Three in every five banks in Asia Pacific have yet to offer a full digital account opening process for new customers, despite a drive to go digital among a majority of financial institutions, a survey by FICO shows.
FICO surveyed 20 chief risk officers from across Asia Pacific in April 2019.
Among respondents, 28% says a key challenge to acquiring new customers online was the region’s changing regulations and 21% says this was the need to create digital know-your-customer (KYC) and anti-money laundering (AML) solutions.
“In Asia, the identification processes used for services such as e-government, banking or telecommunications evolved independently of each other, leading to a fragmented approach with inconsistent levels of security,” said Dan McConaghy, president of FICO in Asia Pacific.
“Open banking and regulations like Europe’s PSD2 are now bringing regulatory rigor to bear on the issue and forcing banks to comply to certain standards and embrace technologies that will better enable digital onboarding,” McConaghy said.
Also, FICO’s survey revealed that 79% of the banks have launched or are currently considering a separate digital banking offering to leapfrog challenges in acquiring and retaining new customers.
“Fintechs and challenger banks have disrupted the status quo in the financial services universe,” McConaghy said. “Traditional banks now find themselves needing to rethink and redesign their services, to transform themselves digitally, and meet the market.”
The survey found that 40% of respondents said digital-only banks and fintechs were the greatest competition to their business, with APAC Internet players (20%) and telcos diversifying into lending (20%) coming in equal second place.
Conversely, the greatest opportunities for digital banking for the respondents were nominated as digital payments (32%) and personal loans (24%).
APAC banks are planning to focus on investing in data science (19%) and improving their customer segmentation for products and services (19%) as their top priorities for their bank transformation.
