2020 will be etched into the history of humanity and will be discussed for decades, possibly centuries to come. Despite the phenomenal progress we have made in science and technology, the world struggled and is still struggling to deal with the challenges posed by the COVID-19 pandemic. Relatively, the Asia Pacific region has fared much better than its global counterparts. Many countries, such as Singapore, New Zealand, and Taiwan, are being looked upon as global role models for the way they have responded to the situation. The other encouraging development is the accelerated transformation of businesses facilitated by the adoption of digital technologies.

We at F5 are fortunate to have a front-row seat to the enablement of digital transformation in companies. In the upcoming series of blogs, I endeavour some perspectives on the trends shaping some of the key customer industries we serve. Innovation happens through the convergence of ideas and industries, and I hope these blogs trigger conversations and stimulate ideas and inspiration for us to build better businesses.

Financial services industry – our single biggest global customer segment.

Technology is fast blurring the line amongst industry participants, and the stage is set for an explosive growth in the decade to come. Despite its long existence, various factors, including conservative regulation and the high cost of service, have limited the industry from being an all-inclusive one. Over 70% of South East Asia citizens and 58% in South Asia are yet unbanked. The attach rates of financial services are still low with very poor per capita consumption of banking services. Only 33% of SMEs have a line of credit. Technological innovation fosters an opportunity to serve these unaddressed segments. It will also allow for the curation of new and innovative products that can enhance the overall quality of life.

Three distinct trends have accelerated in 2020:

• The intensity of competition is at the highest ebb, and this will increase manifold in the coming years. This is being fuelled largely by the entry of Neobanks (digital-only banks). There are now over 65 new Neobanks operating across the Asia Pacific. Through their innovative approaches, they are improving the accessibility and consumption of financial services. Greater China, Australia, and South Korea have made the most progress on this front. The market is livening up in India and ASEAN, with new licensees slated to launch services in 2021.
• Open Banking gains traction. Regulators across the region, especially in Singapore, Hong Kong, and Australia, have been driving policy initiatives to foster greater collaboration between Fintechs and established banks. The Consumer Data Right (CDR) law, which gives consumers greater access and control over their data in Australia, is noteworthy. It will first apply to the banking sector, followed by the energy and telecommunications sector. Integrating customer insights across different dimensions will pave the way to new convergence-led offerings across industries.
• The pandemic has accelerated the shift to mobile banking. The pressure is on for providers to innovate processes that traditionally required in-person visits. End to end consumer journeys can now be fulfilled on a handheld mobile device. This can significantly improve access in remote areas where banking services have not been traditionally available due to a marked absence of physical branches.

The single biggest implication of these three trends is the focus that is being placed on customer experience. This has become the number one priority for CEOs and boards. The emphasis has shifted from just products and services to the orchestration of integrated customer experiences. The leading players are developing ecosystems to help customers achieve outcomes instead of simply selling their products and services. For example, DBS Bank in Singapore has a marketplace for consumers to plan their home or car purchase, book flights for travel, or switch their utility providers. They view banking as just a means for customers to achieve their life goals.

Looking ahead into 2021, my discussions with many of our banking customers highlight several opportunities for innovation and growth.

1. Cloud: The adoption of cloud is still limited in the banking industry. This is changing rapidly as regulators and banks are coming around to accept this irreversible trend. It is a critical enabler to help accelerate the pace of innovation.
2. We will see closer integration of banking and social media applications with the ability to view balances and even make primary transactions over our social channels. By the end of the decade, this will have become the norm.
3. The undeniable need to leverage AI: The usage of AI in banks is still in the early days. Its applications can greatly transform banking processes to improve the consumption of services. For example, AI can be used to assess creditworthiness, particularly for those without a credit history.
4. Transformation of the branch network: Achieving the full benefit of the shift to mobile banking will require an overhaul of the branch network if the goal of reduced cost to serve is to be achieved. We will see a major move towards reducing the size of physical branches and curtailing the core purposes that such branches used to serve in the past.
5. Continued emphasis on security: Security and trust are the fulcrum on which banking rests, turns and evolves. Enabling a frictionless yet secure banking experience is now an art more than it is a science.

Banking as an industry has a big role to play as we work through the recovery from the pandemic. Looking ahead I am quite confident that by 2025, banking penetration in the Asia Pacific should at least mirror the expected mobile penetration rate of 70% in the same time period if not exceed it.

Amidst all the challenges around us, there has also been some positive news. The return of sports, albeit without supporters has lifted spirits for many of us. I have been a Liverpool supporter for the last 45 years! 2020 will also be remembered as the year of a memorable victory for the English Premier League after a gap of 30 years. The new season has begun, and like COVID-19, it has presented a new set of challenges for the team with injuries to our leading players. They say, “When the going gets tough, the tough get going”. I am hopeful that we will prevail and win the league again.

I hope the same applies to all of our businesses and that we can bring out our best in the year to come.

Questions? Have any trends that I missed? Share in the comments — I’d love to hear them!