Digital banking penetration is at an all-time high, at around 97 percent for developed Asia, and 52 percent for emerging Asia according to McKinsey’s Personal Financial Services survey.
The same McKinsey survey found that consumers in the region are increasingly using banking services offered by non-banking companies and fintech firms, so much so that 40 to 50 percent of the population in developed Asia and five to 15 percent in emerging Asia are already using payment solutions offered by these companies. However, that does not mean banks have lost their relevance. The entrance of these new competitors only serves to light a fire under banking pioneers, and innovation has now become a necessity to remaining competitive.
Taking on a different approach to the competition
Instead of trying to play catch-up with new and existing competitors, banks should ask themselves: how can we create new value instead of merely contributing to the ever-growing pool of seen-before apps and services? When banks find, develop, and protect a new market space, it will be much easier to capture new demands and become disruptors in their industry.
It is important for any player in the space to have a clear understanding of current trends and situations. Time and resources need to be put in to study the volatile business landscape in order to make better-informed and more accurate business decisions. When hidden pain points of the industry are uncovered, banks can then use this information to reconstruct market boundaries and identify non-customers of the industry. Only then can they start designing a roadmap to reach the goal -- which should also aim to deliver new value to customers -- before launching the plan.
In each of the above steps, data is key. Luckily for us, it is the rise of the digital age and data is in growing abundance. By 2020, the world would have created 40 trillion gigabytes of data, with every person generating 1.7 megabytes in just one second. However, only 43 percent of ASEAN companies today are using big data to enhance their businesses, according to AOPG Insights’ report titled “The ASEAN Appetite for Data in Motion”.
Transforming big data into actionable insights
The next question banks need to ask themselves is: how can we successfully tap into this wealth of opportunities presented by big data? One of the most comprehensive ways is by using an enterprise data cloud. An enterprise data cloud empowers banks to acquire clear and actionable insights from complex data anywhere by providing:
Maximum flexibility to choose where to store their data and how to manage their infrastructure with a platform that is optimized for hybrid cloud deployments
Ability to democratize their data without risking compliance and regulatory requirements
Ability to implement many different types of use cases all in one platform and one copy of the data
Openness – this means open source to avoid vendor lock-on and an open architecture that is interoperable with their ecosystem of data management vendors
Insights derived from these analyses can then be used to decide on commercially feasible opportunities like unmet customer demands the industry has yet to recognize, or to address and develop your strategy to create new demand.
An enterprise data cloud can also help to execute the new plan by accelerating innovation as it allows workloads to quickly move across different cloud environments when needed, without having to worry about security and governance.
One organization which has found great success in adopting an enterprise data cloud is United Overseas Bank (UOB). With a network spanning more than 500 offices in 19 countries and territories globally, including subsidiaries in five ASEAN markets, UOB wanted to deepen their data analytics capabilities and use data insights to enhance the bank’s performance.
With an enterprise data cloud, the Singaporean bank can now offer its staff self-service analytics and machine learning-driven insights. This enables it to gain a better understanding of its customers’ lifestyle preferences and empowers it to deliver personalized offers and recommendations, which ultimately helps raise conversion rates. The move also allows UOB’s corporate relationship managers to better understand its global client networks and promptly identify new revenue opportunities, while saving them the 1,000 hours they used to take to manually review documents.
Faced with stiff competition and shrinking budgets and resources, the future may seem bleak for banks that are hesitant to harness the power of data to transform their business. To counter that, banks should look at ways to disrupt their industry instead of simply competing with others. They can achieve that by using enterprise data cloud to gain insights that can help them identify, create, and protect new and uncontested markets, thereby making competition irrelevant and differentiating them from their competitors.
The writer is Vice President of Asia Pacific and Japan, Cloudera