Research by - Rob Jameson APAC Content Lead at Capco, Hayley Haupt Partner and APAC Head of Strategy & Consulting at Capco, Paul Sommerin Partner and APAC Head of Digital & Technology at Capco Danny Wan Executive Director, and Head of Strategy at Capco - Hong Kong
Consumer attitudes to banking services in Asia-Pacific are evolving rapidly. Here we assess the cross-regional themes that emerged from our poll of nearly 5,000 Asia-Pacific consumers while also highlighting the differences between our individual markets: Hong Kong, Greater Bay Area (ex-Hong Kong), and Singapore.
*SIX IN TEN RESPONDENTS SAY THEY WOULD TRUST ‘BIG TECH’ MORE THAN A BANK TO DELIVER BANKING SERVICES*
Eight in ten say they want a better online experience from their banking services provider. Across the Asia-Pacific region, consumer attitudes towards banking services are increasingly influenced by factors outside of local banking markets. For example, the super app mobile portals that consumers have adopted to help organize key aspects of their daily lives (from messaging friends to food deliveries, ride hailing and travel) are now setting a high bar for ease and convenience across all types of digital customer journeys – including banking services.
*Mobile access is king*
Across our five surveyed markets, three-quarters of all respondents now access banking services using mobile phone apps. For many consumers, their bank is their mobile banking app. The spectrum of this mobile dominance ranges from 66% of respondents in China’s Greater Bay Area (ex-Hong Kong) who use mobile apps for banking service access to 85% in Bangkok and the surrounding region. Not that the wider Greater Bay Area is behind the curve when it comes to using technology – 22% of our GBA (ex HK) respondents say they now use wearables to access banking services, compared to only 6% in Singapore.
Confidence and trust are everything in digital banking (not least because these are accepted strengths of traditional providers) and here the message from Asia-Pacific consumers is at first reassuring – but with a sting in the tail. In our cross-region sample, most consumers – about eight in ten – said their confidence in using mobile and digital banking services has grown over the last two years. That vote of confidence in a digital future was most pronounced in Thailand (88%) but weakest in Hong Kong (68%). The twist is that six in ten consumers across our five markets say they would trust a ‘Big Tech’ firm more than they would a bank to fulfill banking services. The vote in favor of ‘Big Tech’ was most marked in China’s Greater Bay Area (ex-Hong Kong) – birthplace of the super app – where 77% of consumers asserted, they would trust ‘Big Tech’ more than a bank. In contrast, that figure falls to 42% in Singapore.
Personalization and sharing
The strategic threat posed by fintech, ‘Big Tech’ and the new generation of virtual/digital only banks means it is vital that established banking service providers can identify and deliver precisely what consumers want. However, it is not just those incumbents that need to pay attention. In Hong Kong, which began to license virtual banks relatively early, from March 2019, many of the new entrants are also having to work hard (often in the shape of attractive introductory offers/inducements) to make an impact and attract customers. Digital offerings that can truly differentiate a banking service are therefore going to be critical. Across most of the five Asia- Pacific markets that we surveyed, a large majority of consumers said they would be attracted by an app that gave them better visibility of all their financial products and provided personalized insights. For example, in Singapore, 20% found this ‘extremely attractive’, an additional 36% ‘very attractive’, and 38% ‘somewhat attractive’.
*SEVEN OUT OF TEN CONSUMERS WA N T A B ETTER O N L I N E EXPERIENCE*
Consumer confidence in digital banking has risen strongly over the last two years, but most consumers would trust ‘Big Tech’ to fulfill their banking services as much as a bank. Hong Kong’s relatively mature banking market – dominated by a few traditional banks and with robust cross-selling rates – has been fast-forwarded to the future by the pandemic-fueled rise of remote banking and the advent, since 2019 of eight virtual banks. Consumers at first welcomed the new banks, with more than 1.2 million accounts opened by end 2021 as promotional offers helped to fuel the enthusiasm.
More recently, openings have plateaued and digital transformation at many incumbent institutions has slowed under the twin pressures of a stuttering economy and a dearth of technology talent. However, with 70% of our respondents currently accessing banking services using mobile apps and many also using laptops and wearables, Capco’s survey showed that there is significant consumer appetite for further transforming banking services – in ways that incumbent banks will welcome, and in ways they may not.
• Hong Kong consumers are gaining confidence in digital banking but say they are open to switching and would trust strategic bank competitors, such as ‘Big Tech’, to fulfill their banking services.
• They are demanding better online services and more visibility across products and are prepared to share information to fuel more personalized products – and many want providers to adopt a sustainable stance.
• Financial services providers need to expand the aperture through which they view the modern Hong Kong consumer. Pricing is key and consumers are looking for the right deal, but their demands are widening away from cost and value in a narrow sense. They are looking for financial services providers that can help them save money while also helping them view and understand their finances in a more holistic and personalized way.
• With trust no longer a bank monopoly, it is urgent that Hong Kong’s banks improve the customer experience and answer consumer demands for better digital platforms that can support more holistic views and real-time personalized digital services and advisory support – tailored around the lives of individuals and enabled by AI and end-to-end straight-through processing.
“Our survey reveals that ease and convenience and a single gateway to multiple services are a fundamental ask of bank customers. However, instead of a simple aggregator, they are expecting banks to offer personalized insights and advice, e.g., money-saving opportunities. The metaverse is just emerging as a future channel for digital banking services. Banks need a forward-thinking, executable strategy on digital omnichannel that includes apps, metaverse, product personalization, AI advisory, and the right balance of data sharing/privacy” says-
*Paul Sommerin, Partner, and APAC Head of Digital & Technology.*
*GREATER BAY AREA (EX- HONG KONG)*
*NINE OUT OF TEN RESPONDENTS WOULD TRUST ‘BIG TECH’ AS MUCH OR MORE THAN A BANK TO FULFILL BANKING SERVICES*
Most respondents (84%) say they are more confident using mobile and digital banking
services today than two years ago. The eleven cities of the Greater Bay Area (GBA) form a fast-growing, capital-rich regional economy that will play a central role in shaping China’s future – and that already sits at the frontier of developments in retail banking services.
Hong Kong is a leading city within the GBA and – as a business gateway and center of financial expertise – will be a key contributor to the GBA’s future success. However, in this commentary, we will be looking at data drawn from the GBA excluding Hong Kong to highlight the differences and similarities in consumer attitudes between Asia-Pacific’s traditional financial capital and the wider GBA region.
The GBA (ex HK) area itself and its public services are highly digitally connected – Shenzhen, for example, pioneered the ‘smart city’ concept and hosts vibrant tech/fintech sectors as well as serving as the headquarters for internet and technology giant Tencent and retail financial services group Ping An.
Sustainability and the metaverse
Sustainability is a key issue for GBA (ex HK) respondents, reflecting wider concerns in this market not just about global warming but also local issues, such as water and air quality. Around 30% of respondents told us they now view a banking service’s sustainability and ESG credentials as ‘extremely important’, with a further 53% attaching at least some degree of importance to it.
Though nascent, the metaverse has the potential to be an important new channel for payments and other banking services. Despite its currently nebulous nature, 78% of respondents said they were at least open to thinking about consuming banking services via the metaverse’s virtual and augmented realities, with 21% responding, ‘Yes, definitely!’. Overall, our GBA (ex HK) respondents were open-minded about how, and where, banking services are delivered.
“Our survey highlights further opportunities to improve and refine customer experiences around banking services to drive adoption in the digital-savvy Greater Bay Area (ex- Hong Kong) market. Consumers are demanding transparency and offerings that are relevant to their lifestyle choices and ambitions and are willing to share social media data to unlock personalization. They also want a more in the- round view of their finances, while taking advantage of products and services from multiple providers. Banks should explore points of differentiation and have a clearer understanding of their customers’ behaviors and lifestyle values. This will ensure they can innovate effectively to deliver a more frictionless financial services experience via digital channels, and drive renewed levels of engagement and trust, says”-Danny Wan, Executive Director and Head of Strategy, Hong Kong
*EIGHT OUT OF TEN CONSUMERS NOW ACCESS BANKING SERVICE BY MOBILE APP*
Mobile dominance is leading to demands for better apps, easier navigation, and face ID and fingerprint login. Singapore, arguably now Asia’s largest financial center, has for years put its citizens on the fast track to a digitally-enabled lifestyle – the city’s early adoption of a digital identity solution, Singpass, gives daily access to a myriad of government and business services.
While digital banking licenses only began to be awarded in 2020, lagging rival financial center Hong Kong, Singapore has a thriving fintech sector and a highly competitive e-wallet market. In August 2022, the firm behind the regionally important Grab super app, headquartered in Singapore, began launching the city state’s first retail digital bank, GXS (partnering with Singapore Telecommunications), with the digital Trust Bank (Standard Chartered and FairPrice Group) following on in September.
For the moment, the wider retail banking market remains concentrated, with four long-established banks taking threequarters of the market. Traditional banks have been tending to cut branch staff and invest in online offerings, but satisfaction with the ease of digital banking varies across institutions and, with some exceptions, there are areas for improvement. Such improvements will become more pressing as digital competition increases, and the attitude of Singapore’s consumers – digital savvy and bargain conscious, but also risk averse – begins to determine the rate of change.
Nearly one in four (23%) of Singaporeans think their banking service’s sustainability credentials are extremely important, a rate that does not vary much by age, with a further 43% attaching a more limited degree of importance. A little under half of our sample would either consider buying (31%) or were definite that they would buy (16%) banking services over the metaverse. This rises to well over half (61%) for the 18-24 age group, who are clearly intrigued by the idea and are perhaps more exposed to the metaverse concept through gaming activities. That’s encouraging news for the leading Singapore banks that are now trying to gain first-mover advantages through experimenting in creating metaverse experiences. One in five (21%) Singaporeans in our survey said they would find it ‘very interesting’ if their bank offered the ability to trade cryptocurrency, with just over half showing at least some degree of interest. However, regulators in Singapore are worried that crypto trading is too risky to be suitable for the public and have recently published a consultation on reducing potential consumer harm, e.g., by disallowing the use of credit facilities for cryptocurrency trading.
“The nascent yet burgeoning digital banking landscape has seen a shift in consumer trust patterns toward ‘Big Tech’ firms, which could lead to an interesting jostle for market position as Asia’s largest financial center continues to evolve. Our survey reveals that consumers are in search of a differentiated digital banking experience with enhanced personalized insights. The ask for an aggregated view of financial information means banks need to think about how they can best embed education about products and offerings as part of the customer digital journey”, says- Hayley Haupt, Partner and APAC, Head of Strategy & Consulting
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