Why Asia's banks are rebuilding their credit infrastructure in 2026

Customers now expect visibility alongside instant credit experiences. 

Asia-Pacific’s private credit market is projected to grow from US$59b ($75.021b) in 2024 to US$92b ($116.98b) by 2027. That expansion is pushing more credit activity into the same customer accounts, across cards, instalments, and short-term lending.

Repayment behaviour that was once handled quietly through statements is now visible in real time, and customers notice when it doesn’t add up. For banks, each repayment becomes a live moment that affects servicing cost and customer confidence.

As volumes increase, the pressure becomes clearest when banks offer several forms of credit to the same customer. A card balance, an instalment plan, and a short-term credit line can sit on one account, each with its own repayment rules.

Many legacy systems were built for a single balance and a single billing cycle, which makes it harder to show how payments are applied or what is due next.

With banks stacking instalments and short-term lending on top of card programmes, consumer complexity becomes harder to work around without rethinking how credit is tracked and billed at the ledger level.

Flexibility becomes the dividing line
Credit cards became the default short-term credit solution because they offered broad coverage through one product. Everyday spending, short-term borrowing, and international acceptance could all sit within familiar risk, billing and customer service processes.

That model is harder to sustain in a digital banking environment. Mobile apps make it possible to offer credit in smaller, more targeted forms, whilst digital-first competitors have normalised instalments and short-term borrowing alongside cards.

Customers now expect visibility alongside instant credit experiences, including rapid digital issuance and real-time spending controls, which many existing platforms struggle to support.

Customers want to choose how individual purchases are paid down, see repayment paths clearly and manage different forms of credit without jumping between products. What separates strong credit experiences from weak ones is repayment clarity: the ability to show clearly what happens when a payment is made.

That shift is visible in the scale of installment-based credit across Asia. In Southeast Asia, the buy now, pay later (BNPL) market has expanded rapidly. It is projected to reach US$53.2b ($67.46b) by 2027, as instalments become a routine part of online spending. In the Philippines alone, an estimated 28.4 million consumers had used BNPL services by the end of 2024.

As consumers become more familiar with this credit format, defined pay-off periods and predictable repayments become the benchmark against which other credit products are judged.

With instalment products, people can see what they owe at a glance. They know how many payments are left on a purchase, when the next one is due, and what comes next. Against that experience, card repayments that roll everything into a single balance feel harder to follow, particularly when multiple purchases are made close together.

When repayments stop adding up
The confusion often starts at the moment a payment is made. Customers expect their money to clear a specific purchase or reduce a particular balance, but repayments may be applied according to internal rules that aren’t visible in the app. Those rules often sit deep in billing logic built for simpler credit models, making it hard – even for servicing teams – to explain what has been cleared and what remains outstanding.

Those gaps show up quickly in missed payments, disputes, and calls to support. What begins as a question about how a payment was applied often becomes a routine servicing issue, reflected in higher call volumes, reversals, complaints, and rising cost-to-serve.

When rewards actually work
As credit options sit closer together inside banking apps, rewards are often used to distinguish between them. Cashback and merchant offers remain familiar levers across Asia-Pacific, particularly where cards, instalment plans and wallets compete at checkout.

What has changed is how those incentives are applied. Rather than offering broad rewards across all spend, banks are increasingly using cashback to draw attention to specific transactions, categories or payment options.

Used this way, incentives sit alongside the credit experience rather than masking it. They help steer everyday usage without adding another product or repayment path for customers to keep track of. Rewards tend to work best when they rest on repayment rules because customers can see how a transaction was billed, repaid and rewarded in one place.

2026: repayment logic takes centre stage
In 2026, banks have little room to rely on workarounds. As credit volumes rise and digital channels become the main point of interaction, issues once handled through statements or support teams now surface directly in apps. When a repayment behaves unexpectedly, the customer sees it immediately.

That reality is pushing many institutions to look more closely at how credit is structured and serviced at the core. The focus is less on launching new products and more on making existing ones easier to follow and easier to adjust as customer needs change. Aligning repayment rules across products, improving how balances are shown, and ensuring payments produce clear outcomes all become part of that work.

As Asia-Pacific’s credit market expands, the advantage will sit with banks, fintechs, and digital lenders that make credit easier to understand, easier to service, and easier to repay.