The IDC FutureScape: Worldwide Financial Services 2021 Predictions — Asia/Pacific (Excluding Japan) Implications contextualizes the global financial services predictions for 2021.
The predictions list is a hodgepodge that may well describe the disparate interests and priorities that is reflective of the financial services ecosystem.
To lend or not to lend
“This year, one imperative stands out, which is lending. Lending serves as an indicator for the eventual income growth and profitability of banks, and the ability to lend well in crisis conditions has received a lot of attention especially among the Asia/Pacific region's largest institutions," says Michael Araneta, associate vice president at IDC Financial Insights Asia/Pacific.
He opines that the lending ecosystem is witnessing a radical transformation.
“From owning the entire value chain of lending from origination to servicing, the focus is shifting to specialization in parts of the overall digital lending value chain. Banks and financial institutions are looking to build capabilities to orchestrate various components of lending value chain effectively through collaboration."Michael Araneta
No risk, no reward
IDC Financial Insights predicts the return of risk management as a key driver for technology investments and business decisions, particularly in what seems to be a point of entry for a crisis: credit risk.
Financial institutions must ensure that they can withstand the pressures of a slow growth, high delinquency period, and investments will be forthcoming into credit decisioning systems, collections and recovery, asset–liability management, and stress testing.
Incumbent-and-Fintechs: very definition of frenemis
IDC says 2021 will introduce new trends in fintech-related activities by banks and insurers. Although fintech companies have seen challenges at the outset of 2021, there is greater willingness by incumbent financial services institutions to collaborate. This is seen even in the most traditional business activities like lending and deposit-taking.
Speaking of which IDC predicts that by the middle of 2021, 50% of lending decisions in retail banking will be supported by fintech propositions, underscoring accelerating bank–fintech collaboration.
Everything but the kitchen sink
Other priorities in ensuring quality of customer services have come to the fore.
For instance, by 2024, 50% of in-branch transactions will be initiated as prestaged transactions or appointments for specialists that start on digital platforms and fulfilled on bank-owned technology and locations.
Ganesh Vasudevan, research director at IDC Financial Insights Asia/Pacific remarks said the experience of 2020 has made banks and insurers more confident in their ability to deal with digital transactions.
He noted that with investments into cloud, virtualized infrastructure, and real-time payments systems, they can cope with the sheer growth in the use of digital channels among customers and staff. The effort around operational risk management and business continuity has sustained them amid lockdowns and remote work phenomenon.
“Financial institutions are also much more able to support the emergence of new modalities of customer interactions, which enhance face-to-face interactions or replace them altogether.".Ganesh Vasudevan
One more thing
By 2024, 75% of all consumer and small business loans will be originated through AI-enabled and automated processes.