APAC’s solutions to Europe’s biggest challenges in banking
We've gathered some of the most pressing questions from our European member banks and asked Joe Jelinek, Research Director at Kapronasia, to share how these challenges are being addressed in the APAC region.
Whether you're in Silicon Valley, on Wall Street, in London’s City district, or anywhere else in the world, the spotlight on the innovative capacity of banks in the Asia-Pacific region is growing brighter. The sun rises in the east, and so do many cutting-edge banking solutions. APAC banks are often a step ahead – or sometimes several – offering inspiration for tackling the challenges faced in other regions.
Curious about how they're doing it? We've compiled some of the most pressing questions our European member banks ask us, covering topics like the future of bank branches, creating the human touch in digital banking, cybersecurity, generative AI, digital accessibility, and supporting customers in their ESG transformations.
To dive deeper, we turned to Joe Jelinek, Research Director at Kapronasia, a leading strategic consulting firm specializing in Asia's payments, banking and capital markets. Joe sheds light on how these challenges are being tackled in the APAC region. Are these issues a major focus there? How are they addressing them? Which banks are setting the pace, and what can we learn from them?
At Qorus, sharing best practices to help you overcome challenges and drive innovation is at the core of what we do – it’s in our DNA. We hope this exchange of insights between Europe and Asia-Pacific provides valuable takeaways to inspire your journey of innovation and transformation.
Let’s zoom in on some of the key trends, and the APAC approach to them:
Although major European banks no longer technically need branch networks to operate, they are not planning to eliminate them. Instead, they are seeking new business models to make branches attractive and useful
APAC perspective:
The APAC region, particularly Southeast Asia, has a dual narrative regarding branch networks. While digital banking adoption accelerates, a significant portion of the population remains underbanked, especially in emerging economies. Therefore, the need for branches persists in some markets, while others are focusing on redesigning and reducing their physical footprint. Branches in affluent areas are increasingly being repurposed to offer high-value services or even non-traditional formats such as lounges or cafés, while emerging economies use branches to increase financial inclusion.
Leading banks:
• DBS Bank (Singapore): Introduced ‘mini branches’ that operate with reduced staffing, focusing on digital-first solutions while providing personalized advisory services for wealth management and SME clients.
• HDFC Bank (India): Expanding its branch network in semi-urban areas while also investing in digital capabilities.
• State Bank of India (India): Deployed branch models with technology-led self-service capabilities targeting rural customers.
• RCBC (Philippines): Combines digital and physical strategies, ensuring branches are reconfigured to include personalized services and digital tools to maintain relevance.
Innovations:
• Interactive zones within branches for product demos and financial literacy sessions.
• Tailored branch strategies based on local needs, with some focusing on communal spaces (e.g., lounges) in urban areas and others maintaining transactional services in rural markets.
• Many branches are transitioning to automation for transactional banking and focusing on advisory roles to enhance the customer experience. This shift is supported by the integration of tools such as facial recognition and AI chat interfaces, as well as AI-driven customer data insights that enable targeted services during in-branch visits.
• Using branches as part of a broader omnichannel strategy, ensuring seamless interactions between digital and physical channels.
In an effort to enhance the customer experience, banks aim to create a human touch on their websites and apps. However, achieving this is often easier said than done
APAC perspective:
Asian banks recognize the importance of customer experience and are investing heavily in user-friendly interfaces and personalized services. The challenge is balancing automation with personalized interaction, especially in countries with a strong cultural emphasis on relationship banking.
Leading banks:
• OCBC Bank (Singapore): Launched a digital banking platform that personalizes user experiences through AI-driven insights. The bank has also introduced AI avatars that mimic human conversational styles to improve engagement.
• UOB (Singapore): Developed the TMRW app, which uses AI-driven insights to offer hyper-personalized banking experiences, including savings recommendations, expense alerts and fraud detection.
• DBS Bank (Singapore): Integrated advanced AI to improve alert prioritization and operational efficiency, enabling faster, more accurate responses to customer queries.
• Bank of China (Hong Kong): Implementing features that allow for more interactive customer engagement on its platforms.
• CIMB (Malaysia): Developed conversational interfaces in their apps with context-aware recommendations.
• UnionBank (Philippines): Innovated with AI-powered credit scoring, providing financial accessibility to the previously unbanked.
Innovations:
• Use of localized language capabilities in chatbots to connect with a diverse customer base.
• Personalized video banking services enabling customers to connect face-to-face with advisors online.
• Banks like DBS and UOB use AI to analyze vast datasets and provide tailored experiences, including predictive analytics for customer needs and spending habits.
• Banks such as UNOBank integrate APIs to allow seamless fund transfers and account linking across multiple institutions, enhancing customer convenience.
• Initiatives like UOB's TMRW app focus on creating engaging digital environments that resonate with millennial users by integrating off-the-shelf financial insights and gamified user experiences.
• Banks are introducing tools like POSB’s Smart Buddy (Singapore), which uses wearable technology to teach financial literacy to young users.
• Vietnam International Bank employs augmented reality (AR) in its MyVIB 2.0 app to create an engaging, dynamic user experience for routine banking transactions.
Banks are updating their websites and mobile applications to accommodate people with disabilities, complying with the forthcoming European directive on digital accessibility
APAC perspective:
This trend is gaining momentum as governments and regulators in countries like Australia, Singapore and Japan emphasize inclusive financial services. However, overall awareness and adoption are still in nascent stages compared to Europe and vary widely across countries, split roughly between developed APAC and emerging APAC.
Leading banks:
• ANZ Bank (Australia): Implements WCAG (Web Content Accessibility Guidelines) standards in its digital platforms and prioritizes accessibility testing.
• ICICI Bank (India): Focuses on making mobile apps accessible through voice-based navigation and screen reader compatibility.
• Citi (Asia-Pacific): Implementing global standards for accessibility across its digital services.
Innovations:
• AI-powered tools for real-time audio transcription on banking apps.
• Mobile banking apps compatible with assistive devices, including Braille displays.
Banks are embracing the possibilities offered by generative AI, particularly in terms of operational efficiency and chatbots for customer service
APAC perspective:
The APAC region is actively embracing GenAI, with its potential to boost operational efficiency, elevate customer service and strengthen risk management. Southeast Asian banks are particularly focused on AI chatbots, operational automation and risk management tools, as well as fostering personalized banking experiences.
Leading banks:
• DBS Bank (Singapore): Leveraged GenAI for its ‘CSO Assistant’, an AI-driven virtual assistant supporting its customer service officers. This tool improves query resolution and documentation by integrating custom large language models (LLMs). It has reduced call handling times by up to 20% and boosted efficiency in managing customer interactions.
• OCBC Bank (Singapore): Deployed OCBC GPT, a GenAI chatbot designed to assist employees globally with tasks like drafting customer responses, translating content and writing research reports. This internal tool accelerated task completion by 50% during trials.
• Tonik (Philippines): Incorporated ChatGPT into its operations to resolve 75% of customer queries automatically, enabling employees to focus on complex tasks.
• Techcombank (Vietnam): Developing an AI-powered ‘data brain’ to train and operate LLMs, offering hyper-personalized customer services.
Innovations:
1. Enhanced chatbots:
• Great Eastern Life (Singapore, Malaysia, Indonesia) launched GERICA, a GenAI chatbot assisting agents and customers with policy and claims queries.
• Pand.ai partnered with insurance companies like Allianz to create bilingual WhatsApp chatbots for motor insurance in Singapore.
2. Productivity tools:
• Banks like UOB are piloting Microsoft 365 Copilot to integrate AI into various workflows, improving cross-departmental collaboration and operational efficiency.
3. Customer personalization:
• DBS Bank uses GenAI to analyze customer behavior, providing real-time, personalized nudges for financial planning and product uptake.
4. Risk management:
• GenAI models are increasingly used for adaptive learning in fraud detection, real-time transaction monitoring, and improving credit scoring models with synthetic datasets (e.g., FinbotsAI in Cambodia and Myanmar).
Cybersecurity is an increasing concern, especially with the emerging threats of deepfakes and quantum computing
APAC perspective:
Cybersecurity is a top concern for APAC banks, especially with increasing cases of ransomware, phishing attacks and emerging threats like deepfakes. Regulators are tightening frameworks to push banks towards better security. The increased threat vector is compelling banks to adopt advanced technologies like GenAI for fraud prevention, real-time monitoring and adaptive threat detection. Financial institutions in the region recognize the need to address these threats proactively, with investments in GenAI-driven models to enhance cybersecurity measures.
Leading banks:
• NAB (Australia): Investing heavily in cybersecurity measures to protect against emerging threats.
• ICICI Bank (India): Enhancing its cybersecurity framework to safeguard customer data amidst increasing digital transactions.
• DBS Bank (Singapore): Uses GenAI for fraud detection and cybersecurity, deploying adaptive learning models to counter emerging threats like synthetic identity fraud and deepfakes in financial transactions.
• MUFG Bank (Japan): Invests in quantum-resistant encryption to prepare for future threats.
• OCBC Bank (Singapore): Integrated GenAI tools to detect anomalies in real-time and enhance data security protocols across global operations.
• Techcombank (Vietnam): Implements GenAI-based tools to monitor transactions and detect unusual patterns that may indicate fraudulent activity or system breaches.
Innovations:
• Real-time facial recognition authentication coupled with deepfake detection algorithms.
• Quantum computing collaborations to strengthen encryption systems for long-term security.
• GenAI models are used to analyze and detect synthetic media in real-time, preventing fraudulent activities such as voice or video impersonations in customer interactions.
• Southeast Asian banks leverage GenAI to process vast amounts of transactional data instantly, identifying anomalies and stopping suspicious activities before damage occurs.
• While still nascent, APAC banks like MUFG (Japan) are investing in encryption methods resistant to quantum computing threats, anticipating future vulnerabilities.
• Institutions use GenAI to generate synthetic datasets, improving fraud detection models by enabling them to identify novel attack patterns.
• Advanced GenAI algorithms track user behavior across digital platforms, flagging deviations that may signal unauthorized access or cyberattacks.
An increasing number of banks are collaborating with their customers, particularly businesses of all sizes, to help them achieve ESG compliance
APAC perspective:
Sustainability is increasingly becoming a priority for APAC banks, driven by global ESG trends and regional regulatory mandates. This shift is motivating banks to engage more proactively with businesses to fund green initiatives and provide ESG advisory services.
Regulatory developments further underscore the importance of this focus: China and Hong Kong have introduced mandates requiring listed companies to publish sustainability reports by 2026, while Singapore has established the Green Finance Industry Taskforce to promote sustainable finance practices.
A BNP Paribas survey highlights that over one-third of Asian companies are now setting net-zero targets, demonstrating the urgency for banks to navigate the complex ESG landscape shaped by both local and international regulations. However, the scale and focus of these efforts vary significantly across the region, reflecting the divide between developed and developing APAC markets.
Leading banks:
• DBS Bank (Singapore): Actively engages clients in sustainability initiatives and offers green financing options. The bank has partnered with H&M to create financing tools aimed at decarbonizing supply chains, allowing H&M's suppliers to access financing and technical support to reduce their climate impact.
• Bank of America Merrill Lynch (Asia-Pacific): Collaborating with businesses to develop sustainable investment solutions.
• Standard Chartered (Asia-Pacific): Launched an ESG-linked cash account for corporate clients, where interest rates and fees are tied to the company's ESG performance. This initiative is currently in a pilot phase in Hong Kong and Singapore.
• Bank of China: Partners with renewable energy companies to finance large-scale sustainable projects.
• BNP Paribas (Asia-Pacific): The bank is actively forming partnerships with innovative ESG solution providers to assist clients in collecting ESG data across their value chains and establishing relevant KPIs.
Innovations:
• ESG compliance platforms for customers to self-assess and monitor their environmental impact.
• Use of blockchain to trace green investments and ensure transparency in reporting.
• By integrating sustainability considerations into supply chains, banks like BNP Paribas are enabling corporations to enhance competitiveness and achieve operational efficiencies. This involves providing financial incentives for suppliers to adopt sustainable practices.
• The transition from MT standards to ISO 20022 messaging systems is enhancing transparency in transactions, allowing for better tracking of funds and supporting decarbonization efforts across supply chains.
• Some banks are exploring blended finance strategies that combine public and private funding sources, particularly beneficial in emerging markets where sustainable development needs are critical.
Conclusion
The trends shaping the European banking sector are resonating across the Asia-Pacific region, prompting banks to adapt their strategies accordingly. While there is a clear interest in enhancing customer experience, leveraging technology, ensuring cybersecurity and addressing ESG concerns, the responses vary significantly by country. Leading banks in the APAC region are innovating and implementing strategies that reflect both global best practices and local market needs.
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