By Arvind Swami, Director, Financial Services, Red Hat Asia Pacific

There’s a growing need to democratise financial services in Asia Pacific. Over the next decade, the region is expected to house half of the world’s upper-middle-income and above households who will drive 50 percent of global consumer financial transactions^[1]. Consumers in this region have already grown accustomed to the convenience of digital banking services. In light of the COVID-19 pandemic, Asia’s share of active digital banking users increased to 88 percent, up from 65 percent four years before^[2].

To cater to this growth of digital savvy users, the financial services industry (FSI) is leveraging technologies such as automation, 5G, edge computing, and artificial intelligence and machine learning (AI/ML). While many banks have been continuously iterating to keep up with consumer demands, they will need to rapidly pivot their products and services and innovate at a much faster pace.

Even as much of the region has learnt to live with the pandemic, banks must have a 2022 action plan that ties these new investments together to create impactful services that can set them up for success in the long run. Asia Pacific banking leaders should focus on four main areas to modernise their infrastructure in a strategic, cost-efficient manner to create more bankable business opportunities.

Personalisation is more than UI-deep

When it comes to personalised financial services, Asia Pacific sets a high standard. Over 45 percent of consumers in China, India, and Thailand, said that they share their data for personalised offers and deals, compared with less than 30 percent in France, Germany, and the United Kingdom^[3]. Additionally, industry disruptors and embedded finance providers such as Alipay have already been delivering hyper-personalised offerings that can specifically target their customers’ ever-changing needs.

Traditional banks can no longer survive by simply refurbishing their products’ exteriors and user interfaces (UI) without doing the same for their digital infrastructure. To provide the self-driving banking services that customers desire, banks must have a deeper understanding of their customers.

A bank’s customer experience is only as good as the quality of its data. Hence, banks can focus on building an integrated data platform that provides deep customer insight. This data integration creates a more efficient data environment, allowing banks to have a single, enterprise-wide view of each customer. The bank then can have the ability to look at customer data from end to end, employing data marshalling, channel management and delivery, to successfully leverage new technology and enhance the customer experience.

Giving financial services an Edge

Despite Asia’s appetite for digital financial services, 290 million of Asia’s population still remain unbanked^[4]. Players such as fintech companies have provided integrated services like deposits, digital loans, and insurance. They enable previously unbanked customers to leapfrog directly to these services, leaving less prepared banks to play catch-up.

Banks can contribute to efforts in uplifting Asia Pacific’s unbanked communities with a decentralised approach to managing and processing data that pushes computing towards the edge of the network. Edge computing enables banks to create digital branches that deliver services like deposits, loans, and payment to the unbanked population.

This not only helps to reduce challenges and costs related to network latency and bandwidth, but also enables new types of applications and services that might have been previously difficult to deliver. For example, kiosks or mobile devices with 5G networks will allow frictionless services to be offered in areas where physical branches are difficult to access, such as places far away from city centres.

Strategic partnerships: No bank is an island

Today, the financial services landscape is filled with a wide variety of solutions for Asia Pacific consumers to choose from. From mobile banking and digital payment apps to wealth management and trading solutions, it can be challenging for banks to innovate fast enough to keep up with consumer needs.

Strategic partnerships are expected to be crucial to banking success in 2022. Banks must deepen their collaborations with communities, partners, and consulting services, that specialise in certain platforms, such as payments and e-commerce, or technologies like data analytics and AI/ML. For example, banks may not have the expertise needed to drive AI-driven applications at speed, but they can rely on third-party providers such as consulting services and system integrators.

Continue to make culture a cornerstone

While technology and business processes are core aspects of modernisation, driving cultural change is an equally important element.

Asia Pacific companies should continue transforming traditional management structures by encouraging senior executives to work more collaboratively with other employees. To foster a culture of transparency, collaboration and teamwork and inclusivity, banks can apply practices and technologies like DevOps, cloud-based computing, and data integration. By creating a conducive and collaborative environment, banks can empower employees across all departments to push the boundaries of innovation, ultimately accelerating digital transformation and addressing Asia Pacific’s banking needs in an effective, cost-efficient, and agile manner.

Red Hat customer PT Bank CIMB Niaga Tbk (CIMB Niaga) has had much success with this. With Red Hat Open Innovation Labs, the bank was able to leverage best practices for agile methodology and DevOps to develop and deploy applications more rapidly in an automated and more secure manner. Now, the bank can deliver new customer-facing applications or update them with new services more quickly, enabling it to maintain its consumer banking share of wallet despite increased competition from its peers and fintech companies.

Accelerate digital change in 2022

In summary, while the financial sector has accelerated much of their digital transformation in the past two years, I anticipate that 2022 will be an even more defining year now that they have learnt to adapt better to the pandemic.

To succeed in the year ahead, banks should focus on four key areas. They have to get a deeper understanding of the customer by getting an end-to-end view of their customer data. Edge computing is key to not only enable the applications that will help banks achieve this, but also to serve Asia’s unbanked markets. A more inclusive financial economy will also include nurturing strategic partnerships with the larger FSI ecosystem as banks work on creating and capturing new services and opportunities. Culture is also an indispensable factor to any lasting change and banks should continue working to create an open, collaborative environment.

By aligning people, process and technology, banks will be better prepared to successfully transition into the new year by helping their customers with their evolving banking needs.

^[1] McKinsey, Future of Asia: the future of financial services. Oct 2021

^[2] Ibid.

^[3] Ibid.

^[4] Tech Wire Asia, Will Asia be home to decentralized finance?, Aug 2021.