In an era dominated by digital innovation, the banking sector is rapidly evolving to meet modern consumer demands for seamless and integrated financial services.
This move towards “invisible banking” signals a departure from traditional banking and offers a glimpse into a future where banking is invisible but part of everyday life.
Underpinned by core modernization, this concept will see the need for physical bank branches and dedicated banking applications fade, replaced by seamless financial services embedded in everyday activities such as shopping, traveling, and socializing. It represents the future.
The indispensability of invisible banking operations
Image: New Straits Times
The banking industry’s journey towards invisibility represents a departure from traditional paradigms and embraces a future where banking is no longer limited to physical branches and dedicated apps.
Zainul Hashim
As stated by Zainul Hashim from Malaysia’s CIMB Bank, the essence of invisible banking is seamless accessibility across different applications and channels, minimizing friction for users.
However, the journey towards full invisible banking is only just beginning, especially in regions like Malaysia, and is hampered by spending prudence and regulatory constraints.
Modernizing core banking systems has become a strategic necessity as banks seek to align with the digital-first preferences of today’s consumers.
This will require moving beyond outdated legacy systems to embrace disruptive technologies such as coreless banking platforms, open APIs, generative AI, and machine learning.
These technologies are more than just enhancements; they are essential to creating a superior customer experience that will be at the heart of future banking services.
The rise of digital financial services in Asia Pacific
The Asia-Pacific region is experiencing an unprecedented surge in digital financial services, driven by technological advancements and changes in consumer behavior.
The API banking market is expected to grow at a CAGR of 25.3% from 2023 to 2030, and the e-commerce market is expected to expand at 19.2% to reach USD 6.14 trillion by 2030. The momentum is undeniable.
Similarly, the fintech and Internet of Things (IoT) market is also witnessing strong growth, further highlighted by the region’s significant internet penetration of 68.5 percent in 2023.
The move towards real-time payments is also noteworthy, with transaction value set to rise from 49.2 billion in 2022 to more than 300 billion by 2027, despite 24% of the population being unbanked.
The AI market is evolving upwards, growing at a CAGR of 19.46%, highlighting the region’s rapid acceptance of digital transformation.
Gateway to great customer experience
image extracted from “The Invisible Bank – Orchestrating invisible experiences through core modernization” e-book
The shift to invisible banking highlights the importance of core modernization as a strategic priority for banks.
Thought Machine highlights the significant financial and operational benefits of core modernization, noting that banks adopting cloud-based, API-driven systems could realize savings of up to 40% Did. This transition promises not just efficiency, but a transformative leap forward in banking.
This transformation unlocks four key growth opportunities: aligning customer journeys, cultivating new customer relationships, creating embedded experiences, and enabling hyper-hyper-personalization.
Adjusting the customer journey
Image: Vietnam Investment Review
Modern banking aims to create seamless, personalized experiences across all customer touchpoints. This includes leveraging technology to strategically manage the customer journey and ensure every interaction contributes to a consistent and satisfying banking experience.
The challenge lies in overcoming the lack of understanding and awareness of these journeys, with 40% of leaders identifying it as a major hurdle.
Lan Anh Ngoc Nguyen
This strategic approach makes every customer interaction part of a consistent and enjoyable journey, leading to revenue generation and increased customer loyalty.
“To truly embrace invisible banking, we need to focus on customer centricity, streamlining processes, and maximizing efficiency. It’s about simplifying complexity.”
Lan Anh Ngoc Nguyen, Chief Technology and Operations Officer of Standard Chartered Bank in Vietnam, said:
Foster new customer relationships
The modern banking industry requires a departure from traditional banking relationships.
Banks can build stronger, more meaningful connections by understanding and responding to customer needs through innovative services and proactive advocacy.
Embracing modular architecture and advanced analytics is critical, allowing banks to quickly develop and introduce new products that resonate with their customers’ lifestyles.
Embed the banking experience
Embedded finance, which integrates financial services into non-financial platforms and applications, is becoming a cornerstone of the strategic plans of banking institutions around the world.
According to a recent survey, 70% of bank executives now consider embedded finance to be central to their overall business strategy, rather than just an ancillary feature.
Despite this growing recognition of its importance, only 20% of these institutions have begun offering embedded financial solutions to their customers.
The integration of financial services into the platforms and workflows customers already use, facilitated by open APIs and strategic partnerships, is redefining the convenience of banking and unlocking new revenue streams and customer engagement. Ready to pave the way for reinforcement.
Hyper-personalization with advanced analytics and AI
Hyper-personalization is a key focus in banking strategies across Asia Pacific, with 87% of banks planning to partner with fintech companies.
The partnership aims to leverage AI and analytics to customize the banking experience to each customer’s individual preferences.
Such a customized approach is expected to significantly increase customer satisfaction and loyalty by providing personalized financial advice and product recommendations.
Transform banking operations with cloud-native core systems
image extracted from “The Invisible Bank – Orchestrating invisible experiences through core modernization” e-book
A fundamental transformation of banks’ underlying technology stacks is considered essential to this transition. By moving from monolithic, siled systems to cloud-native, microservices-based architectures, banks can achieve unprecedented levels of agility, scalability, and the ability to innovate.
Moving to cloud-native core banking systems is the foundation for achieving the agility and scalability needed for the future of banking.
Such systems facilitate agile project management and continuous deployment, allowing banks to rethink product design and architecture through microservices and APIs.
This transformation is essential for banks to adapt to a rapidly evolving digital environment and meet growing customer demands.
Download our whitepaper for a deeper understanding of the strategies, insights, and case studies that will define the future of banking.Invisible experience adjustments through core modernization”.
