Asia Pacific FSI accelerates digitalization in biz amid pandemic

Based on the survey of 597 regional business decision makers in FSI across 15 markets in Asia, within a 6-month period, before and since COVID-19, the sector was found to be ahead in its ability to innovate in response to challenges.

Despite the challenges and disruptions of COVID-19, the regional Financial Services Industry (FSI) has continued to forge ahead and accelerate the pace of digitization in response to the pandemic, according to Microsoft-IDC's latest findings.

Unveiling the FSI findings of the culture of innovation study in conjunction with Singapore Fintech Festival 2020, the Microsoft and IDC's study[2] found that more than 6 in 10 (66%) FSI organizations are accelerating digitization of their businesses. This figure rises to 86% amongst FSI Leaders, organizations who have the most mature culture of innovation, defining their ability to drive sustained innovation.

Based on the survey of 597 regional business decision-makers in FSI across 15 markets in Asia, within a 6-month period, before and since COVID-19, the sector was found to be ahead in its ability to innovate in response to challenges. Specifically, 70% of all FSI organizations in the Asia Pacific say that innovation is now a "must" and almost all FSI Leaders (96%) agree and are actively putting this into practice.

Apart from relying on innovation, the study also revealed that FSI organizations are deriving high revenue shares from digital products and services -- this stands at 39% currently and is forecasted to rise to 52% in three years.  This is much more so for FSI leaders, where this stands at 47% today and expected to rise to 57% in three years.

This is evident in the examples of an Indian fintech start-up, Paisabazaar, which introduced a new digital service to digitally overhaul the personal loan application and approval process amid the pandemic, as well as banking groups like Standard Chartered Bank and National Australia Bank which have taken steps toward a cloud-first digital strategy, to make virtual banking, next-generation banking and payment services a reality for customers.

Assessing the Innovation Maturity of FSI Organizations

During COVID-19, FSI organizations matured in their approach toward innovation. This has included the swift pivot of business processes to raise customer experience and centricity and embracing data management insights to enhance the speed and quality of decision making. In addition to that, FSI organizations have integrated cloud technologies to ensure business continuity during a time of remote working and living.

FSI organizations have improved their sentiments on innovation with 61% of FSI leaders agreeing that innovation is easier since COVID-19. Other FSI organizations have also embraced a more positive stance, with 52% agreeing with this statement.

"FSI has maintained its lead, based on our findings, and was assessed to be the most innovative vertical^[3], with the highest culture of innovation maturity score, and the highest proportion of leaders and verticals," said Michael Araneta, Head of IDC Financial Insights, Asia Pacific.

"What has been most interesting is that large FSI organizations -- the incumbents -- are not necessarily laggards in the space but on occasion, credible leaders with a mature culture of innovation. On the flip side, the prospects of some challenger banks 

are already dimming in some markets, as they have not been able to address sources of funding despite previously having good prospects when it came to their services in payments, and lending," continued Araneta.

Putting a Culture of Innovation into practice -- best practices from FSI Leaders for the new year

The study revealed the best practices that organizations can adopt, referencing the culture of innovation framework, for progress across people, process, data, and technology.