It’s a fact. The exponential growth of data directly impacts financial institutions’ ability to do business efficiently. And there’s no sign of that growth slowing down, with IDC conservatively predicting a 26% CAGR data growth in financial services companies between 2018-2025.
In the old days, banks could work independently of others providing financial services, but not anymore. As the world becomes more interconnected, banks are being drawn into emerging ecosystems comprised of old and new players. Cooperation and integration are the names of the game for both incumbents and newcomers such as fintechs and virtual banks, but putting the blocks in place to build the infrastructure is easier said than done.
Bankers are bullish on digital transformation. According to 2018 research by the Boston Consulting Group, 86% of financial institutions agree that digitization will upend the industry and permanently transform the competitive landscape.
There were many victims of 2008’s Great Recession, but perhaps none were as hard-pressed as those in emerging markets, who were effectively cut off by the suddenly risk-averse big banks of developed countries. Access to finance through traditional avenues is still hit and miss for those in developing countries, but things are looking up with the advent of technological solutions that are bridging the gap to a more promising future.
The Philippines, among Southeast Asia’s most dynamic economies, is experiencing a growth spurt, and its top bank, BDO Unibank, is prepared to take full advantage. Guided by its core values, which include being committed to delivering “products and services that surpass customer expectations” and “the process of continuous improvement in everything we do”, BDO is on course to meet its targets of profit and growth, according to President and CEO Nestor Tan.
South Korea’s penchant for technological innovation has not penetrated its financial sector as much as one might expect. Its established banks have been on the conservative side, but that is changing as the government, recognizing its attributes, promotes the growth of the fintech sector, with a particular emphasis on inventive payments and lending providers. Korean consumers are benefiting from the mushrooming choice of cutting-edge financial-services options now at their disposal.
Southeast Asia, with a high percentage of its population still underbanked but with growing economies and widespread smartphone adoption, is prime territory for fintech upstarts as well as pioneering incumbent banks. The race is on, and many players have jumped in, with ASEAN governments promoting the contest, which is pushing the limits of financial services to new boundaries. The ultimate winners, of course, will be the commercial and retail customers.
The financial industry of Sri Lanka, South Asia’s island republic, has withstood its share of turbulence. Standing out is Commercial Bank of Ceylon PLC, led by its vision to be the “most technologically advanced, innovative and customer friendly financial-services organisation in Sri Lanka, poised for further expansion in South Asia”. In our interview with him, CEO and Managing Director S. Renganathan describes how the bank is escalating its positive impact.
New players driving fresh business models, innovative products and increased adoption of the power of big data affect not only the provision of financial services but the fundamental structures of financial markets. As the tectonic plates shift, banks need to actively seek and embrace new opportunities. For the data economy to thrive, fintechs and bigtechs to provide client choice without affecting financial stability, and for crypto-assets to provide a viable option to traditional assets, regulators must master the art of balancing innovation with regulation.
Greenfield is a new concept in banking and means establishing a new operation in the field. The approach has proved attractive to traditional retail banks as they take advantage of all of the benefits of digital banking by starting new operations alongside their old ones, soaring to new heights without being constrained by their cumbersome legacy infrastructure. The time is ripe for corporate banks to also enjoy the greenfield effect.