digital transformation in banking - ncr

Digital Transformation in Banking: What getting it right means for consumers in Asia

Research by

Agenda

• Banking channel usage trend across Asia

• Payment tool trends in Asia

• Fraud issues in Asia

• Customer satisfaction and churn

Methodology of study

Annual global surveys of consumer banking attitudes and behaviors.

Online study with sampling balanced by country demographics.

Covers retail banking, payments and wealth management.

GlobalData Banking & Payments Survey sample 2018 Q1

China 2,000 Philippines 5,000

Hong Kong 2,000 Singapore 2,000

India 2,000 Taiwan 500

Indonesia 500 Thailand 500

Japan 500 Vietnam 500

Malaysia 1,000

Total Asia 16,500

Global survey 51,000

Banking & Payments Surveys 2018/2017.

Bank channel trends

5,9%

7,4%

8,4%

6,4%

5,0%4,7%

0%

2%

4%

6%

8%

10%

12%

2013 2014 2015 2016 2017 2018 2019 2020

Year

on

ye

ar g

row

th,%

Credit card balances outstanding Personal loans balances outstanding

Residential mortgage balances outstanding Retail deposits

Retail banking

balances

Growth expected across most retail banking lines of business

Capturing this new business requires investment in growth channels

Retail bank balance sheets across Asia (ex China, India, Japan)Source: GlobalData Retail Banking Analytics

Digital Asia

Online banking use has remained consistently high

Mobile has risen to a close second

Banking is already digital across most of South East Asia

34,4% 34,4%

27,17%29,83%

19,9%

27,3%

17,6% 17,6%

12,3%14,0% 12,8%

16,1%

46,8%

27,3%

47,83%

25,23%

48,1%

28,4%

37,6%

21,4%

39,0%

18,5%

46,8%

19,6%

0%

10%

20%

30%

40%

50%

60%

Weekly ormore

Monthly Weekly ormore

Monthly Weekly ormore

Monthly

2016 2017 2018

Ban

kin

g ch

ann

el u

se a

ccro

ssA

sia

Pac

ific

, %

Branch Telephone Online Mobile

Source: GlobalData Banking & Payments surveys

6,9%

11,5%

15,2%

15,4%

11,5%

35,3%

29,4%

30,4%

16,2%

26,7%

23,3%

0%20%40%60%80%

Branch

Telephone

Online

Mobile

Malaysia banking channel use, 2018

Daily Weekly Monthly

3,1%

7,6%

10,5%

7,8%

4,8%

36,0%

28,7%

14,9%

8,4%

32,8%

19,8%

0% 20% 40% 60% 80%

Branch

Telephone

Online

Mobile

Singapore banking channel use, 2018

Daily Weekly Monthly


Channel use is trending similarly across ASEAN but Singapore leads the way in omnichannel

Branch channel

Branch is prominent in

• Troubleshooting• Customer service• Advice

But these are high impact occasions that must deliver a superior experience

40,2%

16,5%

27,6%

29,9%

23,2%

37,1%

11,5%

13,0%

14,2%

16,1%

13,7%

39,7%

31,6%

29,3%

34,3%

23,6%

17,3%

16,4%

15,6%

8,9%

8,7%

10,6%

10,3%

10,7%

0% 20% 40% 60% 80% 100%

Depositing a cheque

Querying a transaction

Booking an appointment withan advisor

Having a conversation with anadvisor

Making a complaint

Prefered channel of activity across Asia, 2018

Branch Telephone Online Mobile Other


Financial product

acquisition Everyday banking is digital but product acquisition remains dominated by the branch

64,2%

72,2%

68,2%

57,0%

51,8%

6,1%

4,0%

10,5%

15,6%

14,4%

17,1%

13,7%

11,1%

16,6%

11,7%

7,0%

5,2%

3,2%

6,4%

8,3%

7,5%

5,3%

6,8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Current acc

Savings acc

Mortgage

Loan

Credit card

Channel of acqusition across Asia, 2018

Branch/in person Telphone Online Mobile Other


Bridge the digital gapConsumer preferences have shifted to digital channels

Capturing the growth and switchers requires greater digital investment across the product suite

AsiaQ: “If you had to apply for a financial product today, which one of the following

would be your preferred method?”

22,4% 20,4% 17,9% 20,8%

41,5%38,7%

36,3%38,9%

2,4%1,9%

4,1%6,7%

33,5% 38,7% 41,1%33,4%

0%

20%

40%

60%

80%

100%

120%

Current account Savings account Mortgage Personal loan

Pre

ferr

ed

ch

ann

el o

f ar

ran

gem

en

t, 2

01

8

Mobile Online Telephone Branch

38.8% 40.1% 39.9% 36.6%Digital gap


Payment trends across Asia

Cash use

Market share of cash payments is decliningEconomic advancement is leading to the increase in cash use but overall cash use is

declining in the mix

660

200 145

234

97 89 50 25

517

256 183 139 117 98

47 20

India Indonesia Thailand Taiwan Philippines Malaysia Singapore Hong Kong

Cash Payment Value of Transaction (USD Billion)

2010 2020

Increasing in overall value due to economic advancement.

Decreasing as a share of payments due to adoption of payment cards and mobile payment.

20% 18% 20%

-18%

15% 13%

1%

-9%

-35%

8% 5%

-27%

5%

-2%-8%

-14%

India Indonesia Thailand Taiwan Philippines Malaysia Singapore Hong Kong

Cash Payment Value of Transaction Growth (%)

2010-15 2015-20

Source: GlobalData Cash Analytics

Card use

Card use is rapidly increasing in Asia Payment card use is expanding across Asia with the rise in adoption of payment cards

by the consumers and the increase of acceptance by merchants

Rapidly gaining popularity across Asia.

19

70 69 41

21 17 21 10

318

145 140

78 61 55 46 30

India Taiwan Hong Kong Singapore Thailand Indonesia Malaysia Philippines

Card Payment Value of Transaction (USD Billion)

2010 2020

Growth slowing but still impressive.

248% 220%116% 85% 99% 44%

63% 53% 47%

380%

239%

55% 52% 46% 43% 32% 31% 31%

Card Payment Value of Transaction Growth (%)

2010-15 2015-20

Source: GlobalData Payment Card Analytics

Mobilepenetration

Mobile wallet becoming popularNot only are more people in Asia embracing mobile wallet they are also using them

much more frequently compared to markets in other regions due to bypassing card and going directly to mobile in some markets while appreciating the new technology and

convenience in other markets

Mobile wallet becoming prevalent in Asia and consumers are embracing it.

China leads the world but all of Asia is trending towards greater mobile payments

9%

17%

16%

22%

16%

18%

14%

22%

18%

16%

16%

8%

13%

24%

28%

30%

35%

37%

41%

46%

60%

65%

Japan

Philippines

Malaysia

Singapore

Indonesia

Thailand

Taiwan

Vietnam

Hong Kong

India

China

Consumer with a mobile wallet and usage, 2018

Have one and USE it Have one but Don’t USE it


Have one and USE it

16%12% 11%

Mobilepotential

Mobile wallet/payments interestMarkets where mobile wallets have been introduced for a longer period such as China have less consumers to convert while other markets where mobile wallet is just at the cusp of take off such as Thailand and Indonesia are recording greater interests from

consumers

Maturity of the mobile wallet environment determines consumer interest.

More mature markets have more alternatives, particularly cards that limit mobile payment utility.

ASEAN countries are among the most interested in the world.

44%

32%

17%

30%

16%

16%

23%

9%

19%

10%

10%

10%

33%

30%

17%

29%

24%

23%

22%

14%

12%

7%

Japan

Philippines

Malaysia

Singapore

Indonesia

Thailand

Taiwan

Vietnam

Hong Kong

India

China

Consumer without a mobile wallet and their interest, 2018

No m-wallet but interested No m-wallet and NOT interested


Mobilebarriers

Mobile wallet interestMarkets where mobile wallets have been introduced for a longer period such as China

tend to have less consumers to convert while other markets where mobile wallet is just at the cusp of take off such as Thailand and Indonesia are recording greater interests from

consumers

Security is the main concern for non users of mobile payments baring India and Japan.

Customer education around phone security is a must for mobile payments to accelerate

32%30%

17%

30%

21%

23%

29%

37%

22%20%

27%

22%

25%23% 22%

18%

14%

12%10%

4% 3%

8% 8%

4%

China Hong Kong India Indonesia Japan Malaysia Singapore Taiwan

Reasons why consumers don’t use a mobile wallet, 2018

Worried if phone got lost or stolen Don’t think its better than cash / card

Tried but don't see the benefit


Fraud trends across Asia

FraudFraud exposure is a major concern and a barrier for further digital payment

adoption..

Consumers education is a continuous effort.

25%

20%

20%

18%

16%

13%

13%

9%

China

Malaysia

India

Indonesia

Hong Kong

Taiwan

Singapore

Japan

Consumers having experienced fraud in the past four years,

2018

7%

14%

11%

6%

11% 11%

22%

9%

5%7%

10%

1%

2% 4%

14%

3%3% 4%

11%

7%

2% 2%3%

1%

6%4%

9% 9%11%

8%9%

3%5%

2%

6%

1% 1%

7%4%

1%


Types of fraud experienced, 2018

Card details stolen on the internet Card details stolen/skimmed at a merchant

Card/PIN details stolen/skimmed at an ATM Online banking login details stolen

Mobile banking details being stolen

Fraud can be reduced in AsiaA lot of fraud incidents can be prevented at the consumer level and having well

educated consumers in the region will be crucialSource: GlobalData Banking & Payments surveys

Biometrics

Biometrics bring great sense of security

Most consumers in markets around Asia are open to new ways of security measures including biometrics

Most consumers in Asia are open towards biometrics.

Innovative security solutions are more viable in ASEAN than elsewhere.

A higher fraud incidence as helped consumers value biometric anti-fraud measures.

75%

59%

83% 84%

42%

74% 72%67%


Consumers attitude toward biometrics security measures,

2018


Happy with biometrics

64%64% 63%

Channel satisfaction and switching

Pure play digital banks

Large sections of the customer base are open to neobanks.

Markets with more establish banking traditions are more resistant.

Incumbents need to be alive to the threat from new entrants.

30,2%

14,1%

7,2%

27,4%

21,8%

9,3%

45,5%

15,2%

8,9%

42,1%

27,3%

36,8%

45,6%

28,7%

9,0%

35,1%

41,8%

33,3%

42,1%

19,8%

23,0%

36,9%

32,4%

32,0%

0,4%

8,2%

18,3%

9,4%

8,6%

16,5%

3,2%

12,6%

18,7%

2,2%

5,0%

6,6%

8,7%

9,9%

5,0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Indonesia

China

Hong Kong

India

Malaysia

Singapore

Taiwan

Asian average

Openness to digital only banks accross selected Asian markets

Very willing Quite willing Neither willing nor unwilling Quite unwilling Very unwilling


Channel satisfactionMost banks are meeting customer expectations.

Customer experience is generally good.

Customer channel expectations are not static and are directly influenced by other industries.

29,2%

31,1%

35,3%

36,9%

52,7%

50,4%

52,3%

49,9%

15,1%

14,4%

10,5%

11,0%

2,3%

3,5%

1,6%

1,8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Branch

Telephone

Online

Mobile

Consumers, Asia (2018)

Very satisfied Fairly satisfied Neither satisfied nor dissatisfied Fairly dissatisfied Very dissatisfied


SwitchingA poor experience in any bank channel leads to higher churn.

Poor online experience is more of a push factor.

11,3%

14,9%

10,8%

6,3%

6,8%

21,1%

22,4%

29,2%

25,0%

12,3%

32,4%

32,8%

21,5%

42,2%

23,1%

26,8%

22,4%

27,7%

20,3%

35,8%

8,5%

7,5%

10,8%

6,3%

22,1%

0% 20% 40% 60% 80% 100%

Branch

Telephone

Online

Mobile

Market overall

Liklihood of switching banks across Asia, 2018

Very likely Quite likely Neither likely nor unlikely

Not very likely Not at all likely

Dissatisfied with..


Key trends• Asia is increasingly digital in its banking experience, with mobile soon to be the dominant

channel

• Branch interactions are still valued for advice, problem solving and remains the main channel of product arrangement

• The gap in digital arrangement and preferences needs to be overcome to benefit from the market growth expected

• Card use is eclipsing cash use but will itself be challenged by mobile payments

• Security is a major barrier to alternative payments such as mobile but can be addressed by innovation such as biometrics

• Channel satisfaction matters as a poor experience leads to high customer churn

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digital transformation in banking - ncr

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