How are Asian-Pacific banks responding to the post-COVID financial world?

Even before the pandemic, APAC banks were facing pressure to digitally transform

By | 3 minute read | December 4, 2020

Banks are reconsidering their digital strategies like never before.

As the financial world descends on Singapore—or at least logs-in there—for the 2020 Fintech Festival, Industrious reached out to Randy Walker, global managing director for the Financial Services sector at IBM. With the banking industry facing so much change as a result of the COVID-19 era, we wanted his perspective on how Asian-Pacific banks are responding and transforming.

The COVID-19 pandemic continues to have a significant impact on the health and economic well-being of the world’s population, the viability of many industries and our entire financial system. Our lives have changed, in every country and in every way, amidst ongoing uncertainty. CEOs and board rooms around the world are grappling with finding the best way forward in this new reality.

Some banks in the Asian-Pacific arena are already finding exciting new ways through, and they’re not alone. Their efforts offer a useful guide for others undergoing digital transformation—pandemic or no.

According to IBM’s COVID-19 future of business study, more than 59% of the organizations that participated said that the pandemic accelerated digital transformation, and more than 75% of responding executives indicated they expect changed customer behavior to continue after COVID-19.

Following the initial lockdown of many countries in the Asia-Pacific region, most firms found their profitability and processes under unprecedented stress. Adding to this is the increasingly viable competition from fintechs; the significant dip in cash transactions and move towards contactless payments has been especially impactful. Given their ability to move nimbly, fintechs offer a new option for the financial services industry to help facilitate the needed technology demands of today’s consumer.

The surge in contactless payments during the pandemic has been a particular boon to fintechs.

As 2020 comes to a close, financial institutions are working hard to identify gaps that hurt performance and scale secure solutions quickly—all while managing cost and risk. This rapid digitization of financial services calls for banks to be thoughtful about every aspect of their businesses, such as blockchain technologies and innovative payments solutions.

Here are some of the best examples we’ve seen of agile innovation in the Asia Pacific:

Bank of Thailand
Bank of Thailand, the nation’s central bank, launched the world’s first blockchain-based platform for government savings bonds issuing a total of USD 1.6 billion within two weeks. Leveraging IBM blockchain technology on the highly secured IBM Cloud, the platform allows investors to benefit from speedy bond issuance, reducing a process that previously took 15 days down to two days.

In the past, the sale of government savings bonds was a complex, multiparty, time-consuming process that relied on a non-real-time system, with duplicated validation steps and manual reconciliation prone to data errors.

Bank of Iwate
Bank of Iwate in Japan announced that is experimenting with IBM Blockchain for electronic contract verification for its My Number program. My Number is Japan’s virtual ID card, which includes a username, address, date of birth, sex, and a number assigned to the individual. The primary goal of My Number is to simplify administrative procedures by assigning everyone a distinct number to be used for social security, tax records and disaster response in Japan.

Bank of Iwate will combine the My Number card with IBM blockchain technology to sign electronic contracts, initially experimenting with verifying corporate contracts. IBM blockchain technology was chosen due to its secure, immutable nature.

State Bank of India
State Bank of India, in partnership with IBM and the watchmaker Titan, released Titan Pay, the country’s first contactless payments wristwatch. While not a direct response to COVID-19, Titan Pay is nevertheless a proof-of-concept of how contactless payments can help slow the spread of viruses.

Available exclusively to State Bank of India customers, Titan Pay works by being tapped against point-of-sale machines, eliminating the need to exchange cash or swipe debit cards. It’s less expensive than most fully functioning smartwatches—starting at the US equivalent of $40—making it potentially much more accessible.

IBM was involved in every aspect of Titan Pay, from initial ideation, to hardware, software, application development and ongoing maintenance.

Forward-looking financial institutions in the Asia-Pacific region and around the world can seize this opportunity to accelerate their migration to the new normal of financial services using a hybrid cloud approach.

Banks are now recognizing that a hybrid cloud infrastructure can help them pursue sweeping modernization initiatives—including operational and customer-facing programs supported by critical technologies such as AI and blockchain. At the same time, they must still be able to address the stringent requirements of regulatory compliance, security and resiliency.

Innovators such as Bank of America, BNP Paribas and MUFG are using IBM’s Financial Services Cloud, are demonstrating it can be done.

Long after the threat has passed, the pandemic will have lasting consequences on business and society. The innovation demonstrated by Asian-Pacific banks in recent months provides insights regarding best practices for financial institutions in other geographic regions as they continue to evolve in a COVID-19 world.