APAC Banks Dominate Digital Banking
APAC is a region of contrasts, and legacy systems are still a major drag
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APAC is remarkable with mobile as the primary digital banking channel used by 38% of customers compared to 29% and 28% in the EU and the US.
APAC is the undisputed leading region in mobile-first banking, which makes sense given its global lead in real-time payments (RTP). Once money goes RTP, there’s no going back, and banks have to become mobile players or perish.
That’s why APAC is home to 40% of the world’s 250 digital banks! Digital bank licenses are seen as a priority by regulators throughout the region.
Regulators recognize that there is pent-up demand for digital banks, driven by high GDP growth and the large number of unbanked or underbanked residents.
Digital banking and payments both made major contributions to inclusion, providing access where incumbent banks were unable or unwilling to offer services.
The problem is that, despite these positives, 7 out of 10 APAC banks are modernizing legacy systems in a desperate attempt to keep up with the digital expectations of a youthful customer base that demands more.
Never forget that the APAC region is one of contrasts. Don’t for one second mistake APAC banks’ successful digital banking with gleaming new tech stacks! When working for IBM, focusing on banks in the region, this became very clear!
APAC banks face the same challenges in core system modernization as those in the West. The difference is that mobile banking was a far bigger priority for them, given that it was a “make it or break it” proposition for them.
The question answered in this report is where APAC banks should allocate their transformation funds. Let’s take a look:
👉 What’s Driving APAC Bank Transformation:
🔹 Modernise core technology through MACH architectures
Banks must plan a roadmap to transition to a lean, agile, next-gen core system capable of supporting future business requirements, growth, and transaction volumes. They should accelerate the shift to microservices, API-first, cloud-native, and headless (MACH) architectures to foster agility and innovation.
🔹 Adopt an API-first approach for open finance and ecosystem integration
Embedded finance and platform-driven ecosystems will be the cornerstones of the next phase of banking, enabling integrated services and personalised experiences.
🔹 Scale enterprise-wide AI, data-driven decision-making and hyper-automation
Banks should transition from AI pilots to an enterprise-wide AI strategy, driving intelligent decision-making across processes. This requires an integrated data foundation, supported by scalable infrastructures such as data lakes.
🔹 Build embedded resilience with zero-trust security and active-active architectures
Embed complete resilience into every layer of banking infrastructure to ensure operational continuity while managing risks and regulatory compliance. A Zero Trust security model implemented across multi-layered systems ensures continuous monitoring and authentication
🔹 Prepare for emerging technologies like quantum, DeFi and immersive banking
To stay at the forefront, banks must proactively plan for emerging technologies. (Who could argue that?)
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