Digital banks in Asia Pacific witnessed improving overall profitability in FY2019. Although some digital banks’ net profit in FY2020 has been affected by COVID-19 pandemic, their growth outlook remains optimistic.

These are the leading countries where new payment options are creating new opportunities and disrupting the incumbents

Retail banking sector has been the main growth driver for Indian banking sector during the past few years, as banks’ exposure to corporate banking sector has been reduced due to bad loans problems. Their retail lending has grown at a compound annual growth rate (CAGR) of 16.2% over the FY2013 to FY2018 period, making India's retail banking one of the biggest among emerging markets.

As the race towards digitalisation intensifies, the relationship between banks and “big tech” companies is increasingly marked by collaboration and synergy, not just competition

Technological disruption is reshaping the payment landscape, creating a tight mobile wallet business environment. Banks must reshape their strategies that will help enhance their competitiveness in this market.

Increased utilisation of financial technology is setting the stage for further digitisation of the Philippine’s consumer banking industry, which is slowly transitioning into a “cash-lite” economy.

Crypto markets have seen recent spikes and increased volatility as more mainstream companies and speculators continue to join the digital asset trading and investment bandwagon. The impressive rise of other cryptocurrencies beside Bitcoin has dented its market dominance.

New digital financial infrastructure, new regional free trade agreements, and decisive leadership in the emerging sustainability and green agenda bode well for international RMB adoption.

Global mobile phone users are projected to reach 4.8 billion by 2025, compared with 2.8 billion users in 2020. Businesses are tapping into this vast market as mobile wallets gain an increasing share of the payments market.

The rapid transformation of domestic and cross-border payments brings new opportunities and challenges for financial institutions.Amid shrinking payment margins, players are rethinking their business models to better monetise data insights and integrate financing options such as “buy now, pay later” (BNPL). Industry experts share their views on the impact of this changing landscape, emerging value propositions, and key technology enablers for future growth

Market development, operational challenges, and payment preferences are going to shape consumer engagement with the new instant payment platform

The German fintech’s dramatic collapse is likely to reshape the payment processing landscape as market rewards players leading innovation and value creation

Indonesia is seeing exponential growth in mobile payments spurred by a robust fintech landscape, though usage remains uneven and limited

While fintechs may take some market share away in specific niches, the partnerships, analytics, and value-add that leading banks are developing can keep head of the game. Banks that fail to keep up could lose a significant share of their SME business

Several key themes emerged amidst the many discussions by global leaders in payments, including QR code, blockchain, credit card schemes, fintech and data consolidation

MoMo grew into the largest mobile wallet provider in Vietnam by offering a better user experience and forging early partnerships with incumbent players

Chatbots are another example of relatively low-cost advancements in artificial intelligence adoption within the banking industry. These computer programmes are designed to conduct live chats to resolve common queries and carry out specific tasks; and they are proving to be popular among customers.

Traditional banks in China have begun to utilise cutting-edge technologies by collaborating with technology companies, start-ups or emerging financial institutions. While pushing their way in revolution, the vital point is to strike a balance between the digitisation of services and traditional manual banking services.

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.

With the entry of financial technology disruptors, banks in Asia Pacific are putting greater focus on technology and operational excellence to enhance customer service and the overall transaction banking experience.

The last four years have been considered the worst for Thai banks in retail banking. Despite a meagre income and loan growth, banks have been working hard to improve operating efficiencies, re-balance portfolios, and build digital platforms to support the country’s next phase in e-payments, internet financing and micro lending.

Most Asia Pacific markets have witnessed a slowdown in unsecured consumer loan growth, as regulations tighten and more alternative lending options are made available to borrowers. To stay relevant, banks are slowly digitising the business while also closely monitoring credit quality.

Taiwan’s Financial Supervisory Commission (FSC) is driving the country’s banks to move to digital platforms through its “Bank 3.0” vision as banks have an urgent need to differentiate themselves in the crowded retail banking market.

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.

Mobile payments are expected to surge in the next few years, driven by technology and analytics. However, banks are facing tough challenges from non-bank competitors offering more attractive services.

Credit card issuance and usage wane as digital and mobile payments increase in popularity.

Increasing adoption of digital payments has resulted in stiff competition within the industry. Non-bank payment players have become more aggressive, aiming to grow into full scale financial service providers.

The advent of new technologies is driving rapid upgrading of national payment systems around the world that are enabled with rich data and real-time capabilities.

The incumbent outlines its response to an increasingly fragmenting payments landscape offering to support old and new customers alike by helping them de-risk major technology investments with the provision of a gateway service.

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.

New payment options in the market are creating new opportunities, making competition fiercer, and reducing the use of cash and cheques.

Banks are integrating new technologies into their core businesses to improve their digital banking presence and speed-to-deliver

The People's Bank of China has established an integrated system to connect banks, merchants, and retailers to facilitate increased transactions, which grew 74.5% to $913.5 trillion in 2015. With growing consumer spending, financial institutions in China have to step up to meet the needs of retail clients.

Globally, banks and non-banks are testing whether QR codes to merchants and consumers can provide a simple solution for payments.

Australian banks are moving towards increased digitalisation, leveraging technological advancements to ensure seamless customer experience in providing better retail banking products and services.

Central banks worldwide increasingly recognise the benefits of wholesale central bank digital currencies (wCBDCs) in making remittances and other cross-border transactions cheaper, faster and safer. Pilot projects set in motion seek to identify opportunities and risks as well as explore the possibility of having shared infrastructure to automate cross-border payments, foreign exchange and settlements.

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

With a large portion of Africa’s population still lacking access to traditional banking services, particularly in places banks fear to tread, payment providers have stepped into the breach, gaining in popularity for offering services beyond the usual payments, money transfer and savings

An altered operating environment has led treasury to reprioritise their investment and liquidity management strategy, with cash management providers offering enhanced solutions

Transaction banks in the Middle East are expanding services in non-oil businesses with high growth potential, in line with economic diversification, and to mitigate geopolitical instability in countries in the Gulf Cooperation Council

Nubank has reported its first full-year profitability since its launch in 2014. Nearing 100 million customers, the bank has set new benchmarks in revenue

Alipay retains its top spot in this year’s ranking, while Apple Pay climbs higher with its expanded financial services ecosystem