New players and technologies continue to drive change in the transaction banking space in Asia Pacific, causing incumbent banks to focus more on improving customer experience and reviewing existing business models.

Investments and interest in distributed ledger technology have been rising rapidly as new use cases emerge to harness its potential. The technology is nonetheless still at an early stage with many hurdles to cross, possibly five to seven years away from mainstream adoption.

With more than 70% of Southeast Asia being unbanked, fintech possesses tremendous potential to widen financial inclusion and spur economies. Advances in the industry mean more people and companies have the ability to save, borrow and transact. Yet with such a wide and sensitive remit, regulations need to keep pace with the constant innovation.

Financial institutions are starting to use APIs to create important linkages between their products and services and their customers and important third party value providers. Early movers to stand to gain mindshare of both customers and the wider application developer community.

Digitisation in the cross-border money transfer industry might leave fewer opportunities for incumbent banks and operators to grow. How they cultivate alliances and digital innovation to stay ahead of competitive will be critical moving forward.

Wide discontent with conventional banks have led to the emergence of mobile-only fintech banks. However, these challenger banks are struggling to expand their customer reach, putting doubts whether they can stand against bigger traditional banks.

Competition is forcing banks to improve the digital experience of their customers. Banks are focused on investing in mobile technologies, data analytics, security and cloud computing.

As the search for efficiency intensifies amid a slowdown in economic growth, banks continue to leverage technology to relieve cost pressures and provide increasingly complex working capital solutions that their clients demand.

The development of digital platforms that enable direct global money transfer is a nascent but fast growing business model from the remittance industry. The model does not envisage traditional banks as part of the long term plans, and competes with the largest global money operators head on.

Regulators in African countries are exploring the role of open banking in financial services. This push is reflected by the diverse opportunities that open banking can provide to financial services and end-customers.

The current disintermediation in payments and MSME lending marks the tip of the iceberg, and retail deposits may be the next battleground

North America demonstrated the highest overall strength, followed by Asia Pacific and the Middle East, with all banks in the ranking averaging decline in return on assets from 0.76% to 0.74%, and improved gross non-performing loan ratio from 1.8% to 1.65%