When it comes to innovation in digital finance, there is no rest for the weary. This is especially true in Asia, where the competition to capture mindshare among digital banking clients has remained fierce, with incumbent banks enhancing their digital platforms as more fintech challengers enter the market.
Growth aspirations in Asia come as no surprise given the region’s attractive young demographics and economic upside. According to the International Monetary Fund, Asia-Pacific’s GDP was expected to expand by 4.6% in 2023 after growing 3.8% in the previous year, with China and India expected to contribute around half of the global growth. Key to capitalizing on the Asian opportunity is having the resources to deploy and engage with clients in addressing their pain points, whether it be cross-border payments or fulfilling their wealth management needs.
Fintech start-ups continued to struggle amid the tough macroeconomic environment with the higher-for-longer interest rate environment hindering funding prospects. In 2023 fintech funding globally dropped by 48% to US$51.2 billion, compared with the previous year, data from industry body Innovate Finance show. In Southeast Asia, funding in the sector fell 74% to US$229 million in Q3 2023, from US$887 million in the same period a year earlier, according to data intelligence platform Tracxn.
The funding slump has encouraged several fintech firms to collaborate with incumbent banks to support their business growth. Last year, for example, Standard Chartered cemented its partnership with digital payment platform Tazapay, while Citi became the first digital custodian participant in BondbloX Bond Exchange, the world’s first fractional bond exchange.
This was the dynamic market backdrop against which the board of editors of The Asset conducted their annual review of the best digital financial projects, processes, and institutions in the region as part of the Triple A Digital Awards 2024.
The value of data
Several notable trends were observed by the team over the review period, including the heightened focus on financial inclusion, which has positive benefits for several economies in the region.
One of the advantages of digital finance is that it enhances entry for financial inclusion. People who live in remote areas or lack formal identification documents can use their mobile phones to open accounts, make payments, transfer money, and save for the future. Digital finance also lowers the cost of transactions and reduces the risks of fraud, theft, and corruption. It enables people to access a wider range of financial services, such as credit, insurance, and investment, that can help them cope with financial shocks, build assets, and harness opportunities.
Unserved segments of society are empowered to participate in the digital economy. By providing access to financial information and education, digital finance helps people improve their financial literacy and decision-making.
Data analytics has continued to be an important focus for financial firms in the region. The rapid adoption of artificial intelligence, driven by popular modules such as ChatGPT, has further enabled firms to leverage data to help them better understand the habits and needs of their client base. Moreover, consolidation of information into a single data lake has helped optimize business operations, allowing financial firms to monitor performance and detect anomalies.
Over the course of the review period, the board of editors of The Asset spoke with companies that are not only using AI for efficient data analysis but also are open to sharing information and collaborating with partners to offer value-added services to their customer base. This includes partnering with BNPL (buy now, pay later) players to enhance the client’s shopping experience and with alternative data-scoring providers to facilitate lending services.
Customer is king
While many fintech start-ups struggled during the review period, challenger banks with strong financial backing in several jurisdictions across Asia have started to make inroads into the banking sector, with some of these digital players rolling out investment services to increase their fee revenues. This year is expected to be a milestone for virtual banks in Hong Kong, with several market leaders expected to break even. Other markets in the region are perking up. Malaysia has kicked off its virtual banking journey with AEON Bank becoming the country’s first Islamic digital bank.
The regulatory environment for digital finance in the region remains bright, with the financial hubs of Hong Kong and Singapore leading the charge. Hong Kong is making strides in positioning itself as a virtual asset hub, launching late last year a public consultation to gather views on the regulation of stablecoin issuers in the city. The Monetary Authority of Singapore, meanwhile, is ramping up instant payment linkages with neighbouring jurisdictions, the latest being PayNow’s tie-in with Malaysia’s DuitNow.
In the face of all these developments, one thread running throughout the digital finance story in Asia is that client experience remains paramount. From revamping mobile app design to increasing the bandwidth capacity for low-value, high-volume transactions, the best-performing banks highly value feedback from their client base and often use it to craft and improve their products and services.
The quest for quality service is a never-ending endeavour, and it is in this exciting environment that we are pleased to reveal the winners of The Asset Triple A Digital Awards 2024!
To see the full list of winning institutions of The Asset Triple A Digital Awards 2024 please click here.
To view the best digital procedures and initiatives across the region please click here.
For the list of stellar digital projects please click here.
For more information about attending the awards gala please reach out to us at [email protected]