South-east Asian banks at a digital transformation crossroads

BANKS have been at the epicentre of economic growth in South-east Asia, as evidenced by the fact that nine of the top 20 companies in the region (in market capitalisation) are banks. South-east Asia is undergoing a gradual but massive shift driven by digital technologies, and in anticipation of the enormous emerging opportunities, the banks are in the process of building up their digital capabilities. They are now offering cool mobile apps, providing tablets to their employees, making mobile wallets available and providing many other features to help their consumers manage transactions smoothly. It appears as if banks are gearing up for the future, with the objective of digital transformation remaining central to their present and future strategy.

With this in mind, we started analysing the annual reports, quarterly results, and investor presentations of nine banks in the region in the hope of getting some insights into the future of the banks. Our efforts reveal some grim findings:

Financial reports serve as the mission statements for any firm, highlighting the company's vision and its future strategy. It is astonishing to discover that South-east Asian banks have yet to embrace digital transformation in a holistic way. The regional banks have enjoyed relatively healthy revenue growth in the past, but the digital lip service may not work anymore as purely transactional banking isn't going to cut it in the future.