Incumbent banks are all benefiting from the rapid growth in digitalization amidst the coronavirus outbreak, whilst growth for neobanks has largely stalled. A survey of 13 large banks across these 5 markets by the bond credit rating firm found that the pandemic has pushed digital banking services to become a necessity rather than simply a convenience for bank consumers. This change in behavior drummed up daily account usage in the first half of 2020. Almost nine in 10 or 86% bank account transfers from January-June were done via digital banking platforms amongst banks in Australia, China, Hong Kong, Japan, and South Korea. These numbers has deepened the enthusiasm of surveyed banks when it comes to digitization, with 80% of indicating that they plan maintain or raise investment budgets on digitalization after the pandemic. Key areas of focus include payments, cybersecurity, and awareness on competition from fintechs and neobanks.
Survey of large banks in five APAC banking systems showed that most plan to maintain or raise investment budgets for digitalization even in the face of weakening profitability, with digital platforms likely to become increasingly integrated into mainstream banking while physical branches will close. In contrast to growing digital platform usage reported by large banks in our survey, available data suggest that the region’s neobanks have made limited headway in their growth this year, noted Moody’s. This is despite neobanks’ channel being focused on online and mobile. The market shares of most neobanks failed to gain during the coronavirus pandemic and as a whole remain low, although some only started operations in 2020. Increase in market share amongst neobanks in the five markets was low to moderate in the first half of 2020.