PETALING JAYA: Three in five (60%) banks in Asia Pacific have yet to offer a full digital account opening process for new customers, despite recent reports that nearly nine in 10 financial institutions in the region embarked on digital transformation, according to a survey by analytics software firm FICO.

In a statement Thursday, FICO said the region’s changing regulations (28%) and the need to create digital know-your-customer (KYC) and anti-money laundering (AML) (21%) solutions were cited as the two key challenges for Apac banks looking to acquire new customers online.

“In Asia, the identification processes used for services such as e-government, banking or telecommunications evolved independently of each other, leading to a fragmented approach with inconsistent levels of security,” said Dan McConaghy, president of FICO in Asia Pacific. 

“Open banking and regulations like Europe’s PSD2 are now bringing regulatory rigor to bear on the issue and forcing banks to comply to certain standards and embrace technologies that will better enable digital onboarding,” he added. 

For some established banks, one short-cut to their own existing challenges, incumbent technologies and inefficient silos is to start again. \

FICO’s survey revealed that 79% of the banks have launched or are currently considering a separate digital banking offering to leapfrog challenges in acquiring and retaining new customers.

“Fintechs and challenger banks have disrupted the status quo in the financial services universe,” said McConaghy.

“By developing compelling new products, services and experiences, these companies have set a new standard and raised customer expectations. Traditional banks now find themselves needing to rethink and redesign their services, to transform themselves digitally, and meet the market.”

FICO’s survey found that 40% of respondents said digital-only banks and fintechs were the greatest competition to their business, with Apac Internet players (20%) and telcos diversifying into lending (20%) coming in equal second place. 

Conversely, the greatest opportunities for digital banking for the respondents were nominated as digital payments (32%) and personal loans (24%).

Apac banks said they are planning to focus on investing in data science (19%) and improving their customer segmentation for products and services (19%) as their top priorities for their bank transformation.

When asked about the future size of their bank in the year 2030, some 28% of the survey respondents predicted that their organisations would need fewer employees (between 5 to 50% decrease). A further 28% said they think they will need significantly less staff (a 50% or more decrease) in 2030.

FICO surveyed 20 chief risk officers from across Asia Pacific in April 2019 at its CRO Forum 2019 event in Bangkok, Thailand.