About 67 per cent of surveyed banks believe they will lose market share within two years if they fail to digitally transform, according to a new report from cloud banking platform Mambu and The Financial Times Focus (FT Focus).

The ‘Evolve or be extinct’ report was conducted by FT Focus and surveyed over 500 senior banking executives globally to gain insights into their perception of the banking industry, now and in the future.

The results illustrate the urgent need for banks to modernise their offerings, with 58 per cent of global respondents predicting they will completely cease to exist in the next five to ten years unless they change their business models.

Pham Quang Minh, General Manager Viet Nam at Mambu, said: “What we are seeing in Viet Nam in particular is increasing demand for online and mobile banking services from consumers that is driving digital transformation of banks. Online transactions in Viet Nam for the first four months of this year jumped 66 per cent compared with the same period last year, which has been accelerated enormously by the pandemic.”

“There’s also been a huge increase in the use of e-wallets, payments via smartphones and QR codes, and high demand for ‘instant credit’ solutions such as Buy-Now-Pay-Later, particularly among those segments of the population that remain unbanked or underbanked. Viet Nam’s consumers are demanding digital financial solutions, and our industry is rising to the challenge, with banks like Timo, TNEX and Cake at the cutting-edge of digital banking gaining attention around the world. This is an exciting time for Viet Nam, but as this research report shows, those banks that are reluctant to take a digital leap risk becoming extinct.”

Looking more closely at Asia Pacific, the FT Focus report indicates that the region is lagging behind other regions on transformation, however, APAC banks are taking steps to ‘catch up’ to the rest of the world, with plans to increase investment in big data, machine learning and blockchain at significantly higher rates than other regions.

Myles Bertrand, Mambu’s Managing Director APAC, said: “The research illustrates how the banking industry is diverging on its approach to digital transformation. While less than one third of APAC banks describe their digital transformation strategy as mature or advanced, there’s an emerging cohort of digital ‘evolvers’ that is bucking this trend and really leading the way. These forward-thinking players are setting a blueprint for the rest of the industry to follow while demonstrating the business case for a customer-centric approach.

“And while the strong commitment from APAC banks to increase their investment in new technologies is very positive, banks in the region also need to change the way they approach innovation, and start proactively embracing new partnerships and collaborations. The ‘ecosystem’ approach has been incredibly successful in other regions, and with half of APAC banks concerned that they lack key internal workforce skills necessary to transform, it will prove very effective here too.”

Elliott Limb, Chief Customer Officer at Mambu, said: “The last 18 months have shown banks just how important it is for them to have a robust and agile digital banking offering. And with 53 per cent of those surveyed admitting they’re at risk of missing digital transformation targets, it's time the industry took note of the financial ‘evolvers’ that are leading the charge in this space. These are fintechs, challenger banks, and forward-thinking traditional players that are prioritising purpose-driven services and great customer experience.” — VNS