Asia's affluent middle class is growing rapidly. But more than that, as Asian customers become more financially savvy, they are demanding more dynamic and complex financial solutions and setting a new standard on how they want to be served by banks.
"As affluent Asian customers become more financially savvy, they are demanding more dynamic and complex financial solutions."
Sanjoy Sen, ANZ managing director Retail Banking Asia Pacific
Asia’s economy accounts for a quarter of global economic output. ANZ Research predicts the region’sshare will rise to 35 per cent in 2030 and increase to over 50 per cent by 2050 (ANZ Insight, Caged Tiger: The Transformation of the Asian Financial System, issue 5, March 2014).
The speed and scale of Asia’s economic growth is driving a sharp increase in the population of affluent and middle-class customers across the region. They are accumulating wealth rapidly, spending more and generating a strong demand for financial products and services in the region.
Affluent Asian customers are becoming less loyal
A major challenge for incumbent institutions is that affluent Asian customers are open to trying different providers as they seek specific solutions for their needs. On average, affluent customers in Asia bank with 4 to 5 financial institutions. However, this also presents banks with more opportunities to win the wallet share of customers.
As the number of new financial players continues to proliferate in the region, banks need to focus on building their brand as a key differentiator against competitors.
In addition to investing in a robust digital platform that supports cross-border transactions and customer customisation, banks should also use their deep knowledge and understanding of the markets they operate in, in order to strengthen the value of their brand by representing trust, integrity, security and quality to service to customers.
Affluent Asian customers want more convenience from their bank
Rapid economic growth is driving a faster pace of life in the Asia. That means affluent Asian customers want instant attention and response from their bank. They want a bank that suits their on-the-go lifestyle by allowing them to bank whenever and wherever they want to through digital banking.
Central to the response from banks – and other financial institutions - is a multi-channel digital strategy that allows customers to instantly interact with their bank and process their transactions across multiple channels.
To achieve this, banks are building new technologies into their ATMs, branches, and call centres. The challenge is to ensure these channels can seamlessly integrate and communicate with each other, as well as digital banking apps and platforms.
In ANZ’s branches in Asia, we have interactive self-service stations that allow customers to key in their requirements and instantly receive information on products that cater to their needs.
We have also seen the advent of Smart ATMs in the markets in which we operate. These ATMs offer customers all the services of a branch, such as account opening and credit card applications.
Behind this striving to achieve seamless integration across channels is a shift in strategic mindset when it comes to technology. Banks are gradually moving away from using a proprietary platform to an open architecture ecosystem that can be connected to third party apps and platforms.
In Singapore, some banks now allow customers to transfer funds to anyone via a mobile phone app, without the need for the recipient’s bank account number.
Banks are evolving to provide customers with simpler, faster and more intuitive banking. We can expect the future of retail banking in Asia to be even more interconnected than ever before.
In the not-to-distant future, customers will be able to apply for a credit card online or on their mobile phone and simply go to an ATM, which will dispense their credit card.
Affluent Asian customers are increasingly global in their outlook
Technology is only one shift in Asia. Rising affluence has led to an increase in international travel and many affluent Asian customers have personal or business connections across multiple geographies.
They want a bank that can support their cross-border banking needs by giving them access to banking services and their cash anywhere they are. Customers also want to benefit from Asia’s growth and they look to their bank for the expertise and network to connect them to investment opportunities across the region.
Banks that offer a strong cross-border proposition across Asia will do well in a market of globally-oriented customers. While global banks are optimising their holdings and presence in Asia – driven mostly by the financial crisis – regional and local banks are capturing a larger share of the affluent Asian market by strengthening their cross-border banking proposition for affluent customers.
Affluent Asian customers value customised solutions
Affluent Asian customers are becoming more digitally-savvy, with access to many financial information and tools online.
Customers are increasingly well-informed on the financial solutions that fit their need and there is a paradigm shift in the way customer needs are being served. They are now driving banks to provide solutions that focus on their needs instead of the old days when banks influenced customer choice.
Banks that want to benefit from the wealth boom in Asia have to offer personalised, compelling propositions that support their targeted customer segments in the region.
It is no longer a one-size-fits-all approach and banks must find unique and innovative ways to customise their solutions to the specific needs and lifestyle of affluent customers.
For example, the ANZ Travel Visa Card is another example of how we are designing targeted solutions for the specific needs and preferences for our customers.
Banks are also optimising their branch footprint to focus on the primary needs and behaviour of customers in the locale.
In high-traffic, transit areas like train stations, we are seeing more branches that use advanced digital technology to allow customers to self-serve and get the information they need or conduct their transactions quickly.
Full flagship branches are typically located in business and neighbourhood hubs where people gather for their day-to-day activities.
This enables banks to capture the full opportunity of the specific area by providing a more relevant customer experience while achieving efficiency of scale.
The challenges ahead
Banks face a key challenge as they navigate the evolving consumer banking environment in Asia: the need to balance customer desire for advanced digital banking and personalisation with the increased focus on cost optimisation, productivity and governance in the banking industry.
Technology is advancing at a very fast pace. It takes time to transform traditional banking models into agile organisations that can deliver a high-quality and consistent customer experience through a multi-channel infrastructure.
To succeed, banks must align their operating models and culture to the pace of digital transformation in the market while staying abreast with regulatory change and compliance.
These changes also require investment and strong governance. The legacy infrastructure and complex organisations of many banks mean that truly transformational change is an evolutionary journey.
However, the upside for banks in Asia is significant if they can capture and support the strong growth in the economy, consumer wealth and consumption in the region.
The opportunity lies in engaging the increasingly self-directed customer with a richer and more diverse selection of products and channels, while facilitating access to opportunities across the region and providing personalised advice and quality service to customers.
Sanjoy Sen is Managing Director at ANZ Retail Banking Asia Pacific