According to an EIU report the competition between the established retail banks and the fintech newcomers, including digital-only banks and those in payments solutions, is heating up.
The EIU reports states that big tech companies like Google, Facebook, Apple and major payment players such as WeChat Pay, Alipay and PayPal are viewed as the biggest threat to APAC bankers (60%). By contrast, the neobanks and digital-only banks, such as Monzo and Volt Bank are only seen as a threat by 25% of the APAC bankers surveyed.
It also reveals that 37% of Asia-Pacific bankers see mastering digital marketing and engagement as their top strategic priority by 2020. Martin Frick, MD of APAC said: “Asia-Pacific bankers are acutely aware of the race they find themselves in against technology giants that have the capital and scale to take market share from established players. Neo-banks are not far behind and have the flexibility to outmaneuver major banks on the margins. To remain relevant, retain customers and appeal to the evolving demands of younger generations, banks must master digital engagement, and quickly.”
Some 37% of the APAC bankers also believe that emerging regulation in areas such as data protection and digital taxation will have a significant impact on the banking sector. There has been a significant number of differences in the way regulations have evolved across the region. For example, in Australia, open banking is being driven by the government to increase competition within established regulatory frameworks. Whereas in Singapore open banking regulations are being driven by those involved in the industry.
The report also points to China, where tighter licensing and data protection rules are set to diminish Alipay and WeChat Pay’s duopoly across the broader region.
The report also highlighted the fact that APAC bankers main concerns about open banking are the ability to capture customer data (34%) followed closely by a third-party relationship vulnerability being exploited (31%) and an inability to protect against cyber-attacks (31%).