APAC banks risk losing customers over weak digital services

Four in 10 would move for better online and mobile features.

Asia-Pacific (APAC) banks are facing growing pressure to retain customers as consumers demand more personalised, advisory and AI-enabled services.

According to research by Temenos and Celent, 72% of banking customers in APAC are only moderately satisfied or less satisfied with their main financial institution, leaving a large group of customers open to switching for better value and digital services.

Better online and mobile banking features were cited by 43% of APAC consumers as a key reason they would switch banks. 

“Hong Kong and Singapore lead the way in satisfaction, far outpacing other countries. India, Indonesia, and Japan trail all others. Japan has the lowest level of satisfaction despite boasting one of the largest economies in the region,” the report stated.

Globally, one in four consumers have recently considered changing their primary bank, whilst 56% of retail banks said winning and retaining customers had become more difficult over the past year.

Personalisation is also becoming more important to customer loyalty. Some 58% of APAC customers want more financial guidance, whilst 52% said their bank should better anticipate their needs when they use an app or contact the bank. 

About 35% want interest rates or other benefits that reflect the size or length of their relationship with the bank.

However, only 4% of banks globally said personalising the customer experience was their top investment priority.

Customers are also showing interest in artificial intelligence (AI) for banking, particularly when it helps them understand and manage their finances. 

Some 68% of consumers globally said they would use a conversational interface for banking queries, although there is less interest in AI taking automated actions such as making purchases or paying bills.

Privacy and data security are the biggest concerns about AI amongst APAC consumers, cited by 46%, followed by errors or inaccurate decisions at 33%.

Banks are responding by investing in technology. Nearly half (46%) of banks globally plan to make major changes to, or fully replace, their core banking systems in 2027. More than 20% also expect to expand AI beyond internal operations into customer-facing services.

Michael Bernard, Principal Banking Analyst at Celent, said customers want banking services that are more personal, secure and easier to use, whilst retaining human support when needed.

Will Moroney, Chief Revenue Officer at Temenos, said banks need to improve trust, relevance and convenience to retain customers who are open to switching.