Shifts in consumer behaviour towards digital services are resulting in monumental changes for the banking industry. Highly anticipated digital banking licenses will be awarded in Singapore and Malaysia this year, while the first of the winners of Hong Kong’s new digital licenses has come to market. The pressure is on for incumbents to adapt to the new world by offering the digital experience that customers are starting to expect.
This trend has been accelerated by the dramatic start to this decade, with everyone facing the need to prioritise digital over physical. This new environment could drive a greater adoption of digital technologies across the whole banking sector: digital onboarding as standard, increased financial inclusion as digital solutions bring banking services to Asia’s vast underbanked and unbanked populations, and a shift to digital payments as a desire to touch and handle cash dwindles.
So far, digitisation efforts by incumbent banks have had mixed results. Unable to predict the scale and pace of today’s customer-centric innovation, many initial attempts to digitise were developed in-house. As the pace of market change and increasing customer expectations evolved, this transitioned to buying off-the-shelf solutions. Yet, far from creating competitive advantage, these approaches left established banks weighed down by vast amounts of legacy code – and technical debt. For big banks, this complexity impacts their ability to harmonise their service offering or easily connect new services such as robo-advisory or personal finance management, and the entanglement of multiple, complicated solutions makes it harder to deliver the hyper-personalised experiences the digital challengers are known for.
A digitized bank is not a digital bank
The problem faced by many incumbents has been that a digitized bank is not a digital bank. Customers have come to expect a seamless omni-channel experience and accessibility whenever they need it, but providing a digital front-office does little for customer experience if the back-office isn’t in order.
