The coronavirus pandemic and the resulting social distancing phenomena are likely to spur banks across south-east Asia to accelerate their digital transformation strategies, with laggards likely to suffer swifter franchise deterioration as customer preferences and competition evolves more rapidly, says Fitch Ratings.
We expect established, digitally advanced incumbent banks to gain from the trend as customers flock to convenience and perceived safety in times of crisis, while also reaping the benefits from potentially improved productivity as well as cost savings from closed branches in the medium term.
Many major banks across the region have reported a surge in online banking activities since the onset of the pandemic. For example, Bank Rakyat Indonesia (Persero) Tbk (BBB-/Stable) reported around 88% yoy growth in internet banking activity in 1Q20, and a similar trend occurred in many major banks in the Philippines and Malaysia.
The three large Singapore banks, in addition to higher digital transactions, have also reported a significant rise in digital account opening or usage of ‘robo-advisory’…