Half of APAC banks at risk of missing digital transformation targets: study
Banking leaders admit that they are at risk of ceasing to exist in 5-10 years.
Over half of banks in the Asia Pacific admitted that they’re at risk of missing their digital transformation targets, according to a new study published by Mambu and the Financial Times.
Banks in the region are lagging behind other regions in terms of digital transformation, the report found. Less than one-third of APAC banks described their digital transformation strategy as mature or advanced, according to the report, which surveyed over 500 senior banking executives globally.
This is alarming, as they risk not just losing market share but ceasing to exist altogether. Two in three (67%) of the leaders surveyed believe that their bank will lose market share within the next two years if they fail to digitally transform, and over half (58%) even predicted that their institution will completely cease to exist in the next five to ten years unless they changed their business models.
“The last 18 months have shown banks just how important it is for them to have a robust and agile digital banking offering. And with 53% of those surveyed admitting they’re at risk of missing digital transformation targets, it's time the industry took note of the financial ‘evolvers’ that are leading the charge in this space,” Limb said, adding that banks should look into how fintech, challenger banks, and forward-thinking traditional players that are prioritising purpose-driven services and great customer experience.”
On the upside, APAC banks are playing catch up to the rest of the world, with lenders touting plans to increase investments in big data, machine learning, and blockchain at a rate higher than other regions, noted Elliott Limb, chief customer officer at Mambu.
Not all banks in APAC are still playing catch up, with an emerging cohort of digital "evolvers" bucking the trend, according to Myles Bertrand, Mambu’s managing director for APAC.
“These forward-thinking players are helping those lagging behind to level up their transformation efforts, setting a blueprint for the rest of the industry to follow while demonstrating the business case for a customer-centric approach,” Bertrand said.
But it’s not enough for APAC banks to just have a strong commitment to increasing their investment in new technologies, Bertrand noted. Banks in the region also need to change the way they approach innovation and start proactively embracing new partnerships and collaborations.
“The ‘ecosystem’ approach has been incredibly successful in other regions, and with half of APAC banks concerned that they lack key internal workforce skills necessary to transform, it will prove very effective here too,” he added.