Digital banking began to move into its second distinct phase in 2016 which would be categorised by collaborative innovation, digital ventures and partnerships.
Asian banks are needing to rethink their digital strategy as the first era characterised by operationalization, digital channels, and business restructures, closes to make way for a new wave of innovation, according to experts at Oliver Wyman.
Asian banks had continuously looked for strategies to counteract digital disruption within the industry, but the first phase, defined by Oliver Wyman partner in retail and business banking practice Asia-Pacific, Duncan Woods, and Oliver Wyman Singapore principal, Bharath Sattanatham, as being between 2012-2016, had well and truly ended.
“Digital banking 2.0 strategies will focus on driving simplicity and improving cost positions. Banks will need to drive innovation beyond transactions and into lending and wealth management,” they said in a BrinkAsia report.
“They should look to enlarge target populations, and work with a range of ecosystem partners to embed finance as part of customers’ daily lives, redesigning user experiences with mobile-first principles.”
Woods and Sattanatham identified four digital strategies which should pursued to maximise the benefits of the second digital era, to which banks shad been called to respond to strongly.
Firstly, there should be a rotation to digital characterised by digital transformations of core franchises. Secondly, banks should partner with fintech players to find solutions to pain points like credit scoring, risk and fraud. Digital ventures were also a focus point moving forward, with stress on the development of digital-only ventures. Lastly, banks should endeavour to create new age partnerships to acquire customers or expand service offerings.
“This pursuit of digital banking excellence calls for a change in mindset, requiring both enterprise innovation to drive agility, and collaboration with external parties,” they said.
“Depending on their starting point, banks may need to play a role across all quadrants. But at least now they can draw on lessons from recent history to guide them forward in the digital age.”