Kenneth Kuek
Country Lead of InterSystems, Singapore
In the ever-evolving landscape of finance, financial innovation is reshaping the way we perceive and interact with money. Southeast Asia is emerging as a key player in this revolution.
The entry of digital-only banks has fast-tracked the digitalization of the finance sector in Southeast Asia, notably in the Philippines, Indonesia, Thailand, and Vietnam. Singapore is leading the charge, contributing significantly to the region’s digital banking rise. This swift transition challenges financial institutions such as legacy banks, risking loss to more agile, customer-centric digital competitors.
This highlights the need for financial institutions to modernize and abandon outdated legacy systems. Embracing contemporary technologies by partnering with FinTechs and adopting a robust data management practice enhances operational efficiency and ensures agility, security, and the ability to meet the dynamic needs of the modern financial ecosystem.
FinTechs are playing a significant role in the region’s internet economy, which is on target to exceed USD 300 billion by 2026. Predictions indicate that spending will rise by 121%, digital payments will reach 92%, and 426 million citizens—representing 62% of the population—will use mobile wallets.
Collaborations between FinTechs and financial institutions are key to creating efficient solutions to tackle data silos, outdated information, and manual processes. Next generation data platforms that connect data and application silos enhance regulatory compliance, product offerings, and environmental, social, and governance (ESG) factors, enabling banks to improve data management and provide more convenient, dynamic banking solutions.
Partnerships Between FinTechs and Financial Institutions
Asia’s strategic location, favourable business environment, and strong ecosystem partnerships have made it an ideal launchpad for financial institutions to partner with FinTechs. As of 2023, Singapore is home to 700 FinTech firms, the Malaysian fintech ecosystem continues to thrive with 313 firms, and Vietnam’s is witnessing the second highest growth rate in ASEAN, predicted to reach US$18 billion in revenue by 2024.
Partnerships between legacy finance and innovative fintechs can be transformative in developing the technologies and platforms that power these financial institutions. For instance, DBS has partnered with FinLync, a global FinTech company transforming corporate finance and treasury offices. They do this by aggregating global banking APIs, enabling embedded real-time payments and efficient cash management.
Another example is Singapore fintech Doxa, with its Doxa Connex platform, a cloud-based SaaS solution that leverages technologies like Artificial Intelligence (AI), Blockchain, Cloud Computing and Microservices. It helps digitalize the workflow of buyers, suppliers, and financiers, using the InterSystems IRIS data platform to facilitate end-to-end operational processes between suppliers, customers, and financial institutions, including DBS, Maybank, UOB and OCBC.
The Rise of Digital Banks
The rise of digital banks (or neo banks) in Southeast Asia has been notable, driven by a tech-savvy population, increasing smartphone penetration, and a growing demand for convenient and accessible financial services. The transaction value in the neo banking market is projected to reach US$116.80 billion in 2024, with an anticipated annual growth rate (CAGR 2024-2028) of 12.56%. This growth trajectory is expected to culminate in a projected total transaction value of US$187.50 billion by 2028.
By 2025, Malaysia is expected to be ahead of the Philippines and Singapore in the adoption of digital banking. Bank Negara Malaysia’s Financial Sector Blueprint 2022-2026, a five-year initiative, focuses on modernising the nation’s financial sector through digitalisation. Banks adopting new cloud-native technologies and fourth-generation core banking systems will outpace less agile competitors. As such, robust cloud-first data management platforms are crucial, enhancing security, streamlining operations, and enabling smooth integration of digital financial services.
In the Philippines, banks that were initially slow to embrace digital finance transformations are now responding. For example, BPI, one of the country’s largest banks, recently launched the Vybe e-wallet on its mobile app. Vybe offers many of the same services as GCash and Maya, and its uptake by a traditional bank illustrates the efforts of incumbent financial institutions to compete with fintech service providers in their native market segments.
The Power of Smart Data Fabrics
PWC’s Digital Banking Survey 2023: Southeast Asia Landscape highlights challenges in banking’s digital transformation, primarily due to the difficulty integrating new technologies with legacy core banking systems.
A promising solution is the implementation of a smart data fabric architecture, a modern approach to create one single source of truth from all the disconnected, disparate, and dissimilar data sources inside and outside the organization that feeds all consumers of the data.
A smart data fabric also provides a consistent and overarching metadata layer, and a semantic layer that maintains relationships among the various data and metadata. A data fabric can eliminate the errors and redundancies introduced by maintaining multiple individual data repositories that serve different consumers of the data. It should allow data to be optionally persisted or virtualized (not persisted), handle real time streaming data as well as batch data at scale, be able to natively manage a wide variety of data types including unstructured data (multi-model), and have embedded analytics to enable real time advanced analytic processing without moving the data to a different environment for analytics (smart data fabric).
These capabilities are revolutionizing how financial institutions in Singapore and Southeast Asia leverage data for strategic gains.
Do More with Data Fabrics
FinTech companies can set the standard for modernizing data management, particularly through the use of smart data fabrics. By addressing challenges with a robust approach, FinTech can infuse new ideas, flexibility, and tailored solutions into the financial sector. This synergy between cutting-edge technology and financial expertise is key to driving transformation and success in an increasingly digital financial landscape.
Kenneth is an experienced data management expert with a focus on Financial Services. He has spent the past two decades building and managing FinTech organizations and is an active member of the local FinTech community, regularly speaking at events and offering mentorship to young startups. His industry knowledge and understanding of digital transformation make him a highly sought after thought leader.
