Digital Banking in Asia: The way ahead! 2021-2025

Something interesting is brewing up in the Asian Banking Sector!

> Covid-19 surged, and customers started to turn to digital channels for their banking and fin-tech needs.

> One negative effect for banks: it led to hidden absconding of consumers buying products from banks and providers other than the primary bank.

> In Bain’s new consumer survey, respondents cite the competing offer’s cost, digital tools and convenience.

> Absconding consumers could intensify in many countries, due to more regulations that make consumer data portable and thus encourage competition.

> To plug the leakage, banks must remove friction from their marketing so consumers don’t feel compelled to shop around, and excel in the basics of opening accounts, so prospective buyers don’t drop off.

From 25% to 51% of all banking product purchases, depending on the country surveyed, go to banks that aren’t the respondent’s primary bank, Bain’s NPS? 2020 survey of about 56,000 consumers in 11 countries finds (see Figure 1).

Why customers abscond?

There’s no single reason behind hidden defection. While respondents most frequently cite affordability of a competing offer, they also cite better digital tools, a simpler purchasing process and convenience (see Figure 2). Younger customers in particular put a greater emphasis on digital tools, convenience, branding and security.

Some respondents actively search for product options, others respond to ads, and 29% of those who defected received a direct offer from a competing bank. In this latter group, 78% said they were willing to buy from their primary bank if it made a compelling or equivalent offer (see Figure 3). That share was even higher for younger respondents.

There are significant gaps in hidden defection between leading and lagging banks, along with varied effectiveness at selling digitally (see Figure 4). Incumbent banks have a lot of room to improve in their digital sales episodes.

Customers’ core banking relationship tends to be sticky, but most banks don’t take advantage of that relationship by delivering more value through personalized offerings of ancillary products. Those banks that reach out at key moments in people’s lives and make the digital process very easy and convenient stand to make banking products less commoditized, economically boost sales and please customers in the bargain.

Banks can use platform thinking as a jump-off point to success in customer engagement. Think of it as an engagement platform and its role in ensuring hyper-personalization capabilities, and the technology platform to ensure hyper-personalization is on-going.

Who is accelerating fast in Asia?

There are those that have built foundations for re-acceleration into digital-first, and will be multiple times more capable of personalization at scale. They have widened the gap against other organizations that still need to gather momentum in this reinvigorated race for being truly digital-first. 

Survival of the fittest- The Race to be Digitally fit!

Appendix: Asia Story!

Banking 2.0 Customer engagement- bit.ly/3rVMkXY

Reference- IDC Infobrief, Backbase, Bain.com, Google

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