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Keys to Unlocking Full Potential of Southeast Asia’s Digital Financial Ecosystem

4 mins read

Cutting Edge Innovations, Trust and Security

By: Qinthara Fasya, DigitalCFO Asia | 22 July 2021

Photo provided by VMware
  • Digital experience has become a critical competitive differentiator with 63% of Southeast Asian consumers now happy to engage with financial services firm digitally; 60% of Southeast Asian consumers are ready to switch brands if digital experiences do not live up to expectations
  • 85% of Southeast Asian consumers are embracing contactless payment, but key challenges remain: 57% feel paranoid about their online activities being tracked, and only 59% trust financial services firms in protecting their data
  • Region’s financial ecosystem needs to create a secure digital foundation to accelerate innovation as consumers place high trust in technologies of the future including artificial intelligence (70%), 5G (78%) and facial recognition (75%)

Southeast Asia’s big digital leap during the pandemic has presented  significant opportunities for financial services firms in the region, but key gaps need to be bridged to  create a more robust and secure digital foundation in order for the industry to realize its full growth  potential, according to VMware, Inc. (NYSE: VMW). The VMware Digital Frontiers 3.0 Study found  that the customer battleground for Southeast Asia’s financial services industry has moved online with 57% of Southeast Asian consumers now preferring to engage with their banks via apps rather  than visiting in-person at a branch. This has critical implications for growth-oriented financial  services firms, as 60% of consumers are prepared to switch to a competitor if digital experiences do  not live up to expectations. 

While 59% of Southeast Asian consumers felt that financial services firms delivered better digital  experiences (compared to retail, healthcare, government, and education organizations), 24% still  feel that financial services firms have failed to adapt to the changing market. Even as financial  services organizations accelerate their innovation efforts to gain a competitive edge, consumer  priorities in Southeast Asia remain focused on core fundamentals that enable great digital  experiences: a high level of security and protection of consumer data (58%), ease-of-use across all  devices (46%) and applications that deliver services simply and effectively (41%). 

“COVID-19 has permanently changed the way people engage with their financial services providers.  Transformation of consumer digital behaviours used to take years to happen, but the pandemic has  accelerated this progression to mere months. It is clear that cutting-edge innovations such as Cloud and Modern Apps will be accelerators that helps to transform the future of finance in this region.

A  trusted digital foundation will be key to supercharge innovations and enable financial services  organizations in delivering new, seamless and secure digital services and applications, and to meet  ever-evolving customer needs,” said Guru Venkatachalam, Vice President and CTO, Asia Pacific and  Japan, VMware. “Beyond a robust digital foundation to help financial services organizations respond  and adapt to the shifting consumer demands, we have to bear in mind the ethical considerations of  Southeast Asia’s increasingly progressive consumer base. This is key for the advancement of the  financial ecosystem as a whole, so we can collectively move faster to the future.” 

The future of finance is virtual in Southeast Asia

Over the last year, consumers in Southeast Asia have gained a better appreciation of the value of digital products and services, with 63% of respondents stating that digital engagements with financial services organizations have freed up their time to focus on other priorities. Consumers are also embracing emerging technologies more, with more than half (70%) expressing trust in artificial intelligence and 41% willing to let an app help make their investment decisions over an individual that works for the bank.

In a sign that digital engagement models will become the norm for the region’s financial ecosystem, the study also found that Southeast Asian consumers are relying on their smart devices more, with 64% of respondents stating that their phones are now more important than their wallets when conducting financial transactions.

Technologies of the future show promise, but security and trust are still foremost concerns

Consumers in the region are showing willingness to embrace next-generation technologies with 75%  of those surveyed expressing trust in facial recognition technologies and 5G (78%). When it comes to  technologies of the future, consumers are optimistic about the impact to their digital experiences, with 41% believing that 5G can make banks more efficient, enabling them to do things like processing applications and credit checks faster. 

Despite the optimism in emerging technologies, consumers in the region will not compromise when  it comes to security, with 82% of them considering security the number one priority when choosing  a financial services provider. Furthermore, more than half (57%) of Southeast Asian consumers feel paranoid that organizations are tracking and recording what they are doing on their devices. The  implication is clear for financial services organizations: deliver not only cutting-edge innovations, but  also secure and privacy-focused digital experiences to win the trust of Southeast Asian consumers. 

Growing demands for an ethical and inclusive financial ecosystem

While Southeast Asia’s digital pivot has yielded remarkable results with 78% of consumers defining themselves as “digitally curious” or “digital explorers,” consumers in the region are increasingly focused on more than just digital experiences when choosing their financial service providers. 55% of consumers stated that they will stop engaging with organizations that do not publicly share their ethical policies. In relation to the financial services industry, 84% of Southeast Asian consumers are also expecting technology to advance financial inclusion within the next decade.

Technology key to accelerating economic growth and recovery  

Progressing into 2021, VMware outlines key priorities that will further strengthen the transformation of Southeast Asia’s innovation-led financial ecosystem:

  • Empowering financial services organizations to build a multi-cloud and app future: Unlocking multi-cloud future with app-driven innovations in a consistent and more secure environment that enables continuous innovation
  • Enabling innovation and productivity for a distributed workforce: Future ready workforce solutions will enable a seamless and secure digital employee experience, driving greater outcomes in the new world of work
  • Intrinsic security for uninterrupted innovation: An intrinsic approach to enterprise security will provide an additional layer of robust protection for mission-critical operations and infrastructures to fast-track business innovation and resilience

“As economies across the region gear up for economic recovery, the ability to deliver superior digital experiences is what makes the financial services industry key to spearheading new growth for the digital economies of Southeast Asia. Frontier technologies such as Cloud will be pivotal in enabling organizations to make their mark and move faster to the future,” said Sanjay K. Deshmukh, Vice President and Managing Director Southeast Asia and Korea. “By leveraging our industry-leading technologies, VMware is committed to becoming a trusted partner and enabler to help financial services organizations in the region ramp up innovation, improve speed to market and, in turn, better respond, adapt and accelerate their businesses’ growth in today’s new digital paradigm.”

About VMware 

VMware software powers the world’s complex digital infrastructure. The company’s cloud, app  modernization, networking, security, and digital workspace offerings help customers deliver any  application on any cloud across any device. Headquartered in Palo Alto, California, VMware is  committed to being a force for good, from its breakthrough technology innovations to its global  impact. For more information, please click here.

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