Backbase, the global pioneer of Engagement Banking, announced the release of the APAC-focused Infobrief, “Accelerating Customer-Centric Transformation by Balancing Build and Buy – A Collaborative Approach Towards Sustainable Digital Banking Architecture.”
Developed by global market intelligence firm IDC, and commissioned by Backbase, the in-depth report draws insights from 125 banks and 316 CIOs in Asia-Pacific, including the Philippine market, and offers a regional perspective on digital transformation.
The Infobrief challenges the long-standing default approach of building in-house solutions for digital engagement banking platforms, and finds that 65 percent of mid- to large-sized banks in APAC have opted to build their engagement banking platforms in-house to achieve digital transformation; however, 70 percent of these projects have failed due to costly and lengthy in-house efforts.
In the Philippines, the government recognizes the crucial need to speed up innovative digital transformation, especially in the banking sector. With the central bank poised to reopen the window for digital bank license applications, this could catalyze incumbent banks to expedite their reassessment and strengthen their digital offerings for both consumers and business owners. This demands a recalibration of technology strategy to elevate digital experiences, amplify satisfaction levels, and broaden the scope of digital services for these banks to remain competitive in the evolving landscape.
“In the Philippines, we see some of the established banks being the first movers in embracing the adopt and build strategy. BDO and BPI are the top 3 banks in the country by asset size and they have partnered with Backbase to innovate customer-centric digital banking on our Engagement Banking Platform as early as 2020 and 2016 respectively,” said Riddhi Dutta, Regional Vice President, Asia of Backbase.
According to the Infobrief, a staggering 80 percent of digital engagement platforms built in-house with budgets over $10 million face underperformance and have not yielded the desired ROE in their digital initiatives.
“Building in-house has been a de-facto strategy by banks, but it’s no longer feasible to deliver to the pace and scale that is required to be competitive. The complexities that come with the extensive amount of data layers, channels, features, upstream and downstream integration that needs to support legacy and modern systems to manage and orchestrate sophisticatedly is where in-house implementation breaks apart,” said Ashish Kakar, Senior Director of Research, APAC of IDC.
Despite having embarked on digital transformation since the 2000s, many banks in APAC remain at an early stage, failing to fully capitalize on its benefits and deliver compelling digital customer engagements.
The IDC Infobrief highlights a crucial disconnect between banks and their customers, where most banking products and offerings are deemed “me-too” and limited.
In a matrix gleaned from the Infobrief, the Philippines is categorized as a ‘Legacy’ quadrant alongside India and Malaysia. However, when compared to the other two countries, the pace of digital transformation progress in the Philippines is expected to be comparatively slower. Countries in this quadrant are characterized by their adherence to the traditional IT approaches, with IT primarily serving as a cost center rather than a transformation differentiator.
Customers’ challenges in digital experience include accessing multiple services through disparate interfaces, dealing with the lack of a unified view of their portfolios, and enduring lengthy onboarding processes. The demand for instantaneous approvals and streamlined digital processes remains unmet, while personalized experiences, segmentation, and relevant promotions based on customers’ lifestyles, life moments, and goals continue to elude them. Additionally, backend operations suffer due to the lack of intelligent assistance in contact centers, leaving customers repeating information to different service officers due to the absence of a 360-degree unified customer view. This is a result of banks focusing on locking in a high amount of resources getting banking platforms into shape instead of prioritizing the creation of differentiated upstream customer journeys and experience.
