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Rewriting the Rules for Tomorrow’s Financial Services in ASEAN

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By Michael Connell, Head of Architecture and Industry Strategy, ASEAN & GC, Oracle

The financial services sector in ASEAN today is highly competitive and is rapidly growing. Within ten years, this sector had rolled in more than US$20 billion to the economies of Singapore, Thailand, Indonesia, and the Philippines1. With a population of 570 million and booming, the financial services industry in ASEAN holds an enormous potential that makes it a promising and healthy sector to watch. 

The introduction of financial technology (FinTech) has created a diverse and highly fragmented landscape in ASEAN. As competition with the emergence of new – and non-bank – players, lines are being blurred between traditional banks and digital-only banks, and new ecosystems and partnerships are formed to disrupt the industry at scale.

Disruption in a fragmented and competitive landscape

As a region that is made up of 10 member countries, ASEAN’s state of financial services is diverse with varying levels of maturity. Despite the fact that 70 percent of the adult population has limited access to financial services (also known as “unbanked”), the increase in internet and mobile penetration, as well as change in consumer behaviors have led to greater acceptance towards digital services such as e-commerce and digital banking. There will be a new generation of people that will never step foot into a bank as these new digital services proliferate. 

Moreover, regulatory policies in ASEAN are becoming more open to supporting the development of digital financial services. For instance, the Monetary Authority of Singapore's regulatory sandbox allows businesses to test innovations in a controlled environment under regulators' supervision; in the Philippines, its central bank has an open-door policy with FinTech companies and encourages them to approach the regulator to discuss new products and services.

As a result, the momentum to move towards digital banking is strong as central banks, and governing regulators look to enhance the competitiveness of the finance industry in ASEAN. This is an extension of the ASEAN Banking Integration Framework (ABIF) that started in December 2014. This sets the agendas of traditional banks and FinTech start-ups for the financial services roadmap in the region and continues building on a solid banking foundation for the region.

Winning heart-share in the digital age 

As the financial services industry in ASEAN grows and evolves rapidly, technology is enabling businesses to expand their offerings, and it is also blurring the boundaries between traditional banks and FinTechs. In Singapore, 73 percent of financial services businesses believe that part of their business is at risk of being lost to standalone FinTech companies2.

Be it traditional finance, technology firms, e-commerce, or telecom companies, everyone is battling to capture customer mindshare and earn their trust to be ahead of the game. This needs to increase business value by expanding service offerings and meeting the changing consumer demands becomes even more critical today as we go through another economic hurdle.  

The ongoing pandemic has seen people coming together to support one another through this challenging time. From a national level, governments such as those in Singapore, are passing down incentives to organizations, hoping that these get passed through to citizens. From a corporate level, businesses are doing all they can to ensure business continuity – paying attention to not only profitability but also its people. The financial services sector is no exception. 

For businesses to win the financial services race in ASEAN, some levels of empathy may be introduced in the financial industry – potentially setting a new success metric. Business models are likely to be tweaked to prioritize people to win the heart-share (and trust) of its audience instead of market share.

Tomorrow’s financial institutions

We’ve established that the financial services landscape in ASEAN has matured a lot. With that, business transformations are necessary for existing players to remain relevant and compete with new players in the scene, such as digital-only banks and FinTechs. As this digital banking race intensifies, here are some of the key differences in risks and opportunities that both players can take.

With the challenges and opportunities laid out between traditional and digital-only banks, one thing is for sure, and that is technology will be at the forefront of tomorrow’s financial services.

Learn to See Data in New Ways 

In this digital economy, data is the real asset. Within the financial services sector, the maximum potential of data has yet to be harnessed. As such, players within this field should turn to data to win the trust of its audience.  

To do that, banks need to be transparent about data usage and assure their audience that their information is secure. For more than 40 years, Oracle has been helping companies, governments, and organizations gather, organize, manage, use, and secure their data to improve their business, and the world. In this aspect, we are in a more than qualified position to help banks explore new ways of securing and using data in this new banking era.

[1] https://theaseanpost.com/article/rise-aseans-financial-services
[2] Blurred lines: How FinTech is shaping Financial services


Join Michael Araneta, Associate Vice President, IDC Financial Insights, Steve Shipley, Adjunct CIO, IDC Financial Insights and Michael Connell, Head of Cloud Enterprise Architects, ASEAN Head of Architecture and Industry Strategy, ASEAN & GC at Oracle as they discuss the new market dynamics in banking: upheavals in the industry, the different approaches, mindsets and value propositions of challenger banks versus traditional banks in their strategies for success.

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