For almost a decade now, Asia Pacific banks have been transforming themselves to better cater to their smartphone-wielding audiences—all the while mindful about minimising disruption to their current setups as well as keeping an eye on smaller competitors that are trying to invade their turf.
Indeed, consumers are showing a willingness to procure banking products from tech giants, fintechs, and digital-only banks. The widespread success of payment solutions from China’s tech giants Tencent and Alibaba and India’s Paytm reveals the scope of easy-to-use financial products marketed to consumers in Asia.
For mature markets such as Australia, initiatives such as open banking–giving customers greater control over the data banks hold about them–also are creating tremendous opportunities for non-banking players and putting power back in the hands of consumers.
The first wave of leading non-banking digital providers offered easier payment and transaction solutions. But that was just for starters. Now they are swiftly moving into other banking products and services, such as offering loans and providing investment and financial advice–traditional revenue-generators for banks.
It’s no wonder why improving the digital banking experience and achieving customer-centricity have become key mandates across banking boardrooms in the Asia Pacific region.
In a recent analysis of retail banks in APAC performed for my team, Adobe Digital Insights (ADI) found the entire industry improving its performance on digital engagement and conversions.
This focus has led to a sharp fall in average industry bounce rates, from a high of 45% in July 2017 to 27% in July 2018. This is a remarkable shift in just one year. Of note, the rate of change has been faster within the region’s digital leaders, according to ADI.
During this time, banks have been focusing on two broad initiatives in their transformation: digitising back-end processes and matching them with what digital natives expect from the front-end customer experience.
Research also shows changes in consumer behavior. For example, a recent study by McKinsey & Co. revealed that only 12% of total monthly transactions take place in bank branches in Asia’s developed nations; in emerging countries, this figure is 21%. Customers said they are more inclined to use digital platforms for everyday routine transactions and only visit branches for more complex tasks. Also of note is that customers said they are willing to shift between 35% to 40% of their total wallets to digital-only banking propositions.
Encouragingly, customers who receive tailored information from their banks said they are far more satisfied than those who do not. The McKinsey study found that customising products and information has quickly become a core competitive differentiator, with 63% of consumers who have received personalised information from their banks more likely to use additional products from them.
In addition, according to Adobe’s “2018 Digital Trends in Financial Services” report, banks are learning from their digital-only competitors and adopting global best practices to better respond to customers’ evolving needs, and increase engagement and conversion through digital channels. (CMO.com is owned by Adobe.)
Services like detailed product comparisons, branch locators, and interactive online calculators are examples of ways banks are leveraging content marketing through personalised financial content right alongside product listings, the report found. More and more banks have set up financial advisory blogs to assist customers in choosing the right product and service.
Not surprisingly, conversion rate optimization is a big focus for APAC FSIs. One way retail banks are improving in this area is by using product merchandising–creating visual assets designed specifically for listings, investment rewards, and product conversion paths.
These efforts are yielding strong results: According to the Adobe study, from July 2017 to July 2018, some of the traditional banks have improved their return visit rate by more than 80%.
On The Horizon
The banking industry can achieve long-term sustainable growth through its customer-centric mindset. By focusing on changing consumer needs and behaviours, traditional banks can innovate to disrupt the market and expand market share. They can compete successfully with smaller digital players by developing a deep understanding of their customers across all touch points. Armed with this knowledge, they are anticipating needs and providing tailored solutions. It is the way forward.