Recent years have seen a digital banking trend sweep across much of the world, and South East Asia is no exception. New financial institutions have emerged that use digital platforms to offer new approaches to banking and challenge traditional institutions’ status quo. These digital banks offer an entirely digital service with no physical branches, and the need for branches is replaced by dedicated 24/7 customer service and automated systems. In many parts of the world, these challenger banks’ popularity has pushed traditional institutions to launch digital versions of their own financial products. However, you may be wondering what digital banking is like across Hong Kong, Singapore, Malaysia, Thailand, Indonesia, and the Philippines, and how it compares to the service that has already been established by traditional banks.
South East Asia’s digital banking services, despite sometimes being formed by companies outside of the finance sector, operate with a digital banking license. However, in many South East Asia areas, it is early days for such licenses, and the initial rounds of digital banking licenses have only recently been granted. Hong Kong and the Hong Kong Monetary Authority have been much quicker to catch up with fintech innovations and are licensing digital banks faster. Digital banks offer an entirely revolutionary financial service that is so innovative that the traditional financial sector has struggled to keep up with it.
The benefits of digital banking largely stem from the fact that these banks root their mission in fixing some of the problems presented in the traditional banking industry. One such problem is that historically, banking has not been accessible to certain types of customers, such as those with low-income or high-risk customers. Digital banks have transformed the application process, making it much faster, with less or no paperwork and completed entirely online. The process usually involves downloading an app, entering some personal details, and confirming your identity. Within minutes your application has been approved, and your account is open – a much more accessible and convenient process than the one offered traditionally.
Fees are a common occurrence with traditional banks and can cost customers hundreds each year. However, digital banks do not have the regulations, expenditures, and dated infrastructures of traditional banks, allowing them to provide an almost entirely fee-free service, often selling themselves as banks with no hidden fees. This also means that digital banks can often offer better interest rates on savings.
Further benefits of digital banks’ service come down to the automated tools and features they offer to help customers make the most of their finances. Real-time spending notifications allow customers to stay as up-to-date on their spending as possible, and monthly spending reports help them see where they could be spending less or saving more. They also offer ways to squirrel funds away into separate areas and round-up features that place spare change into savings. One of the most significant benefits of digital banks is that they are growing quickly and always rolling out new features to make the banking experience more useful and convenient for their users.
The main digital banks available in China include WeBank, Mybank, XWBank, and aiBank; with WeBank, established in 2014, being the first. WeBank has also been cited previously as the world’s leading digital bank, notable for its accessible loans and near-instant credit approval. In Hong Kong, since the HKMA began granting digital banking licenses in 2019, digital banking is expected to thrive in certain areas, such as Macau and the Greater Bay Area. There has also been much speculation that these banking licenses will rejuvenate Hong Kong’s banking sector, so we can expect digital banking to grow in the region, and hopefully, soon offer bank accounts and savings accounts to rival that of the traditional institutions. This is much the same for other areas of South East Asia, such as Taiwan, in which after the initial licenses were granted in 2019, digital banks are expected to be launching their services fully in 2020. Until then, we can expect that they may offer fee-free accounts, money-saving tools, and more.
The recent licensing of digital banks by larger financial institutions will allow customers to feel more comfortable and safe banking with digital banks. This license often comes with a guarantee that secures customer deposits. Other than that, digital banks are at the cutting edge of technology, and customer safety is part of this. The authorization customers complete to apply for an account involves facial recognition, fingerprint scanning, or voice recognition, demonstrating how digital banks are utilizing the best of technology to provide customers with a secure experience. It is also common for digital banking apps to offer instant freeze and unfreeze features that allow customers the convenience and peace of mind in cases of lost or stolen cards.
As digital banking is expected to continue to grow in South East Asia, more digital banks are expected to emerge. They will be rolling out new features, tools, and products to tempt customers from traditional financial institutions.