Covid-19 presents an opportunity for banks to go fully digital

The Covid-19 pandemic is forecast to shrink the global economy by as much as 6% in 2020, and as cities stay in lockdown, the numbers are unlikely to get better.

Despite this, the current situation could present an opportunity for financial institutions to make the leap and go digital – even though banks are tightening their belts and putting tech investments on the back burner.

Tan Bin Ru, CEO (SEA), OneConnect Financial Technology / Photo: OneConnect

“To drive change during a crisis is a very difficult call. During these difficult times, you’re going to see some changes [in banking] emerge, and some [banks] are unfortunately going to go down,” says Tan Bin Ru, the CEO of OneConnect – an associate of China’s Ping An Insurance Group – in Southeast Asia.

OneConnect provides technological applications and technology-enabled business services to financial institutions. These include digital onboarding solutions such as enabling companies to conduct the electronic know-your-customer (eKYC) process via facial recognition and biometric authentication. Originating unsecured loans for the unbanked, an area that traditional banks typically steer away from due to difficulties in ascertaining their credit worthiness, is another solution the company has adapted for its Southeast Asian clients.

Some banks, like India’s Kotak Mahindra Bank, have taken a different approach and are going 100% digital, Tan says.

In March, the Mumbai-headquartered bank extended its digital account opening platform to its corporate customers as part of the enhanced initiatives its enacting during the country-wide lockdown. It also implemented a bilingual voice bot named Keya which can tackle customer queries in both English and Hindi.

Rocking the boat

Over the last two years, New York-listed OneConnect has turned its attention toward Southeast Asia as the region’s financial sector picks up the pace in digital transformation. Tan says the company aims for the region to eventually make up 10% of its total revenue.

Digital onboarding, which employs technologies such as facial recognition and biometric authentication, was a particularly hot category for the firm in 2019, and Tan expects this will continue into 2020 thanks to government-led efforts in the region.

As an example, Thailand’s central bank has given its stamp of approval for six lenders, including Kasikornbank, Bangkok Bank, and Siam Commercial Bank, to use eKYC technology to verify the identity of customers who are opening online deposit accounts.

OneConnect is currently working with major financial institutions in Malaysia and Thailand, as well as KBIJ, a private credit bureau in Indonesia, and UBX, which is a subsidiary of UnionBank in the Philippines. While it hasn’t partnered with major banks in Singapore yet, Tan foresees that will soon change, as she says talks with players in the city-state are becoming “more regular.”

However, “Singapore banks are, unfortunately, relatively comfortable,” she notes.

Automatic teller machines in Singapore / Photo credit: 123RF

Targeting digital banks

Challenging times ahead