SE Asian banks to cope with fintech disruption, Moody’s says
Banks in Southeast Asia, including those in the Philippines, are in a good position to weather market disruption from fintech players given that they have done well with their own digital transformation efforts, according to Moody’s Investor Service.
The global credit watchdog said in a report that established banks in the region have invested significantly in digital transformation to compete with fintech disruptors, with the result being widespread customer adoption of their digital channels and improved product quality.
“The competitive landscape for digital financial products will continue to evolve, but Southeast Asian banks are well positioned to compete, given their performance in recent years, and more so for large banks with the scale to make the necessary investments,” Moody’s said.
As for the disruptors, Moody’s said growth among fintechs has been uneven and is likely to moderate.
“Many were able to build huge customer bases, although their service offering is largely limited to digital payments and expansion into other financial services remains modest,” the company said.
“Fintechs are still loss-making and tight financing conditions will dampen their growth in the short term.” Moody’s observed that even among established companies such as Union Bank of the Philippines, products other than payments are also offered through digital platforms.
UnionBank itself saw the number of accounts opened via digital means 53 times in 2021 alone. In addition, incumbent banks have applications that offer a comprehensive suite of financial products for private customers and SMEs. On top of this, UnionBank has UnionBank Online, bonds.ph and UnionDigital Bank for retail as well as UnionBank SME Lending and The Portal for SMEs for small and medium enterprises (SMEs).
Bank of the Philippine Islands also has BPI Mobile, VYBE and BPI Trade for retail customers as well as Bizko and BizLink for SMEs.
For disruptors, among the Philippine players mentioned was GCash, which offers digital wallets and other financial services. Meanwhile, Maya also offers these in addition to pure digital banking.
Apart from Maya, there are only five other licensed digital banks in the Philippines – Tonik, Go Tyme, Overseas Filipino Bank, UnionDigital and UNOBank.
Furthermore, Philippine regulators have rolled out real-time payment systems that can be used to bridge existing and fintech services. This is the InstayPay transfer system and the QR Ph system.
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