CX and the Future of Banking in APAC: How FinTech is Transforming the Industry
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The appearance of FinTech companies in the past few years has significantly altered the world of finance. FinTech has disrupted the traditional banking industry by introducing new products that are changing the way financial services are delivered.
Leveraging innovative and high-tech solutions, these companies make existing financial products and services more efficient, accessible, and cost-effective.
How FinTech is currently impacting the industry in the Asia-Pacific region
FinTech companies have introduced innovative products and platforms that are making banking more convenient, promoting financial inclusion, and introducing gamification through rewards and loyalty programs.
The introduction of user-friendly interfaces has made banking more accessible and less intimidating. They have created services that allow customers to bank online, rather than having to go into branches, queue for hours, and wait for lengthy transactions to be completed. Instead, they can use their mobile phones or computers to perform transactions at their convenience.
The Asia-Pacific (APAC) region is currently one of the most underbanked regions in the world, but FinTech solutions have increased financial inclusion by introducing affordable and accessible products and services.
FinTech uses modern technology to reach underserved populations, such as rural areas and low-income communities. For example, in Indonesia, just over 50% of the population has bank accounts, but 76% of the population owns a mobile phone. This allows FinTech companies to promote financial inclusion.
FinTech companies across APAC have also expanded gamification by introducing rewards and loyalty programs. These incentivize customers to save, invest, or spend responsibly by using game-like elements such as points, badges, and levels to reward customers for their behaviour. For example, Paytm uses gamification to encourage its users to save money through the "Paytm Cash" feature, which rewards users with cashback and points for completing certain tasks.
How FinTech has changed the customer experience landscape
FinTech in APAC are paving the way in banking by creating a better customer experience and introducing innovative products and services. They are making it easier for customers to perform banking tasks on their own. This allows many people to self-serve, and often avoid contacting their banks at all.
Customers can perform transactions, access information, and resolve issues without having to speak to a bank representative. This saves customers time and reduces the burden on bank staff. It allows customers to access their money when they want it, rather than when it is convenient for the bank.
FinTech companies are also using technology to improve real-time communication with their customers. Technologies such as live chat and messaging services are replacing more traditional communication methods like phone calls and emails.
A recent survey across nine APAC countries indicates that social media is increasingly becoming the preferred channel for customer support. One example is Grab, a super-app in APAC, which has begun using Meta’s Messenger for customer support. This has resulted in a 23% decrease in operating costs and a 3x higher retention rate.
The ability to integrate or use a single app for multiple purposes is also a game-changer in the world of banking. FinTech players in APAC, such as Grab, Gojek, AliPay, WeChat, and Paytm are creating systems that allow customers to perform a wide range of tasks. For instance, Gojek offers over 20 services under one platform, allowing customers to order rides, transfer money, plan holidays, and more. This reduces the need for customers to switch between multiple apps. It currently has over 30 million monthly active users.
What changes do we expect to see over the coming 12 months?
The FinTech industry has seen unprecedented growth over the last few years, but as we move into the next 12 months, we can expect to see further changes that will have a significant impact on the industry.
More Consolidation. The current economic conditions have intensified the pressure on FinTech players. It’s expected that numerous FinTech companies will undergo consolidation in the next few months. Financial constraints may lead to mergers and acquisitions. This may also result fewer new Fintech companies launching.
While some FinTech companies may slow down their expansion plans, larger players that can afford to take a hit are likely to increase their market share. These players will have the resources to endure short-term financial challenges, giving them a competitive advantage.
Increased Use of AI & Blockchain. Due to technological advancements, it is expected that FinTech will implement more AI-enabled features, use automation to improve processes and provide more personalized and efficient services to customers. Blockchain technology will also become more prevalent, allowing FinTech to provide more efficient contract management and payment options. The Monetary Authority of Singapore is working with DBS Bank to explore the use of blockchain technologies and investigate how distributed ledger technology can make payment networks more secure.
Tightening Regulations. In the next few months, it’s anticipated that regulators will impose more clear-cut regulations on financial institutions, particularly in the APAC region, where laws differ significantly across countries. This is going to put a major reporting burden on FinTech companies. Specialized software will need to be employed to generate the data that regulatory bodies require, reducing this reporting burden. Regulatory Technology (RegTech) will therefore be increasingly relevant to FinTech. The demand for RegTech implementation is growing, and will likely continue to grow as the regulations get tighter.
Transition to Software-as-a-Service Solutions. FinTech in APAC are increasingly turning to Software-as-a-Service (SaaS) solutions due to high rates of technological adoption and the cost-effective nature of cloud-based solutions. SaaS offers scalability, reduced costs, and customization to meet unique business and industry requirements. This allows FinTech companies to focus on their core products and services while quickly adjusting their capacity to meet changing demand. As the APAC region continues to experience rapid growth and technological advancement, SaaS is expected to drive further innovation in FinTech businesses.
Accelerating disruption to banking in APAC
FinTech is changing banking in APAC by introducing innovative products and services that challenge traditional models. They provide user-friendly interfaces, promote financial inclusion, introduce gamification, and improve the customer experience by creating tailored customer journeys, real-time communication channels, and super-apps.
In the next 12 months, FinTech companies will advance further and collaborate more with traditional banks to offer comprehensive services. The FinTech industry will continue to impact the banking industry in APAC and beyond.