The Asia Pacific banking sector has largely weathered the pandemic crisis. But with revenues being squeezed by low interest rates and sluggish loan growth, APAC banks will make big bets and increase their spending on technology, talent, and fintech to drive growth. Tapping into the opportunities brought on by the digital momentum gained during the pandemic, banking executives will take a leaf out of disruptors’ books to expand digital offerings, pursue innovation by launching new digital and sustainable products, and experiment with digital currency initiatives:
- It’s back to the future as digital wallets make a comeback. 2022 will see mass adoption and the mass migration of lifestyle “super app” platforms across APAC. The technology has been there for some time — though it now has the convenience of embedded biometrics — but the pandemic was just what the wallet needed: an almost overnight switch to online commerce, coupled with QR codes proliferating for order-at-table solutions, vaccination passes, and COVID-19 check-in tools. 2022 will close with at least 20 bank, retail, and telco super apps duking it out.
- Banks in Asia will outpace global peers on participation in retail CBDC ecosystems. In 2022, China’s retail CBDC (central bank digital currency) pilot will spur other countries in Asia such as Japan, South Korea, and India to accelerate their CBDC projects and turn their proofs of concept to pilots. We predict that in 2022, more than 80% of Chinese banks will be deeply involved in the digital yuan ecosystem and expand their digital-yuan-linked offerings from payments to “buy now, pay later” (BNPL). A dozen large banks will follow suit to join the CBDC ecosystem in each of the other Asian countries that launch their CBDC pilots.
- The number of sustainable finance products will triple, but not all will pass muster. APAC firms have lagged their European counterparts when it comes to launching new sustainable products such as green loans and bonds, as well as checking accounts with sustainability features. But this is about to change. In fact, Forrester expects the number of sustainable products on the APAC market to triple in 2022. But APAC banks need to fight accusations of greenwashing. Some regulators are addressing the lack of transparency, with China providing standardized taxonomies and Hong Kong and Singapore incentivizing banks to create frameworks of their own. Leading banks must validate borrowers’ environmental, social, and governance (ESG) claims and use of proceeds, using data and emerging technologies — internet of things, decentralized ledgers, and AI — and independent ESG ratings providers.
To understand the major dynamics that will impact Asia Pacific organizations next year, download Forrester’s complimentary Predictions guide. To dive even deeper, check out our Predictions 2022 complimentary webinar series, and engage directly with the analysts who made the predictions.