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In the new reality post COVID-19, Asia Pacific is experiencing three main drivers of change:

  1. Distribution channels are rapidly adapting to a more digital world
  2. Cost priorities are at the forefront of the minds of executives, and
  3. New operating models are emerging

Irrespective of specific lock-down measures in different countries in ASAPC, the move towards digital has accelerated. Whether that's a push towards a more digital economy or looking at distribution channels consumers are all asking for more digital financial services.

Overall, Asia Pacific is seeing less of an economic impact on an individual’s life compared to the rest of the world. However, customer behaviors have, and will continue to, change. Banks need to accelerate the adoption of digital technology to compete.

New risk models and strategies need to be developed as well as processes and protocols to accompany them, in this new digital world.

Regional, national and global banks vary in their levels of diversification (e.g. investment banking, commercial, wholesale, asset and wealth management) and a push in the digital agenda doesn't necessarily mean convergence of ecosystems across countries.

Customer behaviors are changing variously by country and as a result, the banks’ reaction to those ecosystems need to be different. In the new reality there will be national variation in opportunities for banks and those represented in multiple countries need flexibility to succeed.

In a low interest rate environment, with additional cost pressures to maintain profitability, the acceleration of new technologies massively impacts business models. Banks face a significant challenge to reduce cost and develop digital and effective operating systems while at the same time seeking growth.

All banks also recognize there are significant credit issues to resolve. In Asia Pacific banks play a deeper role in capital markets as corporate bond markets are less developed.  This capital market structure is different to other major western economies and the credit risks are more concentrated in the banking sector.  Consequently the economic slowdown will have greater impact on banks than in many other economies with more diversified capital markets.  Additionally, more complexity is created by potential long-term impact of the government stimuli and how governments support individual corporate credits.

The Asia Pacific banking sector will certainly be interesting to observe over the next few years. Advancement of digital operating models and customer experiences are needed to remain competitive, drive growth and give customers the experience they need in the new reality.

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