Ushering in the next era of banking: 5 things to do

18 January 2022 5 min. read

A continued rise in the adoption of digital services across Southeast Asia is re-shaping the financial services industry. Andrew Male, a partner at digital transformation consultancy Publicis Sapient, outlines what financial services institutions can do to usher in the next era of banking.

Recent research from the Publicis Sapient (‘Digital Life Index 2021’) revealed that the majority of consumers in Thailand (85 percent), Singapore (83 percent) and Hong Kong (81 percent) prefer online interactions when it comes to banking.

Consumer expectations in Asia are also rising with personalisation coming across as a strong theme. 34 percent of consumers in Singapore want financial services companies to provide personalised offers that are based on their spending preferences; this figure rises to 42 percent of Hong Kong respondents and 49 percent of Thai respondents.

Andrew Male, Partner, Publicis Sapient

Other sentiments uncovered by the study include customisable alerts or notifications, as well as personalised content or advice to help them better manage their money.

Amid it all, financial institutions must continue to stay ahead of the changing personal finance landscape. The key question is which trends deserve the greatest focus as companies strive for transformation growth? Here are five things financial services companies need to take note of as they navigate the changing personal finance landscape.

Make purpose the new profit

The financial industry has a major role in serving and shaping society. Financial services companies facilitate economic activity that is dynamic, accessible and safe. Consumers today consider a company’s statement of purpose and its willingness to take bold and decisive actions that drive positive impact. It is this climate that future-ready organisations will have to prioritise accessibility, responsibility and sustainability.

Integrating these values into the financial industry will require companies to invest significantly in digital architecture that helps make banking more accessible to everyone; incorporate sustainability considerations into the ways investments are approached; and take an active role in tackling issues that matter to the climate. These actions will go a long way in building trust with a younger, more impact-conscious generation of consumers, in turn building business sustainability for the long-term.

Further reading: Purpose and belonging at the core for Southeast Asia workers.

Put an end to ‘one size fits all’ user experience

Personal finance is exactly that – personal. And that applies to consumers’ banking. The fintech revolution has seen tech startups and nonbanks successfully embed financial products into their digital offerings. To stay competitive, banks will have to rethink their current digital platform offerings, and do away with the generic, linear customer experience to retain and grow their customer base.

The Digital Life Index 2021 revealed that just 61 percent of respondents in Thailand and 65 per cent of respondent in Singapore are either not confident or only somewhat confident in smartly managing their money online. This figure rises to 71 percent among consumers in Hong Kong.

The user experiences of tomorrow must be more customised and represent a deeper understanding of consumers’ specific needs. Always-on targeting solutions will replace linear journeys, giving financial institutions greater agility and banking customers a sense of inclusion. To achieve this, banks will have to collect and integrate a wide range of metadata around race, ethnicity, gender and literacy. This will then make consumers feel assured, understood, and empowered to handle their personal finances in a digital era.

Transform into platforms

Platform business models – those that facilitate exchanges and transactions – are rapidly replacing standard distribution channels. Publicis Sapient’s Digital Life Index 2021 report found that 1 in 2 bank customers in Asia Pacific use their bank mobile apps when interacting with their banks. Comparatively, just 13 percent among Asia Pacific’s bank customers interact with their banks in-person at a branch.

Financial institutions with a legacy need to build platform businesses or partner with them. Consumers are drawn to platforms because they are easy-to-use, meet the needs of users, and have minimised transaction costs to the point that they become negligible. Once scale is achieved, platforms will be tough to displace. By harnessing cloud computing to support this model, incumbent organisations can create new platform designs that power innovation and efficiency.

Lay the groundwork for an AI revolution

With the ability to collect and analyse vast quantities of data, artificial intelligence (AI) can enable a deep understanding of consumers and deliver highly personalised services at scale. To achieve realistic AI goals, companies will need to focus on improving technology infrastructures; developing robust AI strategies; and delivering personalisation at scale

Only when these roadblocks are overcome will financial institutions be able to unlock the powerful potential of AI to revolutionise personal finance.

Further reading: Four ways how AI can benefit the financial services industry.

Make friends with the fintechs

At the heart of it all is coming to grips with the fintech revolution. Fintechs have and will continue to grow in prominence, and major financial services firms will not only have to work with them but consider taking a few pages from their playbooks. Banks must appreciate the significance of several emerging technologies and concepts that are reshaping their industry.

By understanding these developments – the rise of platforms, the potential of AI to power personalisation and the importance of action-oriented corporate responsibility – banks can actively shape the next chapter of financial services rather than be shaped by it.