Banks in APAC to face tough competition from digital-only players
Many of these are offered by new, digital-only players, and who are still working on earning the trust of customers in a data-aware environment.
While customers are still sticking with their existing bankers, they’re also experimenting with the possibilities that new-age digital banks and insurance companies make possible.
In the next two years, however, the digital banks might win entirely prying away customers from older banks that are taking too long to digitally transform themselves.
According to a recent study by Forrester, consumers in the APAC are quite digital-savvy. About 73 percent of consumers believing that they should be able to accomplish any financial task on a mobile device.
Further, 77 percent of banking customers in the APAC told Forrester that they prefer digital channels, which are also preferred by life insurance customers in countries such as Mainland China, Thailand, India, and Australia.
Although there is a strong base of loyal customers holding on to relationships with traditional banks for personal and corporate accounts, the reality is that many of them are choosing to work with new-age players for new-age products, services, and support they need.
Forrester found that many customers trust payment firms and technology firms over traditional financial services providers to help them better manage their finances.
Global technology giants, payment providers, eCommerce players, and even ride-sharing leaders are already threatening established firms by offering simple, convenient, and more personalized digital experiences.
The report examines technology giants such as Google, Tencent, and Alibaba and finds that financial services applications created by them have won over specific markets: Google Pay in India, Tencent’s WeChat and Alibaba’s Ant Financial in China, Hong Kong, and even Malaysia.
“Consumers are more likely to engage with firms that prioritize helping them improve their financial well-being,” said Forrester VP, Research Director, and Region Manager Dane Anderson.
“We expect that customers will dynamically deconstruct their personal financial services ecosystems and reassemble them with newer and better players. Traditional institutions have several advantages but will be left behind if they do not transform faster to meet the challenge.”
Truth be told, banks and insurance companies understand the need for them to really play up their digital capabilities to customers and refine the experience they provide while constantly digitizing their core applications and processes.
Banks such as Singapore’s DBS, Malaysia’s Maybank, and Australia’s ANZ Banking Group, and insurers such as FWD Group and Metlife are doing really great work when it comes to digitally transforming themselves.
Other players in the region such as CIMB, RHB Group, and others are also leading from the top when it comes to digital initiatives. However, at the end of the day, customers will choose products and services that offer them the most convenience at the best price and traditional banks and insurers need to understand that.
Customers in the APAC are sophisticated when it comes to digital banking, as noted by Forrester’s study. To keep their business, traditional banks will need to really step up their game.