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Datafiles Jun 07

Indian banks still dominate the list of the top 10 banks with the highest nonperforming loan (NPL)ratio among the 500 largest banks in Asia Pacific, despite the improved asset quality. In addition, the list also includes two banks from Bangladesh and one each from China, Japan, and Pakistan.

As global banks move towards ISO 20022 readiness by the end of 2022, it is important to understand the impact that the adoption of the new standard will have on the banking and payment industries and what challenges and opportunities they will face as they modernise international settlement.

With 41% of China's $45 trillion in banking assets and 27% of its $30 trillion in loans exposed to the property market, authorities are likely to initiate an orderly distribution of distressed assets of real estate developers such as Evergrande that failed to meet the “three red lines” limit on debt liabilities. Leveraged expansion sabotaged Evergrande’s sustainability while profit from property development shrunk for three consecutive years.

Despite weak growth in the banking industry last year, UOB managed to grow its SME deposits significantly and reported the lowest CIR among its peers. It was also the first bank to announce $2.2 billion in relief assistance in February 2020, ahead of any government support measures. It was the leading provider in government’s assistance schemes to SMEs with the largest market share.

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

At the International Heads of Retail Finance Virtual Meeting on 28 August 2020, leaders from over 22 institutions in Asia Pacific, the Middle East and Africa, discussed key trends and issues impacting the industry. The rise of digital only banks, integrating lifestyle and finance through digital platforms, and improving customer experience were at the forefront of the dialogue.

Africa’s payments services architecture is rapidly evolving in response to changing technology and customer expectation. While non-banks such as mobile network operators (MNOs) are the key drivers of disruptive payments technologies in Africa, traditional banks are also creatively developing and integrating disruptive technologies to address the continent’s payment challenges and most importantly meet customer expectations.

Pressure on margins from increased competition and compliance requirements is forcing the industry to recalibrate its trade finance offerings. While institutions know that trade digitalisation is important for the future of the business, success relies heavily on deeper coordination and collaboration between the myriad participants in the trade finance ecosystem and technology enablers

Globally, commercial banks have demonstrated that they are not the underdogs when it comes to growing the number of digital users. They compete well in most markets under review against the best neo-banks and digital financial institutions (FIs). However, the dramatic rise in digital user base of neo-banks in recent months may erode this lead.

Datafiles Oct 26

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.

President Xi Jinping’s pet project – “The Belt and Road Initiative” – aims to link Asia, Europe and Africa by rewriting global trade routes. With such a big project, China’s accompanying motivations are also enormous. Be it on an economic, political or strategic-level, the project is sold almost as a catch-all solution.

In a matter of weeks US President Donald Trump’s administration will lay bare how they wish to regulate banks and markets. After months of scathing remarks about the Dodd-Frank Act, any clarity on exactly how Trump wishes to overhaul the system is welcomed by both detractors and supporters. But how much change should be expected?

In retail banks around the world, robots are making their way into the back office and reducing costs by as much as 80% while increasing accuracy by up to 100%. Along with bringing lower costs and greater efficiency, they’re also creating the complexity of redeploying people who have performed routine tasks for many years.

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.

Customised financial advice had, for many years, been available almost exclusively to private banking clients or to the mass affluent. However, robo-advisors are offering the same advice to many more consumers. Customers in Asia, from the man on the street to the ultra-wealthy, seem ready to embrace these new robo-advisors.

In the United Arab Emirates, banks have become more competitive in retaining their customers as a result of new regulations, while the rest are developing their individual strengths gained from their own customer experiences. The experiences of National Bank of Abu Dhabi and Abu Dhabi Commercial Bank illustrate how banks have adapted their strategies to new developments in the banking sector.

It is clear that China’s goal of becoming the world’s largest economy by 2020 and the internationalisation of the RMB are two initiatives that are symbiotic in nature. With the recent IMF decision to include the currency in the SDR currency basket, what does the future hold for the RMB?

Asia Pacific markets have seen a shift towards digital banking during the past few years. Nowadays, banks are placing more effort on mobile banking, such as improving security and convenience of their applications and enhance the user experience to drive engagement in the channel.