As we kick off the brand-new year 2022, it’s a very good chance for all of us to reflect from our past mistakes and look ahead what the future holds for us. Digital might be one of the most overused words in the past years and we in the banking and finance industry finally (hopefully) understood what digital banking is. Digital is a new dimension impacting all industry including ours and has been widely accepted and accelerated during pandemic as a new norm in connecting with people. This is shown in McKinsey survey between 2017-2021 the adoption of digital banking in APAC emerging market increased by 33 percentage points at high 88 percent while developed market stable at 90 percent.

What started off as a simple app to conduct day to day banking activities from fund transfers, bill payment, checking account balance, has evolved to all parts of banking services from purchase of investment product, obtaining loans and managing cashflows. In fact, it is now expected by our customers to have majority of banking services to be available on their banking application as compared to just being another channel.

"Digital is a new dimension impacting all industry including ours and has been widely accepted and accelerated during pandemic as a new norm in connecting with people."

A digital only bank used to be a new sexy start-up funded by venture capital backers however not many has found great success in terms of business metrics beyond new customer onboarded. Some of the key challenges that we can recognize would be:

1. A standalone app that has feature to help customer to manage their money might increase stickiness but does not necessarily increase the customer bank’s balance or revenue.

2. There isn’t enough use case for them to move all their money into one single account.

On the other note, digital technology will continue to transform the banking landscape in Indonesia. Financial services customers in the country shows considerable growth in the adoption of internet and mobile banking, indicating that digitalchannels will become increasingly crucial in building loyalty and generating growth for financialinstitutions. Several factors combined to accelerate the migration to digital channels in Indonesia. In addition to the rapidly increasing adoption of the internet and smartphones, and growth in e-commerce, a strong digitization push by Indonesian banks has stimulated demand. Banks’ efforts to encourage customers and explain online banking were the most frequently cited reason respondents gave for trying digital channels.

The successful players understood that the key is the digital connectivity to ecosystem by that digital bank. For example, a marketplace platform that enable their customer to connect directly with their banking services to checkout or for their merchant to monitor their earnings has been deposited into their bank account. This will lead to myriad of other banking services like providing loan based on their transaction at that marketplace, encouraging them to start savings to buy something from the marketplace and more. At OCBC NISP we endeavour ourselves to be the premier provider of banking as a service in Indonesia market. This enables tech players like marketplace to avail and connect their service with banking services.

In consumer apps, navigation tools like waze or maps are things that we now take for granted, but when they first started the experience was not as smooth. So, we can ignore how technology capabilities like Artificial Intelligence and Blockchain will change how we are designing our customer experience. Self-driving car to self-driving finance, who will be the bank of the metaverse and what position will banks take in the world of blockchain. These are long term strategic options that management needs to start exploring if they want to be future proof.