An in-depth study conducted by Temenos and The Economist Intelligence Unit found that banks view big tech players like Facebook and Apple as the biggest threat to the APAC banking sector.
Thirty-two percent of respondents said tech players like Google and Facebook were the biggest competitors in banking, followed by 28 percent who said payment players like PayPal and Alipay would be the biggest competitors. .
Only 25% believe that neobanks like Volt or Monzo will be the biggest competitors in the banking sector by 2025.
And this despite the launch of several neobanks in Australia such as Volt, 86 400, Xinja and Judo Capital.
Volt Bank chief executive and co-founder Steve Weston told the report that neobanks were able to take advantage of high interest rate margins and leverage them to better manage customers’ finances.
“Clients tell us they want someone who understands what they are trying to accomplish in their financial life and helps them achieve those goals,” he said.
Other threats to the banking industry include technology and fintech partnerships, robo-advisors, and peer-to-peer lenders and aggregators that fill in the rest.
Managing director of APAC at Temenos, Martin Frick, said bankers in this region were aware of the challenges they faced.
“Asia-Pacific bankers are acutely aware of the race they are in against tech giants who have the capital and scale to take market share from established players,” he said. he declared.
The threat of technology is also reflected in impact trends: 50% of banks believe new technologies will have the greatest impact on their operations by 2025.
Emerging regulation on digital technology and the changing competitive environment were also a major concern for banks, but interestingly only 25% believed open banking would have a significant impact. by 2025, despite the regime already implemented in Australia.
One of the reasons for the lower ranking of open banking is that although it is driven by the Australian government, in other markets it does not yet have a government framework and is driven by the players themselves. same.
Given the challenge of technology, digital marketing and engagement have been ranked among the top priorities for 2020, followed by improving product agility.
By 2025, banks’ priorities will shift to include migrating customer usage from physical channels to digital, launching open banking strategies, and offering hyper-personalization to customers.
Mr Frick said banks knew digital was the only way to stay relevant and they needed to master it quickly.
“To stay relevant, build customer loyalty and meet the changing demands of younger generations, banks must master digital engagement, and quickly,” he said.
