the coming five years, the industry is expected to undergo major transformations. 44 percent of the top 250 banks in the region are expected to complete by 2025 their «connected core transformation» which will enable more platform-based developments. 48 percent of banks in the region are also expected to leverage artificial intelligence or machine learning technology for data-driven decisions.
«Looking beyond, banks and neobanks have to elevate their digital-first capabilities to effectively enable hyper-personalization for customers,» added Jouk Pleiter, CEO and founder of Backbase, adding that the coronavirus pandemic has accelerated financial services digitalization in the region.
