Smartphone banking booms in Asia as digital penetration expands threefold

Mobile banking has grown at least twofold in Emerging Asia to outpace other e-banking types.

Smartphone banking is on the rise in Asia as it has outpaced all other e-banking types with digital penetration expanding in both scope and scale particularly in Emerging Asian markets, according to a report from management consultancy firm McKinsey.

Digital banking penetration has expanded from 1.5 times to as much as threefold in various Emerging Asian economies since 2014, giving rise to a larger percentage of digitally active customers, accounting for a fourth (25%) of the population in markets like China, India, Indonesia, Korea, Malaysia, Pakistan, Philippines, Taiwan, and Thailand and 85% of the population in Developed Asia.

The median for e-banking penetration is at almost thorough at 97 for Developed Asia and more than half at 52 for Emerging Asia.

“For banks, these changes represent both a challenge and an opportunity,” said McKinsey & Company partner and head of Asia Pacific digital banking practice Vinayak HV. “What’s clear is that they cannot rely on their existing business models and need to consciously invest to change their businesses in line with rapid changes in consumer sentiment and behaviour.”

Major banking players need to fine-tune their digital strategies in an effort to tap the increasingly online audience or risk losing patronage to mobile wallets who are quickly snapping up market share in India and Hong Kong.

“Many are already doing this or looking to both protect their existing share and capture newer opportunities. Meanwhile, shifts in consumer behavior is also creating opportunities for newer attackers both platform players and emerging fintechs,” HV added.