APAC: Embracing symbiosis to accelerate digital transformation in banking

Asia Pacific’s banking sector is marked by rapid technological adoption, intense competition from fintech challengers, and evolving customer expectations for speed, convenience, and personalization. Banks in this region are increasing IT investments, focusing on agility, and exploring cutting-edge technologies such as generative AI to transform customer experiences. However, legacy systems often constrain bankers’ ambitions. Symbiosis—where next-gen core banking systems are deployed and used alongside legacy platforms—provides a strategic framework to accelerate digital transformation while managing complexity and risk.

Asia Pacific retail banking trends

IT spending in Asia Pacific retail banks was expected to grow by an average of 3% in 2024, with expectations of further increases in 2025. Over half of banks prioritize speed and agility as top drivers of their technology strategies, reflecting the need to respond swiftly to market changes and fintech competition. Digital account opening improvements and embedded finance are key focus areas, alongside exploratory projects in generative AI, with 45% of banks actively exploring use cases.

The fintech sector’s growth has catalyzed a cultural shift toward greater responsiveness and nimbleness among traditional banks. Cloud adoption and open ecosystem initiatives are accelerating, supporting flexible, scalable infrastructure necessary for future innovation.

Symbiosis: Enabling agility and innovation

Asia Pacific banks face the challenge of modernizing core systems without disrupting ongoing operations or incurring prohibitive costs. Symbiosis offers a phased approach to:

• Enhance agility: Deploy next-gen systems for specific business lines to quickly launch new products and services.
• Improve customer experience: Provide seamless, integrated digital journeys that meet rising expectations for speed and convenience.
• Future-proof infrastructure: Build flexible, scalable platforms that accommodate emerging technologies like AI and open banking.
• Manage costs and risks: Avoid the complexity and risk of full core replacements while optimizing IT budgets and resources.

Integration complexity, operational continuity, and regulatory compliance are critical considerations, especially given the region’s diverse regulatory regimes and rapid technology evolution.

Strategic implications for Asia Pacific banks

Symbiosis empowers Asia Pacific banks to leverage their strong market positions and customer bases while adopting the agility and innovation capabilities of fintechs. This hybrid model supports rapid experimentation, faster time-to-market, and continuous improvement in customer engagement.

By improving data integration and analytics through symbiosis, banks can unlock personalized offerings and risk insights, enhancing competitiveness in a crowded market. The approach also aligns with the region’s emphasis on cloud adoption and AI, positioning banks to capitalize on emerging technology trends.

The role of generative AI

Generative AI is emerging as a transformative technology in the banking sector. By leveraging generative AI, banks can create more personalized and engaging customer experiences. For instance, AI can be used to generate personalized financial advice, automate customer service interactions, and even predict customer needs based on historical data. This not only enhances customer satisfaction but also drives operational efficiency. Intelligent virtual assistants are likely to be adopted rapidly, and they will have profound implications for the technology stacks of retail banks. Next-gen core banking platforms will be crucial to support these rapid advances and symbiosis offers a practical, pragmatic approach to blending next-gen and legacy technology quickly.

Cloud adoption and open banking

Cloud adoption is another critical trend in the Asia Pacific banking sector. By moving to the cloud, banks can achieve greater scalability, flexibility, and cost-efficiency. Cloud platforms enable banks to quickly deploy new services, scale operations as needed, and reduce the costs associated with maintaining on-premises infrastructure. Additionally, open banking initiatives are gaining traction, allowing banks to collaborate with fintechs and other third-party providers to offer innovative services.

Regulatory compliance

Navigating the complex regulatory landscape in Asia Pacific is a significant challenge for banks. For example, regulatory concerns about cloud – including data sovereignty and other factors – may affect the pace of cloud adoption. Deploying capabilities that are cloud-first, not cloud-only is an appropriate strategy to be ready to move fast, when the regulators permit the shift to cloud.

Symbiosis can help banks manage regulatory compliance more effectively by integrating compliance management systems within new digital platforms. This integration ensures that banks can adhere to local and international regulations while maintaining operational efficiency. Moreover, it allows banks to stay agile and responsive to regulatory changes, ensuring continuous compliance.

Change management

Effective change management is crucial for the successful implementation of symbiosis. Banks must engage stakeholders at all levels to ensure alignment and support for new operating models. This includes comprehensive training programs to equip staff with the skills needed to navigate new systems and processes. By fostering a culture of continuous learning and adaptation, banks can ensure smooth transitions and minimize disruptions.

Future outlook

The future of banking in Asia Pacific is digital-first, with symbiosis playing a central role in this transformation. As banks continue to integrate advanced technologies with legacy systems, they will be better positioned to meet evolving customer expectations and competitive pressures. This hybrid approach not only enhances operational efficiency but also drives innovation and growth.

Conclusion

For Asia Pacific retail banks, symbiosis is a vital strategy to navigate the complexities of legacy modernization while accelerating digital innovation. It delivers the agility, customer-centricity, and technological flexibility needed to thrive amid intense competition and evolving customer demands. By embracing symbiosis, Asia Pacific banks can transform their operations, enhance customer experiences, and secure sustainable growth in the digital era.

By leveraging the strengths of both legacy and next-generation systems, Asia Pacific banks can create a resilient and agile banking ecosystem that meets the demands of the modern financial landscape. This approach not only addresses current challenges but also positions banks for long-term success to reimagine banking in an increasingly digital world.

¹Celent, Asia Pacific Retail Banking IT Priorities and Strategy in 2023
²Celent, Dimensions: Asia Pacific Retail Banking IT Pressures & Priorities in 2024