4 things we learned about the future of banks from our portfolio companies driving banking transformation across Southeast Asia:

1️⃣ Digital user experience is not enough for digital banks to be sustainable. As Tonik CEO and Founder Greg Krasnov shares in a LinkedIn post on a The Business Times article featuring his insights on the industry, “[Sorting] out unit economics first…allows [digital banks] to scale confidently, with not only monetization, but actual positive customer-level profitability.

Tonik has developed this through their loans, from shop installment loans to their recently launched SME loans, all seamlessly accessible through their app and integrations with retail and payment partners.

Catch Greg at this year’s Seamless Asia 2024 in Singapore, where he will be talking about banking transformation on Feb 21st!

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2️⃣ But user experience is still a point of competition as more agile, digital players enter the market. Open finance company Brankas’ Bank Stability Report 2023 highlights room for improvement in terms of uptime for banks in their dataset (Indonesia, Philippines) compared to the minimum requirements for Singapore banks. This comes with digital banks and fintechs already capturing 47% of all new checking accounts opened in 2023.

As the report concludes, “In light of more sophisticated cybe attacks, the need for more frequent cross-border access, and banking support for a multitude of platforms and devices, banking needs to be secure, accessible, and trustworthy.”

3️⃣ Generative AI can be at the intersection of driving unit profitability and improving customer experience. Gen AI has the potential to decrease technical debt as well as improve productivity of large customer-facing and white-collar workforces.

McKinsey & Company reported that Gen AI could increase the overall industry revenue by US$340B and operating profits by 15%.

For example, WIZ.AI’s generative AI solutions have helped increase customer reach by 70% and saving 72% on costs for banking customer growth. More in their “Increasing Bank Competitiveness with Generative AI” whitepaper.

4️⃣ Leveraging generative AI is best done with effective data capture and processing at scale, especially for regional banking operations, to then train proprietary LLMs.

This means taking a look at the hood and automating data processes at scale — something that bluesheets has made its bread and butter with AI-based products around accounting and insurance processing especially.