Asia Is Expected to Experience a Dramatic Surge in Digital Banking and Fintech Adoption, with Around 50 New Challengers

Asia might be getting ready to experience a digital banking revolution. During the next few years, the continent is expected to see over 50 new digital banks that could completely transform the financial services sector. GFT’s Christopher Ortiz claims that these developments may just be the beginning of the region’s digital transformation journey.

Asia could also experience broader adoption of blockchain or distributed ledger technology (DLT) with the launch of several private exchanges, multi-currency digital wallets and crypto-assets.

Some of the traditional banking institutions have realized that technological evolution is inevitable and are now seriously working on their digital transformation strategies. Incumbents have invested considerable resources in Cloud technology and are committed to initiatives that will lead to the end-to-end digitalization of banking processes. They’re also making improvements to user experience, which has been a focus area for many Fintechs.

However, many of these user-friendly apps have been focusing on their retail offering, while the institutional and wealth management businesses are not integrating modern tech solutions as fast as they should.

Most of the current core client base of leading wealth managers haven’t been able to take advantage of the latest Fintech solutions. It’s possible that some of these firms are underestimating the potential impact of the wealth transfer to the next generation, who might be quite digital or tech-savvy.

Some of the most established private banks in Switzerland realize that digital transformation and Fintech adoption is necessary. They’ve been undergoing major changes so that they can offer the best digital financial services which are now in high demand, especially in a post COVID world. As reported by Retail News Asia, wealth managers in Asia are now beginning to focus on their digital strategies as well, so that they can remain relevant and generate more revenue.

It’s no longer about only offering digital platforms. That may have been the initial goal 10 years back, but now companies are changing their overall business models and working on their digital-first, revenue-generating strategies. According to estimates, Cloud migration could help financial institutions lower mainframe costs by as much as 80%, however, this isn’t a short or overnight migration process, as it may take many years to complete. Analysts are now recommending that company CIOs should begin looking more seriously into their Cloud technology integration plans.

The majority of banking services will be fully digitized by 2025, according to several reports. Multi-currency digital wallets with several different central bank digital currencies (CBDCs) and stablecoins (virtual currencies pegged 1-to-1 with major currencies like the USD or GBP or other real-world assets) are expected to begin replacing physical currency.

Other emerging Fintech trends like tokenization of investment assets and real estate are also developing quickly. Meanwhile, cross-border transfers are expected to be carried out via DLT-powered solutions (a lot more frequently than international payments being performed today).

In the US, P2P digital payments like Chase QuickPay with Zelle are increasingly being used during COVID, according to a new survey. US-based Fintech challengers like Chime are offering new types of financial services and incentives in order to acquire more customers.

In Asia, Malaysia’s reserve bank recently issued a new policy document for virtual banks, up to five licenses are anticipated.

Fintech analysts claim that challenger banks are disrupting the banking sector in a “big way” by improving customer experience.

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