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.
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.