Asian banks need technology investments such as AI to continue their growth momentum.
The industry is robust, with 19 of the top 50 global banks home-grown in Asia.
But unless these banks continue to invest in emerging technologies to drive innovations and productivity, they could be exposed to greater resilience risks in the longer term.
The Asian banking world has been challenging and fast evolving due to geopolitical tensions, interest rates under stress, inclusion and microfinance needs, consumers’ increasing demand for hyper-personalised services, a deteriorating risk environment, operational efficiency challenges, and, on top of that, increasing regulatory oversight.
Perceived Risks and their Business Disruption
Each of these challenges require technology investments to resolve.
In this context, the bank must decide on what its priority investments will be. Let’s briefly review some of these bets that could be potential winners in 2025 and beyond.
Banks need to be agile in their transformation initiatives.
Agility requires a mix of technology infrastructure and a build strategy that enables fast deployment of new capabilities.
The build strategy could be a platform strategy, microservices architecture enabling fast integration of external capabilities, or a mix of adopt and build.
What fits best for each capability requires a fine decision that is both an art and a science.
What is needed is an infrastructure that facilitates innovation.
All of us who have struggled with the “Technology Bill of Material” understand that the legacy infrastructure setup processes are in months in an age where innovation, POC, and A/B tests are required within days.
That is where cloud computing is important, and it must be in the mix.
Cloud computing is also important as more and more of the enhancements require extensive data computing.
While agility helps build an architecture for fast innovation deployment, banks still need to decide on enhancements.
Three factors are coming into play in today’s digital age. These are functionalities that increase revenue, automation opportunities to improve efficiency, and, finally, build trust through resiliency and avoiding financial crime.
In global market intelligence firm International Data Corporation’s (IDC) survey (Jun’24), 41% of the banks stated that they require new products and services to generate revenues.
Main Business Priorities
Launching any new product requires data, which may comprise of a mix of synthetic data generation and data management techniques.
It also requires effort to build the right models, whether that may be techniques like graph and RAG or models such as agentic, generative, predictive, or interpretative.
Servicing, operational excellence, and risk management remain the main areas of deployment.
Embedded finance and new product development are good use cases for revenue enhancements through AI deployment.
Climate risk is also emerging as a real threat, with project risk being affected and personal credit worsening with extreme climates impacting an individual payment’s ability and propensity.
Geospatial data-based solutions could be a possible investment that will pay off in the long run.
Placing these bets could eventually lead to positive leverage for BFSI players.
Join me and my team at our 2025 Financial Services event series taking place across Singapore, China and India from June to August, as we explore the latest trends and insights in DX adoption by Asian banks, and showcase how banking and financial services leaders can develop holistic ecosystems with the help of technologies while reaping AI dividends through operational efficiency and CX enhancements in a multi-polar world.
To sweeten the pot, this year’s event will feature the announcement and celebration of the 2025 winners of the IDC Financial Insights Innovation Awards, which aims to recognise outstanding achievements and best practices in the BFSI sector for their use of technology to enable them to grow and prosper in the age of digital economy.
Submit your nominations now and become the next BFSI rising star in 2025!
