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Reaching underserved financial services customers in Asia

by Carol Ong and Shuying Yao
14th July 2020

Since the start of Covid-19, the adoption of digital services has spiked, ranging from essential services such as communication and banking, to lifestyle needs such as online shopping and entertainment.

This is largely due to measures put in place to restrict physical interaction, thus removing the need to visit places in person. Digital channels, particularly mobile, are no longer viewed as an option, but as the main medium for customers and businesses to use when reaching customers.

Across the globe, banks are removing the need for customers to visit branches. At the same time, they are rolling out digital tools to strengthen touchless customer engagement and launching campaigns to encourage the use of remote and self-help services. In Asia, these initiatives have led to a drastic increase in the use of digital banking and payments.

While such upticks in usage are to be expected in mature markets where there is adequate access to internet connectivity and banking services, similar growth is also being reported in emerging markets. In Vietnam, Sacombank has seen a 50% increase in non-cash channels such as internet and mobile banking, while in Indonesia, Bank Rakyat clocked an 88% growth in online banking activities

Despite this, there is still a sizeable population that is digitally financially underserved in Asia. In fact, a report from Fintech and Digital Banking 2025 Backbase & IDC found that only 30% of APAC banking customers are active on digital banking channels.

This begs that question that in a time when remote activities and cashless transactions are key to protecting public health, how are the banks in Asia ensuring financial inclusion for underrepresented groups? This article explores some of the ways Asian banks have reached out to two disparate groups of underserved consumers – digital immigrants and the underbanked.  

The digital immigrants

The first group of underserved consumers are those who are already banking, but prefer traditional channels such as in-branch services and using passbooks. Most of this group are digital immigrants, people who grew up prior to the digital age. They are resistant to digital banking and are not confident about using technology independently. While most of them would have access to connectivity and smart devices, they only use them for basic functions such as keeping in touch with family members.

Due to a lack of understanding, they’re often wary of online scams and the hidden costs of online transactions. They also feel more reassured by paper receipts and passbooks as these are tangible items which they can easily access and refer to. With multiple sign-up steps and processes, there’s also a high barrier to the adoption of digital services for this group.

How are Asian banks helping digital immigrants?

As most of this group are seniors who are more vulnerable to Covid-19, it’s important that they remain vigilant and keep practising safe distancing, this means refraining from visiting branches. Even with lockdown easing, banks will need to continue to play their part in providing alternative channels for this group of customers to access banking services easily and remotely.

When it comes to serving an ageing population, Japan is another great showcase as elderly people have become an increasingly important market segment to serve. Kyoto Shinkin Bank run programmes such as flower arranging and knitting to capture the interest of seniors. They couple these sessions with lectures about products and services targeted at  elderly people.

Similarly, DBS in Singapore is running virtual befriending sessions and activities like sing-along sessions and home-gardening projects to interact and engage with senior citizens, as well as organising webinars to help train customers to use their digital tools to manage their money.

Some banks are trying to make technology relevant and inclusive to the elderly by speaking to them in their native language. In China and India, there are multiple languages and dialects, depending on the region. Banks have adopted multiple language and voice messaging in their approach. In China, the Alibaba Group is incorporating Chinese dialects into its chatbot.

Similarly, Kotak Mahindra Bank in India has implemented a bilingual voicebot which can address customer queries in both English and Hindi. Banking apps with voice control – like voice messaging - options helped improve the digital banking experience for elderly users who are already on smartphones. 

The underbanked 

The second group of underserved consumers are those who are digitally native, but don’t have access to, or avoid using common financial services. They may be underbanked, having a basic savings account but do not use other banking or financial services products. Instead, they resort to alternatives for quick access to cash. The lengthy loan processing time banks offer don’t work when these consumers need cash fast. They may also be unbanked consumers, without bank accounts.

This is common as the inability to maintain sufficient monetary income to use an account was found to be one of the main reasons why consumers are not using banking services. Apart from that, physical bank branches and banking facilities are often inaccessible, or simply not present in the suburban or rural areas. 

Banking services aside, these consumers are digitally native and use mobiles for communication, ride-hailing and online shopping. Since cash-on-delivery is a common payment method in these countries, consumers don’t need a bank account to shop online. This group is common in emerging markets with high mobile penetration rates.

According to CIO, Southeast Asia has a mobile penetration rate of 133% but only 27% of the adult population have a bank account.

How are Asian banks helping the unbanked?

Covid-19 has accelerated the onboarding of this group of consumers to banking services out of necessity. With the urgent need for people to receive cash relief and make necessary purchases, banks were forced to think of innovative solutions to help consumers open bank accounts easily so that they could receive the funding quickly, while limiting the need for customers to visit branches in person.

Prior to Covid-19, banks in Asia have already deployed solutions for consumers to set up bank accounts without having to go in-branch, and these are useful during this period when people needed to receive cash relief urgently. In Thailand, SCB’s partnership with 7-Eleven has allowed new customers to open a non-passbook savings bank account at 7-Eleven’s Counter Service using facial recognition technology to verify identity. Similarly in UOB’s TMRW bank in Thailand, customers can visit a biometric verification booth with their identity card to complete their account application.

At the same time, banks also need to be innovative in helping customers access cash in this period. In the Philippines, RCBC deployed a mobile ATM service, ATM Go. ATM Go makes use of a smartphone or tablet and a card reader to offer reliable, convenient and cost-effective ATM services, as opposed to having to invest heavily in brick-and-mortar ATMs. In rural areas, RCBC partnered with local sundry and drug stores to set up make-shift “ATM counters” where villagers can go for cash withdrawals, deposits, balance inquiries and fund transfers.

Lastly, to lower resistance to financial institutions, banks in Asia have also partnered with non-financial services such as social media, e-commerce, ride hailing and food delivery, to offer a full suite of consumer services and provide more value to end customers. For example, TMRW bank has partnered with Shopee, Grab and Line Man (an on-demand assistant application offering food delivery, courier, grocery delivery, and taxi services) to acquire new customers. By being front-of-mind in consumers’ daily activities, banks are able to provide more value and encourage the adoption of their banking services.

What can we learn from Asian banks’ response to Covid-19?

Covid-19 has accelerated the move to alternate ways of banking, such as digital banking, even for groups who did not see the need previously. Moving forward, digital banking behaviour and preferences are likely to stay once consumers become accustomed to the convenience and perceived safety. This presents a great opportunity for banks to bring different consumer segments into digital banking. Our key takeaways from what banks are doing in Asia are:

  • Address the specific needs and concerns of different customer segments to provide more inclusive approaches and services. For example, elderly consumers who may have concerns about the tech and scams, and underbanked consumers who are already active on other lifestyle apps.
  • Employ technology to lower barriers of adoption. Chatbots and voicebots that can speak local languages and dialects can make digital tools easier to use for people in communities where literacy is lower but where smartphones are used. For consumers who are not as tech-savvy or do not own smartphones or smart devices, offer kiosks with biometric technology at convenient locations or services augmented by video conferencing tools as alternative channels to verify and authenticate.
  • Consider a mobile-first online strategy for emerging markets with high mobile penetration rates. According to a study by the Asian Development Bank (ADB), 63% of customers are willing to make the switch to neobanks (100% digital banks, which offer banking services without a physical network), showing that consumers are ready to onboard into new and emerging digital banking services.

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