For more than a year I’ve been working closely with several Asian-focused global banks, regional players, and virtual banks. Fundamental to my exploration into the Asian market, was my experience with the Accenture Fintech Innovation Lab, where I had the opportunity to meet over 20 banks and received support from local industry leaders to improve my market knowledge.
The fintech landscape is vastly different from Europe and the Americas. Some notable differences are:
- There is a focus on data, Ai, and ecosystems.
- They use the acronym “ABCD of digital banking”: A – AI, B – Blockchain, C – Cloud, D – Data.
- The user is at the center of a highly reliable, connected system that is able to predict needs by utilizing data to provide relevant information and offers.
- Perhaps most interesting is the fair exchange of data for better services and economical benefits between the user and financial institution.
The interconnected ecosystem
In Asia, a new breed of “ecosystem players” are focusing on the best way to digitally serve the daily needs of customers across a range of services, including meals, grocery shopping, travel, entertainment, and even medical services. Service providers who embed themselves in customers’ daily routine through an ecosystem stand to significantly increase usage of their services while offering customer convenience: a win–win proposition.
Meanwhile, in the EU or Americas, when we think about the “ecosystem”, we normally think about bringing a bunch of companies into the same platform and making some connections. For example, the ability to book a flight through your bank rewards app seems to be a massive leap. What’s currently happening in Asian markets can really be described as “next level” and what we should aspire to deliver.
An example of the two different approaches can be seen by quickly analyzing the M&A/investing strategy of Alibaba vs. Amazon.com. When Amazon buys a company such as Whole Foods, it simply applies its model of faster delivery and enrolls them into their e-commerce platform. On the other side, Alibaba will provide acquisitions with a platform to build on top allowing the creation of new services and connecting them to their main platform as the hub. In turn, enriching Alibaba’s data ecosystem.
The power of data insights
It’s incredible to see how much data banks in Asia can digest and use for meaningful interactions, from simple marketing campaigns to using it to build better products. Most surprisingly was the high level of openness of sharing data. For example, 60% of customers in emerging Asian markets are willing to share data in exchange for better services.
Zhong An, one of the largest insurers in China, which uses data from Alibaba and other insights to offer customers predictive usage-based insurance and perosnalized offers. With this deep knowledge of their customers and 3rd party data, users can submit a claim for a delayed flight and be compensated while at the airport. In addition, Zhong An has become famous for providing tailored insurance and mastering the art of cross-selling.
On the more technical side, I’m particularly amused by their agile infrastructure, speaking with a person from a well-regarded digital Chinese bank, I discovered how much has been critical to their cloud core infrastructure. This bank is able to launch new products in matters of days, their current record from ideation to live customer pilot is 9 days. A classic bank in the Americas or Europe would take months to achieve the same result. Further stipulating the importance of having a flexible architecture, as it is a true enabler of building unique customer experiences. They are also able to keep costs low as they do not need to invest in building API layers, or “frankenstacking” integrations to connect the different silos of their bank. The data is simply there for them to use.
Something very interesting was the ability of non-classic FS players to get into the banking space. In the EU or NA, we think only about Amazon, Apple, and Google as threats to banking. However, in Asia you can see Razer, a gaming company, building one of the largest payment capabilities in the ASEAN countries. These companies bring tech know-how and access to customers and data to the table, along with advanced analytics capabilities. Moreover, when they move into the financial services space, they’re able to do a technological play by building white-label platforms that can be re-used by competitors or can help spin off other businesses.
In the Asian market the mobile penetration is growing at incredible rates, a result of the large population, the addressable mobile market is huge. In China, smartphones have a 50% mobile penetration and 66% in southeast Asia. Hence, most of the banks have a mobile-first approach. However, the way they are leveraging those services is for meaningful interaction. Thanks to data and infrastructure flexibility they engage with consumers via chatbot to provide the bank teller experience, which is totally different from the EU or NA. For example, Zhong An Insurance is able to settle 70% of claims via its AI engine and chatbot providing them major operational efficiencies, at the same time giving to the customers an incredibly quick response in a difficult moment. In Asia, the major digital banks deal with customers mostly via chatbot with an estimated 80% adoption rate for day-to-day activities, saving them costly branch network and personnel. On top of a great self-service customer experience, those banks are able to disburse SMEs loans in minutes only with few clicks.
My experiences from getting to the Asian banking landscape can be summarized below. As a “Marco Polo”, any Italian reference is always welcome, the real journey begins now.
- Build a true ecosystem or an ecosystem 2.0 with a customer-centric approach
- Unlock the power of your data to deliver meaningful customer experiences
- Enable quick cycle for product release and to do not be afraid to test – time to market is crucial
- Learn from other fields, in a meaningful way, and bring some fun into the experience
- Mobile-first is not about having “cool” things with very low adoption (e.g. PFM 2% adoption rate), but really double down in personalized experiences and focus on engagement rates