The disruption caused by the novel coronavirus pandemic made more Southeast Asians turn to mobile apps for their banking needs, a switch that may last even after the outbreak is over, experts say.
Data from Sensor Tower, an intelligence and insights provider for the global apps downloads, show that mobile banking app downloads have increased since March, when many Southeast Asian countries restricted business operations and enforced social distancing, including closing bank branches temporarily.
Banks too have encouraged their customers to conduct their business digitally, increasing investments in online products and apps to make them user-friendly.
"The national lockdown measures in place in different [Southeast Asian] countries over the last 2-3 months only served to accelerate this already rising trend [of app-based smartphone digital banking]," Ho Kok Yong, financial services industry leader at Deloitte Southeast Asia, said in comments emailed to S&P Global Market Intelligence.
Banking is deemed an essential service, which allowed some branches to stay open throughout the lockdown period. However, many bank branches have adjusted their operating hours and limit the number of customers, prompting them to turn to mobile banking for convenience, Ho said.
New users may stay
Although many customers may have been forced to download these apps because of the disease outbreak, they are likely to continue using them even after the outbreak has subsided.
"Consumer shifts to digital channels tend to be irreversible," said Sampath Sharma Nariyanuri, APAC fintech research analyst at S&P Global Market Intelligence. Banks have for long sought to incentivize digital banking through the ease of in-app payments, loans, investments, shopping services, and integration with high-frequency consumer platforms such as ride-hailing and e-commerce services, Nariyanuri said.
"Forced exposure to these banking apps will create a sizable number of converts," said Sri Srinivasan, the ASEAN Digital Banking lead at Accenture. Southeast Asia's banks had already been improving their mobile banking apps prior to the virus outbreak in the hopes of reaching customers who were already using mobile phones for many of their day-to-day activities, he said.
However, Srinivasan noted that the users' experience with the apps will decide whether they would stay after the pandemic. "There are people, particularly the elderly or others not so comfortable with technology devices, that will still need face-to-face help or demand further education on operating these mobile apps, so banks need to be prepared for that," he said.
Cybersecurity concerns may be another factor that may discourage users from sticking to mobile banking platforms.
"If a new user is based in a country with weak privacy laws or cybersecurity infrastructure, they may tend to switch back to brick and mortar banking as there is a fear that their privacy may be compromised and a heightened risk of cyber security issues that come with mobile and digital banking," Deloitte's Ho said.
Indonesia, Thailand lead
Indonesian and Thai banks had the largest increase in downloads, placing in the top eight in the region. PT Bank Central Asia Tbk had 3 million new app downloads during the first five months of 2020, and Krung Thai Bank PCL followed closely behind with nearly 2.9 million downloads, Sensor Tower data showed.
"Large banks in Southeast Asia, including Bank Central Asia in Indonesia and Kasikornbank PCL in Thailand, are accelerating their efforts to drive contactless customer engagement through offering a variety of online services including opening savings accounts via mobile banking apps," said Nariyanuri.
Experts also noted that people in Indonesia and Thailand have a strong affinity for mobile banking. A higher proportion of the population is unbanked, allowing users to leapfrog to app-based transactions. Rising internet penetration and a tech-savvy demographic helps. The two countries also have large access to low-cost smartphones and cheap mobile internet plans, lowering the barriers to adopt mobile banking.
About half of the population in both Indonesia and Thailand were classified as tech "pioneers," or people who are "risk takers, tech-savvy, hungry for innovation, and keen to engage with financial providers using mobile devices," Srinivasan said, citing results of a global survey of financial services consumers last year by Accenture.