Disruptive Trends in Digital Banks in Asia Pacific and Australasia - II: Market landscape

Delivery

This report comes in PPT.

Key findings

East and South Asia led in digital bank development

Japan, China, South Korea and India were the earliest to issue licences to digital banks, driving the first two waves of development. Most of the digital banks in Japan and China have reported profitability, while peers in South Korea and India are in different phases. The profitable players progressed well in five key areas of the profitability framework discussed in the part I of the digital bank strategy briefings.

Financial inclusion in Southeast Asia and India

Key emerging markets, such as Vietnam and India, have a higher proportion of financially underserved and unbanked consumers, with low revenue potential for incumbents. This scenario does, however, provide opportunities for digital banks with sound credit decision-making, prudent risk management and low cost structures.

Digital bank failures in Australia

The five winners of digital bank licences in Australia were Volt Bank, Judo Bank, 86 400, Xinja Bank and IN1. Most of them adopted a “neobank” model. Only Judo Bank and IN1 Bank still survive, leveraging business banking revenue. In contrast, Volt and Xinja closed down, while 86 400 was acquired by National Australia Bank (NAB).

Tough battles in Hong Kong, Taiwan and Singapore

Hong Kong, Taiwan and Singapore have high banking penetration for consumer finance. Quite a few digital banks offer promote the better interest rates, for customer acquisition and retention. Most of them still focus on deposits and financial cards, lacking solutions in lending, investment and insurance.