Despite leveraging more fintech, APAC banks in one international study also invested much less in digitalization than globally.
In a Jan 2023 survey of 783 respondents at 260 banks (with an average asset size of US$344.5bn) across Hong Kong, Singapore, Australia, Indonesia, Thailand, Malaysia, Japan, the UK, Europe, the Middle East and the Americas on banking and fintech trends and strategies, the core motivations of APAC respondents to integrate fintech solutions were reducing operational costs (43%), deploying new technology with greater ease (47%), and leveraging technology expertise not available in-house (52%).
Data from 393 interviews with respondents from North American community markets banks and financial institutions was also included for analysis. Several key insights were gleaned from the data:
- Respondents from the banks cited using fintechs to enhance the customer experience, and those from banks in the Asia Pacific region were prioritizing online portals and banking channels (52%); transparency across processes (such as providing the customer with real-time updates on onboarding progress (50%); and improving end-to-end connectivity and value-add services (45%).
- 87% of respondents from APAC banks (a higher proportion than any other region in the survey) cited planning to connect with an average of four fintechs in the next 12 to 18 months, with 12% citing plans to build their own solutions in-house.
- APAC respondents reported investing an average of US$293.2m in transformation in 2023, compared to the global average of US$367.6m or US$886m Europe average.
- 54% of APAC respondents indicated they had digitalized their customer-facing processes in the last 18 months, compared to the global average of 47% and Europe average of 73%.
- 26% of APAC respondents cited feeling they were ahead on their digital journey compared to the global average of 19%, while 34% in APAC (34%) and globally (33%) cited believing they were behind by more than a year.
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Organizational ESG priorities varied globally across respondents: in the APAC region, the main priorities were:
- securing longer-term funding internally (63%)
- ensuring board and management alignment on sustainability initiatives (61%)
Globally, the respondents’ top global priorities were:
- reducing banks’ own carbon emissions (49%)
- board and management alignment on sustainability initiatives (46%)
Respondents from banks in Europe cited as top priorities were:
- prioritizing reduction in carbon emissions (74%)
- settling on definitions and terms (67%)
- 20% of respondents from APAC banks cited planning to increase their exposure to green lending in the next year; 59% cited planning to do so in the next 12 to around 18 months.
According to Isabel Fernandez, EVP (Lending), Finastra, which commissioned the surveys and interviews: “In an environment characterized by uncertainty, high inflation, fluctuating interest rates and recessionary risks, banks are under an increasing amount of pressure to drive operational costs down while continuing to improve how they serve their customers… (and are) opting to partner with fintechs, with a preference for plugging into a platform of integrated fintech solutions, to help them to adapt quickly while reducing costs.”
In the area of sustainability, respondents were being pressured to reconsider how they manage risk, increase their agility, and fast-track innovation to evolve with new demands. Also, ESG has been continuing to expand throughout respondents’ internal operations and external offerings, the data indicates.
