Bankers are aware internet is transforming retail banking, and perhaps already fisting their hands to think something big. In Asia, this most populous continent paints the unique iridescence of digital optimism; we know upheaval of digital retail banking is taking its root in here, constantly ongoing; but China and India still seemed lag behind as if volcano is fermenting yet not ready to erupt.

According to the latest report from McKinsey, with the notable exceptions of small markets like Singapore, Hong Kong, Japan, South Korea, which will soon reach “self service” and digital savvy banking model, most Asian markets, especially China and India are still focusing on expansion of brick & mortar traditional branch network. Nevertheless internet is increasingly playing crucial role in decision making process for banking products while mobile banking usage incessantly rises.

Therefore McKinsey pinpoints three strategic choices:

1)       Integrator: incorporate multichannels of digital offerings and branch based foundation

2)       Leader: digital centric, ultra lean branch model

A case given here is Portugal’s ActivoBank which has a network of 44 branches but managing half a million customers

3)       Shaper: basically builds a disruptive and Bank 2.0 model from the group up

A reference example give here is Spain’s La Caixa’s mobile banking app shop

Also McKinsey tells a successful digital bank will require changes in below four areas:

1)       Offering: must go beyond pricing as even emerging markets customers are gradually focusing on experience rather than cheapness

2)       Channels: mobile, cloud-based and smart device technology should come together, while branch can be less transactional and more service oriented

Given example: Citibank’s new “Smart Banking” branch in Tokyo

3)       Process: seamless and lean, erasing boundaries between call center, online banking, ATM, branch etc, which require process redesign

Given example: ActivoBank “20 minutes rule”

4)       Capability: investing in IT, building on Big Data, and embracing newest digital marketing and social media

Given example: Poland’s Alior Bank’s Facebook App that ties into bank’s most popular website

After summarizing McKinsey’s key points, the only pity I felt is we are missing case example originated from Asian banks. Sure Western banks provide great prototype, but sometimes it is just hard to be applied in heavy regulated Asian financial market.

So to complement McKinsey’s study, I would use some conclusions from my presentation speech for Bancassurance Summit in Tawian regarding digital banking trends in Asia.

1)       Asian banks, especial Chinese ones, are getting very social media savvy

Best case: China’s Merchant Bank, I wrote a blog about it a while ago, check it here

2)       Mobile interaction is integral to Asian customers, considering netizens from some Asian markets often do not own a PC but definitely less expensive for them to buy a mobile phone, though NFC has relatively lower awareness at this stage in the region

Best case: South Korea’s Hana Bank is one of the best mobile banking performers and its Hana Wallet App which facilitates P2P (Peer to Peer) transaction without extra cost, without the necessity of being a Hana Bank customer

3)       The surge of e-commerce in Asia demands more secure and simple payment method for online transaction

Reference example: Standard Chartered collaborated with Mastercard to unveil Singapore’s first display payment card, which can get rid of a separate device often needed to log in online banking

4)       Digital evolution is stirring new way of financing, from e-commerce giant like Aliababa or simply “crowdfunding”, a two-way game, instead of a three-way game involving traditional banks. Their future remains uncertain as need to overcome legal and policy hurdles in Asia, but it does not mean banks should not keep a vigilent eye on any emerging trend of digital financing so as to extract useful inspirations.



By Cécilia Wu
English & Chinese Editorial Manager