Digital banks need data-driven capabilities to grow

Photo by Artem Beliaikin

Digital banks need to look beyond the digital customer experience to use data in a unified way, focusing on addressing risk and regulation barriers to growth, new research from Oracle and PwC reveals.

The study examined the evolving landscape for both digital and traditional banks in three key Asian markets — Hong Kong, Singapore and Malaysia.

Results suggest that banks should focus on reaching underserved segments, such as small and medium-sized enterprises (SMEs), harnessing valuable data insights to improve SME lending experiences.

Also, progressive regulation like Open Banking and issuance of virtual banking licenses will be a key driver for a new wave of digital-only banks.

Further, Building trust through safe, secure practices for regulatory compliance will be essential.

Venky Srinivasan, group VP for JAPAC & Middle East at Oracle Financial Services, said that traditional banks are facing increasing competition in service innovation, which reinforces the need to redesign conventional banking models.

“Virtual banks may be nimble compared to the incumbents,” he said. “Still, they face three immediate challenges — they need to demonstrate to regulators their ability to comply, they need to monetise data, and they need to turn compliance into a competitive advantage.”

Digital banking propositions globally have done a great job of the on-boarding process. They now must prove themselves across the customer lifecycle with complex products such as SME banking, mortgages, investments and finance management – where satisfaction drops significantly.

“The landscape has changed so rapidly that traditional banks are working at breakneck speeds to determine the best approach to remaining competitive amidst the advent of new entrants,” said Harjeet Baura, APAC digital banking leader at PwC.

“There is immense opportunity for both traditional and new digital banks by harnessing the right technology and use of data effectively to deepen their offerings and their share of the customer wallet,” he said.

The report spotlights several areas where banks can focus on delivering a better experience for customers across the financial lifecycle, including the underserved segment of SMEs, the use of data to turn compliance into a competitive advantage, and fighting financial crime.