Digital Banking Trends in APAC and Beyond

Digital banking trends are rapidly evolving in the Asia-Pacific (APAC) region and beyond. Open banking, which allows customers to share their financial data with third-party providers, is gaining momentum in APAC, with over 70% of banks in the region expected to adopt open banking by 2025.

In Australia, the country's open banking regime has already led to the creation of over 1,000 fintech companies. This growth is expected to continue, with the APAC open banking market projected to reach $13.4 billion by 2027.

Mobile-first banking is another trend taking hold in APAC, with many banks in the region investing heavily in mobile banking apps. In Singapore, for example, over 70% of banking transactions are now conducted through mobile devices.

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APAC is home to 20% of the world's 250 digital banks, which is a staggering scale of the digital banking boom in the region. These digital banks offer electronic client servicing, comprehensive digital infrastructure, and 100% digital delivery to customers.

The rapid pace of transactions in the digital banking sphere presents unique obstacles that these banks must navigate. One of the top trends in digital banking services is the shift towards electronic client servicing.

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Banks in APAC are booming, with 20% of the world's 250 digital banks operating in the region.

The scale of this growth is impressive, with a vast number of digital banks offering electronic client servicing and comprehensive digital infrastructure to customers.

These banks provide 100% digital delivery to customers, making it easy for them to manage their finances online.

The rapid pace of transactions in the digital banking sphere presents unique obstacles for these banks to overcome.

APAC's digital banking landscape is rapidly evolving, with new players entering the market and existing ones innovating to stay ahead.

The growth of online transactions has been significantly accelerated due to the remote mode of everything. This trend has been fueled by the COVID pandemic, which forced people to adapt to digital channels for payments.

People have started paying for goods and services through digital channels to retail or e-commerce stores. Two-factor authorization and transaction confirmation are carried out to make the mobile banking process more secure and faster.

The number of online transactions has increased, with people managing savings accounts and trading stocks online. This has led to an increase in the number of brokerage accounts opened by users through mobile banking apps.

Digital payments have become the preferred choice over offline payments due to the added security and speed. Users can now access banking facilities from any location using mobile apps or web apps.

The growth of online transactions has created a pressing need for effective solutions to manage risks such as synthetic identity fraud and account takeovers.

Payment security and validation are crucial aspects of digital banking. Banks face the challenge of ensuring accuracy and security as transactions process faster, increasing the risk of synthetic identity fraud, traditional identity theft, and account takeovers.

The APAC region has witnessed several prominent fraud cases involving banks in recent years. A Taiwanese bank experienced a significant security breach when hackers compromised its SWIFT system, resulting in fraudulent transfers of millions of dollars.

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Banks must implement robust measures to mitigate these risks and protect their customers. One such measure is the implementation of payment validation services, which can help prevent fraud, reduce errors, and increase efficiency.

Payment validation services involve verifying the legitimacy of a payment before it is executed. This can be done through online portals that allow clients to define rules that identify legitimate payments.

To ensure secure digital banking, banks must invest in security, perform detailed security audits of their systems, protect clients from phishing, and educate clients about cybersecurity.

Here are some ways banks can improve payment security:

By implementing these measures, banks can ensure secure digital banking and protect their customers' interests.

Banks are turning to advanced technologies like APIs and instant payment networks to deliver real-time services, ensuring money moves quickly and account information stays current.

These tools are making speed a top priority in the banking industry, with customers expecting instant transactions and updates.

Payment innovation is also underway, with banks facing the challenge of ensuring accuracy and security as transactions process faster, making identity verification more difficult and increasing the risk of synthetic identity fraud and account takeovers.

Banks are using AI to automate engagement through virtual assistants, making the interaction intelligent and a natural part of the customer experience, and subtly infusing the customer experience with helpful AI.

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BNY's Payment Validation Service is a best-in-class online portal that offers multiple features to support various use cases.

This service enables clients to define specific rules to identify legitimate payments and flag any transactions that deviate from the established norms as potentially fraudulent.

A client can set a time-based rule indicating that they will only send payments on weekdays, and the service will alert them to any suspicious or unauthorized transactions.

By empowering clients with tools to define their transaction rules, BNY is not only mitigating fraud risks but also enhancing customer trust and satisfaction in the digital banking experience.

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The growth of online transactions has accelerated due to the remote mode of everything, with people now paying for goods and services through digital channels to retail or e-commerce stores.

To make mobile banking more secure and faster, two-factor authorization and transaction confirmation are carried out when making digital payments.

Banks are using advanced technologies like APIs and instant payment networks to ensure that money moves quickly and account information stays current.

This is a top priority in the banking industry, with customers expecting banking transactions and updates to happen instantly.

Banks are already making extensive use of AI in fields such as fraud detection, credit scoring, risk assessment, and customer engagement, and they intend to scale that up substantially in coming years.

AI will increasingly be used to automate engagement through virtual assistants, to the point where that is seamlessly integrated into the customer experience.

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Cloud Computing is a simple concept where computing services like data warehouses, software, and networking tools are available on the Internet.

Banks have started using cloud computing, which has led to its massive growth in the digital banking trends. It offers some massive benefits to the banking industry, including cost efficiency, adequate security, increased productivity, global scalability, speed, convenience, and reliability.

Cloud computing enables the banking sector to eliminate massive data silos, which is a huge advantage. It also eliminates the need for physical systems, servers, and techies to manage them.

Here are some of the key benefits of cloud computing in the banking industry:

Scaling AI is a crucial step in the digital banking industry. Banks are already making extensive use of AI in fields such as fraud detection, credit scoring, risk assessment, and customer engagement.

AI will increasingly be used to automate engagement through virtual assistants, making it seamlessly integrated into the customer experience. This means that customers will be able to interact with their bank in a more natural and helpful way.

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Generative AI can bring creativity, fluidity, and flexibility to the interaction, making it more intelligent and valuable. By applying generative AI to the data sets used by conversational AI systems, banks can create a more personalized and effective customer experience.

The agenda is to subtly infuse the customer experience with helpful AI, making it a trusted and reliable part of banking. This can be achieved by proactively providing relevant advice at the right time, such as suggesting a standing order for a regular transfer.

Internally, AI is also being used as an employee co-pilot to help get work done more efficiently. This can involve an AI system trained on a bank's own data set supporting an advisor to provide expert guidance on a complex finance decision.

Banks are already using AI chatbots to improve customer support, and this trend is bound to continue. AI-powered service reduces operational costs and improves the user experience, making it faster and more efficient.

24/7 support is a major advantage of AI-powered service, meeting the demand for instant assistance and keeping customers satisfied and loyal. This is crucial in today's connected world, where customers expect to be able to get help anytime, day or night.

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Super Apps are changing mobile banking by combining many services into one platform, making digital banking easier and building customer loyalty. In Asia, mobile apps like WeChat and Alipay are leading this trend, blending social media, payments, and banking.

The power of Super Apps lies in how they keep users engaged by offering financial services alongside other daily needs. By doing so, they make digital banking easier and build customer loyalty.

In Europe, the financial services environment suggests that customers may not view a messaging or e-commerce-focused app as the natural or trusted platform for their personal finance. This is due to the regulatory environment and the sensitivity of people to the privacy of their data.

Embedded Finance is transforming the banking sector by integrating financial services into non-financial platforms. This development enables banks to expand their services via digital ecosystems, thereby entering new markets and efficiently acquiring new customers.

70% of banking executives already view Embedded Finance as either core or complementary to their business strategy. Banks can act as general providers and embed white-labeled products in non-proprietary ecosystems or focus on dedicated market segments and tailor their services to specific platforms and customers.

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Customer experience is the backbone of digital banking, and it's essential to get it right. Personalization is key, with 80% of customers seeking more personalized services to suit their unique requirements and tastes.

Digital banking continues to grow in popularity, and customers are expecting a consistent banking experience across all touchpoints. This means that banks need to provide tailored offerings that meet their individual needs.

AI-powered customer service is revolutionizing the way banks interact with customers. Chatbots and virtual assistants are now handling many routine tasks, making support faster and more efficient.

Customers want quick, accurate responses without needing human help, and AI delivers. This not only saves time but also allows human agents to focus on complex issues.

Hyper-personalization is changing the game, allowing banks to tailor experiences for each person in real-time. This is made possible through AI, machine learning, and big data, which analyze customer behavior and predict what they want next.

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Customers feel understood and valued when they receive personalized advice, products, and alerts that meet their specific needs. This leads to higher satisfaction and loyalty, resulting in better conversion rates, long-term growth, and higher customer retention for banks.

The goal of data and analytics-driven personalization in online banking is to provide consumers with tailored offerings across all touchpoints. This builds closer relationships with consumers, increases customer loyalty, and drives profitable growth.

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