3 in 5 APAC banks lack full digital account opening for new customers: FICO survey

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Mumbai: As many as 60% (three in five) banks in Asia Pacific, have yet to offer a full digital account opening process for new customers, according to FICO’s 2019 State of Digital Banking in Asia Pacific survey. This new findings are in contrast to some recent reports saying that nearly 9 in 10 financial institutions in the region embarked on digital transformation.

These surveyed banks either have no digital onboarding process for new customers, or only part of it has gone online.

“In Asia, the identification processes used for services such as e-government, banking or telecommunications evolved independently of each other, leading to a fragmented approach with inconsistent levels of security,” said Dan McConaghy, President – FICO, Asia Pacific.

“Open banking and regulations like Europe’s PSD2 are now bringing regulatory rigor to bear on the issue and forcing banks to comply to certain standards and embrace technologies that will better enable digital onboarding,” added McConaghy.

For some established banks, one short-cut to their own existing challenges, incumbent technologies and inefficient silos is to start again. FICO’s survey revealed that 79% of the banks have launched or are currently considering a separate digital banking offering to leapfrog challenges in acquiring and retaining new customers.

“Fintechs and challenger banks have disrupted the status quo in the financial services universe. By developing compelling new products, services and experiences, these companies have set a new standard and raised customer expectations. Traditional banks now find themselves needing to rethink and redesign their services, to transform themselves digitally and meet the market,” commented McConaghy.

About 40% of respondents, as per the survey said that digital-only banks and fintechs were the greatest competition to their business, with APAC Internet players (20%) and telcos diversifying into lending (20%) coming in equal second place. Conversely, the greatest opportunities for digital banking for the respondents were nominated as digital payments (32%) and personal loans (24%).

APAC banks said they are planning to focus on investing in data science (19%) and improving their customer segmentation for products and services (19%) as their top priorities for their bank transformation.

When asked about the future size of their bank in the year 2030, some 28% of the survey respondents predicted that their organisations would need fewer employees (between 5 to 50% decrease). A further 28% said they think they will need significantly less staff (a 50% or more decrease) in 2030.

“There is some recognition in the market that the right size for many banks in the near future will be smaller,” said McConaghy. “New technologies, increasing competition and different business models will change the way financial services looks in ten years’ time.”

FICO surveyed 20 chief risk officers from across Asia Pacific in April 2019 at its CRO Forum 2019 event in Bangkok, Thailand.

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