Study: Bankers following Alipay model
Close to 80% of bankers surveyed believe users will expect a single entry point for all their financial needs in the coming years, driven by the platformisation started by Alipay and WeChat, says financial technology firm Temenos.
Bankers and regulators across AsiaPacific are witnessing a paradigm shift in the industry as digital banking becomes embedded. The rapid digitisation and platformisation in countries like China demonstrate the huge potential that exists in this diverse and growing market, said Temenos and the Economist Intelligence Unit (EIU).
The EIU said new payment players across the region are driving the shift to digital. Close to half of bankers surveyed in Asia-Pacific think that changing customer demands and behaviour will have the biggest impact on retail banks in the next three years.
In China, Alipay and WeChat now dominate smartphone payments. Bankers have taken notice, and 48% of survey respondents said payments players will be their biggest competition over the next three years. The overwhelming majority (81%) of bankers surveyed also believe users will expect a single entry point for all their financial needs.
Regulators in many countries across the region are responding with a tech-friendly approach; only 40% of bankers across the region responded that new regulations were a concern, compared with 46% in Europe and 56% in North America. Improving product agility was a top strategic priority for 57%.
Retail banks’ consumer reach ranges from near universal coverage in the more developed economies of Hong Kong and Australia, to only 21% of people over the age of 15 in Cambodia. Temenos’ research also indicates how rapidly this situation can change, as in India, where de-monetisation initiatives led to a jump in mobile payment users from 35% in 2011 to 80% today.
“Asia-Pacific is leading the world in the rapid adoption of digital banking because of consumers’ constantly evolving demands, combined with the potential of a huge unbanked population and benign regulation. Non-traditional challengers are also shaking up the market. When a consumer’s chat app already offers a single point of entry for all their financial needs, banks need to innovate fast and at scale if they want to remain relevant,” said Martin Frick, managing director of Asia-Pacific for Temenos.
For the study, the EIU surveyed 400 global banking executives about the challenges retail banks expect to face between now and 2020, and the strategies they are deploying in response. Some 51% of respondents were at C-Suite level and 10% were board members. A quarter of respondents are based in Asia-Pacific.