Month: May 2022

Over the last decade, Asia has witnessed a digital revolution in banking and financial services and is quickly adapting to this revolution. This has changed the way people bank and manage their finances, making it simpler and more secure. It is transforming how companies operate and compete in this industry.

The digital revolution in Asia has also changed the landscape for new players to enter the industry, with the number of fintech companies rising year by year. As a result, Asian economies have advanced significantly, leapfrogging into new technologies. For example, the total amount paid for goods and services in China via mobile payments in 2016 alone was $790 billion, 11 times higher than that in the United States.

Financial technology can also aid potential growth and poverty reduction by enhancing economic development, inclusivity, and efficiency. Fintech can assist millions of people and small and medium-sized businesses gain affordable access to financial services, especially in developing nations. These technologies may potentially help the banking industry achieve significant efficiency benefits. They can, for example, offer cross-border payments that lower risk and costs.

The banking sector was one of the first industries to be disrupted by technology, with innovations such as mobile banking apps, net banking, and contactless payments. Additionally, the global pandemic of Covid-19 has accelerated the pace of digitization in Asia as more central banks adopt digital banking to foster better financial inclusion.

With this change came a shift in customer expectations when it comes to customer service- now, customers want more sophisticated services that are available at any time of day or night. According to a McKinsey study on personal financial services, Asian consumers are getting more comfortable utilizing mobile and internet channels for banking services, with usage increasing by more than 35% on average over the last three years. This has led banks to invest heavily in new technologies that can help them meet these demands in Asia.

Several approaches to the Asian banking sector have been utilized to achieve this. Connectivity, automation, innovation, and decision-making are the primary four interconnected, mutually reinforcing factors. Connectivity is the term used to describe how banks may leverage fast-increasing social networks to promote loyalty and disrupt competition. The application of digitalization in process re-design for a better customer experience and more efficient use of resources is referred to as automation. Given the quick speed of change in the sector, innovation relates to how banks should continue reinventing themselves. Decision-making uses big data to make better, quicker, and more accurate judgments about customer purchases and bank decisions about risk.

Conclusion

The digital revolution is transforming the banking and financial services industry in Asia. Digital transformation is driving the change in this industry and has been changing the way people bank and invest, how they manage their finances, how they borrow and lend money, as well as how they get access to financial services.

While the digital revolution is unavoidable, the policy will determine whether you succeed or not. Policy solutions must strike the correct mix between promoting digital development and mitigating hazards, and reforming the education system to meet the demand for more flexible skills and lifelong learning and new training, especially for the most adversely affected workers. Investing in physical and regulatory infrastructure that spurs competition and innovation and addressing labor-market and social challenges such as income redistribution are just a few policies that can help harness digital dividends.

The global financial sector is scaling at a rapid pace as it is undergoing a digital transformation, fueled by new technology, shifting customer behavior, and disruptive fintech competition. The Covid-19 pandemic and the subsequent desire for further digitization have boosted the need for better technology in the industry.

However, in the Southeast Asian region, home to an estimated 661 million people, only 52.64 percent of these people have bank accounts. This is mainly due to the lack of financial inclusion in the region. Financial inclusion refers to the ability of individuals and families to access and use basic financial services, such as savings accounts or credit, regardless of their income levels or location.

Cloud banking is the technology that can enhance financial inclusion in Southeast Asia and has the potential to help banks and financial services providers to provide better services to the underserved population of the region.

How can cloud banking enhance financial inclusion?

Cloud computing uses shared resources and virtualization to improve financial inclusion by providing the infrastructure that allows banks to offer their services at a lower cost, making them more accessible to individuals with low incomes.

Financial institutions benefit from their flexibility, scalability, and operational resilience. It enables them to provide underserved and unbanked areas with cost-effective digital financial services like money transfers, loans, and insurance. It also allows for cost-effective scaling, facilitating the supply of inexpensive products and services to large numbers of unbanked consumers and small companies.

By allowing more significant innovation, cloud computing may help to promote financial inclusion and drive economic and social progress. Companies like Amazon Web Services(AWS) also assist financial companies across the area with their infrastructure needs and provide advanced payment options. At the same time, others are using this to empower small and medium businesses, lowering bureaucratic hurdles and developing new growth models.

Policymakers around this region are enacting forward-thinking policies to boost digital finance innovation. Some nations’ regulators have put in place principles-based outsourcing frameworks to allow cloud service providers to provide novel infrastructure services.

Cloud advancements may give the drive that has so far been absent. Cloud computing can aid incumbent financial institutions’ digital transformations as well as new challenger fintech’s market debut by delivering high-volume, high-intensity computing capacity that enables digital financial services.

Conclusion

Cloud banking is a cutting-edge technology that can enhance financial inclusion in Southeast Asia by offering many advantages for both banks and customers. It allows banks to operate with less capital because they do not need expensive infrastructures like servers and buildings. It also provides more convenience for customers because they can do their transactions from anywhere at any time with an internet connection.

In the past, banks had to invest heavily in infrastructures such as data centers and servers. But with cloud banking, they can use shared resources and pay only for what they need. This makes it possible for banks to offer their services at a lower price point and reach more customers who may not be able to afford traditional banking services.

Although banks have been hesitant to migrate to the cloud due to worries about security and privacy, policymakers have been cautious about the cloud’s potential for aggregated risk. However, in recent years, these challenges have been rectified, and Cloud computing is increasingly considered just as secure as on-premise computing.