HONG KONG: Banking brands need to prepare for a surge in demand for digital products and services among consumers in Asia, according to a report.
McKinsey, the management consultancy, predicted in a study that the number of digital banking customers in the region should reach 1.7bn by the end of the decade, the Wall Street Journal reported.
China is likely to be a major driver of this trend, as 900m people in the country are expected to leverage these tools by 2020, compared with 380m in 2012.
In the last three years, mobile and internet banking has seen growth of 35%, according to McKinsey. Branch visits, by contrast, have declined by 27% during this period.
Kenny Lam, a partner at McKinsey in Hong Kong, warned financial services providers in Asia are currently trailing their peers when it comes to developing appropriate offerings for consumers.
"Asian banks still lag behind their counterparts in the rest of the world when it comes to digital banking services," he said.
For a few of the "leading" banks assessed by McKinsey, almost 20% of core product purchases take place online, he added in comments reported by Global Times.
Moreover, approximately 25% of pre-purchase decision-making and 40% of the services provided post-purchase are now attributable to digital channels.
Where financial institutions are able to find the right mix, net profits could rise by between 35% and 45% Lam continued.
"There's enormous upside opportunity for banks that can figure it out, as well as considerable risks for those that don't. It's not a matter of whether Asian banks should go digital, but when," he said.
Data sourced from Wall Street Journal, Global Times; additional content by Warc staff