Part II: Bank's Performance and 2025

As in the last post, I focused on three nations' banking performance. This article will first discuss the next three nations' banking performance and examine which countries are leading and on the verge of becoming digital-first. It's good to see that bank realizes that the old system is not working, and we should restructure our system in the light of current demand. Banks should collaborate with other technology companies to increase their speed in becoming a digital bank target.?

Indonesia Banking

Indonesia Big banks are spending frantically on technology to counteract possible disintermediation from fintech and digital lifestyle platforms. By 2023, 40% of bankable Indonesian clients will have undergone direct onboarding, electronic KYC, or third-party onboarding. The unbanked population in Indonesia will be reduced by half to less than 20%. Post-pandemic, the central banks in Indonesia is looking at a 10% cut in expenditure to maintain critical systems, including multichannel systems. Indonesian banks at Tier 1 and Tier 2 levels will operate in at least five lifestyle ecosystems.

Indonesian banks will invest in API-enabled, microservices-based, cloud-native digital technology. Their success will be built on a modular architecture. They are backed by this LEGO-style building block design, which allows them to create and modify processes, products, or channels as required. Small company teams may quickly implement changes that have little impact on the firm. Business owners, for example, maybe more creative in sales and service design, while engineering can swiftly create and deploy new value propositions. Modular banking is essential for fine-tuned procedures and will drive any efforts to establish a future-proof digital banking infrastructure.

Banks should increase their spending to compete in "real-time," focusing first on lending, then payments, digital marketing, and product offering. This may be accomplished more swiftly through fintech or third-party collaborations to process services more quickly, provide more excellent user experiences, and reach scale. An increase in the number of banking ties per client suggests a battle for consumer loyalty. Customers in Indonesia no longer bank at a single institution or with a single bank. They provide a wide range of services through specialized banks, and more are turning to fintech for an instant, safe digital transactions. The necessity for banks to become highly linked and establish collaborative ecosystems and alliances has also been spurred by open banking laws.

?Thailand Banking

Thailand will set the standard for the fastest and most comprehensive banking digitalization, commencing with new omnichannel strategies. Six of the top ten banks are reinvesting in a new digitalized channel, the contact center, which is fast becoming a hub for advice and recommendations. Four of Thailand's top six banks will double their agile personnel, ushering in a new era of continuous innovation delivery. The top 10 banks' branch network is expected to shrink by 15% as they seek more excellent staff and resource efficiency. In Thailand, partner-generated retail business will account for 10% of Tier 1 bank retail activity, up from less than 2% now.

Thai clients have demonstrated an exceptional capacity to transition to digital financial services, swiftly adopting digital capabilities proven helpful throughout the crisis. Thailand has experienced unprecedented development in digital payments, the usage of digital IDs, and the use of social media for banking. The next sector ripe for expansion is platform-based banking, in which banks collaborate with third parties to provide a distinct value proposition to customers. Banks must quickly expand digitization programs in 2021, utilizing success as a rationale for further similar initiatives in the years to come.

Banks should consider increasing relationships with third parties to provide customers with the benefits of lifestyle-oriented services. The advantages of these innovation hubs have borne fruit in electronic KYC, digital identity integration, and blockchain/distributed ledger technology initiatives. Banks may expand on this endeavor by investigating additional efforts in biometrics, AI/ML, customer analytics, and identity-as-a-service, including advisory-based suggestions. Continuous, API-driven cooperation is all part of the broader open network economy movement. Participants will expand more quickly as a result of the "network effect." More banks developing integrated value propositions will attract more consumers and produce more value inside the network.

India Banking

Although India remains one of the most pro-innovation economic environments, banks continue to struggle to achieve the higher requirements of availability, dependability, and quality that come with being digital-first. Banks in India may expect a 75 percent increase in response time for high-impact business operations. Seven out of ten Tier 1 and Tier 2 banks want to provide clients with a seamless and contactless banking experience during onboarding, emphasizing creating virtual capabilities in customer verification and identification. Mobile transactions are anticipated to increase by 70% year on year. Spending on analytics and AI/ML technology is expected to rise by 30% as banks incorporate suggestions, facilitation, and advice into their core business.

Sixty percent of Indian banks acknowledge struggling to provide intuitive, relevant, and customized material via newly introduced digital channels. Banks should achieve agility in responding to developing digital offers by being able to interface with third-party capabilities and add more features to services without incurring additional costs for core system change. As digital transactions increase exponentially, banking-tech collaborations will place a greater focus on mobile platforms to develop creative and tailored client journeys.

Banks still see up to 3% of transactions fail, indicating a significant gap in service dependability. While banks must continue to invest in the reliability of core engines and the automation of back-office processes, the focus on creating customer-facing digital services takes precedence. Customer onboarding, loan origination, credit checks, marketing, and lead profiling are some of the most often sought use cases.

Who Is Accelerating Fast?

The next five years will be about reaccelerating digital-first initiatives. Banks that will thrive in digital by 2025 will employ the appropriate tools, technologies, platforms, and frameworks for their distinct brand of digital.

Standouts:

• Commonwealth Bank of Australia National Australia Bank is highly positioned in technology investments fit for the bank.
• Fintechs in India Paytm, SBI YONO, DBS Digibank, PhonePe, Razorpay are achieving better results in hyper-personalization.
• Fintech in the Philippines PayMaya, GCash, First Circle, Tonik, Diskartech is also performing excellently in hyper-personalization.
• Fintech and digital platform in Thailand GrabPay, Finnomena, Omise is highly technology investments and hyper-personalization.
• Fintech and digital platforms in Indonesia Gopay, OVO, LinkAja, ShopeePay, and Bareksa are the most well-performing regions mentioned earlier.

Summary:

Finally, our series of articles on the performance of various regions is complete. We've seen that each region has realized that they can't do much on their own and is now working with other firms. Customer service and insights are becoming essential aspects of banking.

The next five years will be critical for banks, and they must work around the clock to restructure their systems to meet current demand.

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