Fintech challenge a wake-up call for local banks

The rise of financial technology (fintech) is posing a major challenge to the banking industry, which needs to get its technology act together to remain competitive, participants of a recent business forum were told.

Competition from non-banking players is expected to get tougher, particularly regarding payment and peer-to-peer lending, said Shirish Apte, former cochief executive of Asia-Pacific Citigroup and a member of Citi’s executive and operating committee.

For instance, PayPal, Lending Club, TransferWise, Baidu, Aliplay, Google Wallet and Apple Pay are the key fintech rivals of the banking industry, he said at a recent CEO forum on emerging trends in the financial industry and their impact on the workforce, held by Korn Ferry Hay Group, a global management consulting firm.

“With the disruptive trend, banking customers have been changing their behaviour in line with technological developments and increasing their demand for digital channels. Customers’ disloyalty to banks continues to increase,” he said.

A survey by Javelin Strategy and Research found that 71% of mobile customers said online and mobile banking were sufficient for their needs. Some 74% of customers accessed banking services via computers, while over 30% switched banks because of better customer service and value for money.

The touchpoint between bankers and customers has shifted over time. Transactions are moving from face-toface to online, which use a lot less paper.

The role of branches has been replaced by the use of Skype and FaceTime to provide a different user experience, he said.

Technological advances and ongoing globalisation require banks to offer a variety of products through a range of channels. The banking industry has developed from offering simple financial products such as deposits to mutual funds and insurance.

Moreover, customers have become more active in comparing products and services and they are ready to switch banks if they find better customer service and better value for money.

Mr Shirish said domestic banks must also compete with global financial institutions amid the changing landscape and technological development.

In general, three to four banks dominate the banking industry of each country. Thailand has four large players — Bangkok Bank, Krungthai Bank, Siam Commercial Bank and Kasikornbank.