Tag: mckinskey

The number of users in emerging markets in Asia-Pacific, which includes India, has increased from 65% in 2017 to 88% in 2021, according to a survey by consultancy firm McKinsey.

The shift to digital banking was likely accelerated by existing trends such as increasing use of digital channels, including banking, broader use of video calls in place of face-to-face meetings, etc. These trends have intensified during the COVID-19 pandemic, and high levels of digital adoption are likely to hold even as the pandemic subsides, the survey suggests.

In emerging markets, FinTech apps and e-wallet penetration reached 54% in 2021, compared with 43% in developed Asia–Pacific. In 2017, the penetration was just 38% in emerging markets.

More than half of the respondents in most Asia–Pacific markets report that cash is used for less than 30% of weekly spending, the survey said.

The survey results indicate that banks can expand their digital offering, by leveraging existing assets. According to McKinskey, banks will need to reinvent its business and delivery models by focusing on three key areas – value of branches, customer engagement, and overall competitive positioning.

Approximately 97% of all Asia–Pacific consumers favour mobile and online banking, and 2% of consumers in developed Asia–Pacific and 3% in emerging Asia–Pacific continue to conduct most of their bank business at the branch.

With digital banking becoming more and more popular, the question of functionalities of bank branches arises. However, despite these numbers, McKinsey says that bank branches will continue to be consumers’ primary partner in managing money. Banks can make sure that branch staff have time to concentrate on activities like advising on loans, insurance, or investments to customers, and digitise other processes, it said.

To further engage customers in digital banking, McKinsey’s research suggests that banks should urge customers to buy banking products online. Even though 70% of respondents expressed openness for using digital channels for services beyond transactions, only 20-30% said they were comfortable to buy online banking products like savings accounts, loans, or credit cards.

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