Becoming an exponential enterprise

Rise of the boredom economy

Across the globe, the COVID-19 pandemic and its ensuing lockdowns had freed up much personal time – time that had previously been allocated to commuting, dining out, leisure, or other lifestyle activities. As consumers spent a greater proportion of their time at home, they also spent a greater share of their wallet on activities at home: for example, time spent on video gaming activities within the Asia Pacific region increased by about 42% on the back of the pandemic.

The rise of such activities – collectively referred to as the boredom economy – raises the question as to whether financial institutions should re-examine the way they build their products and services around consumer activities, especially as such pandemic-induced habits continue to persist in our new normal. Indeed, recognising this shift, several regional banks can already be observed to be making moves to enter the gamification space.

Examples include mobile banking applications that assign interactive missions to customers to encourage them to increase the level of transactions that they make either with the bank, or with the bank’s merchant partners. Gamification elements, such as points, progress charts, and lottery elements are also used to help customers track their progress towards the rewards and rebates that are awarded upon completion of these missions.

Fortifying the ability to win

For retail customers, should we…

• Prioritise customer engagement over customer spend on a platform?
• Segment the market based on lifestyle interests instead of traditional demographic segmentation attributes?
• Design go-to-market strategies based on predictive data (consumer profiles of tomorrow) or contextual data (consumer profiles of today)?

For business customers, should we…

• Focus on leisure activity-related platforms instead of physical traffic spaces?
• Cater more services for employee benefits instead of employee travel?
• Offer more experiential rewards instead of material rewards?

Rise of relationships, and decline of trust

Globally, there has been a profound decline in the level of trust that consumers have in institutions. Distrust, rather than trust, is now society’s default tendency: recent research has revealed a significant decrease in trust levels for governments and the media, as well as an increase in societal fears.

To close their trust gap, financial institutions should therefore increase the focus on human aspects of their customer relationships. Examples of how financial institutions are doing this in other parts of the world include the opening of innovative bank branches in the US that focus on supporting their local populations – including everything from hiring local talent to showcasing local art – and which function more like community centres than bank branches.

As customers become more comfortable building meaningful connections digitally, insurers can also be witnessed to be leveraging opportunities to double down on their digital customer engagement models – for example, with the introduction of entirely digital, differentiated health and wellness insurance offerings.

Fortifying the ability to win

For retail customers, should we…

• Build communities through local, small-scale hubs (physical and digital) to deliver trusted financial advice and product offerings?
• Double down on more trusted customer engagement models through digital means (e.g., through the use of a trusted digital identity)?

For business customers, should we…

• Re-evaluate their needs for risk management given the changing trust dynamics?
• Assist them in building trust with their own customers by addressing the latter’s biggest fears (e.g., short-term and long-term financial stability)?

The Great Resignation

As the COVID-19 pandemic induced waves of people to quit their job – seemingly in search of more meaning, more money, and more flexibility, amongst other wish list items – many organisations across the globe are struggling with an urgent talent crisis known as the “Big Quit”, or Great Resignation.

For financial institutions, the implications of the Great Resignation are twofold. Firstly, financial institutions need to design more targeted and differentiated employee benefit offerings to increase the level of employee stickiness as the war for talent intensifies. In the US, for example, at least one large banking player can be observed to have recently offered stock compensation schemes to groups of employees who were previously ineligible.

Secondly, financial institutions also need to support their business customers in retaining their own workforce, by integrating health and wellness aspects in their product offerings. One global bank, for example, not only offers its business customers international banking services, but also offers their employees financial education, well-being support, as well as other preferential rates and discounts.

Fortifying the ability to win

For retail customers, should we…

• Develop alternative loan products and credit scoring methodologies that do not rely on payroll data and employment?
• Develop solutions for start-up owners to capitalise on the increasing number of entrepreneurs?
• Develop solutions for high-value gig economy workers to tap into the growing gig economy in Southeast Asia?

For business customers, should we…

• Develop employee banking solutions to help employers provide more benefits to their employees and increase stickiness (e.g., competitive, pre-approved mortgages, car loans, personal loans, and insurance)?

Responsible ESG investing

With the sharpened focus on environmental, social, and governance (ESG) issues, investors are increasingly looking at ways in which they can participate in more responsible investing. In one recent global survey conducted across 33 different geographies on the topic of sustainable investing, 55% of respondents said that environmental issues are much more or more important than before the pandemic – with this trend most pronounced in Asia, where the figure was 65%.

In response to these shifting investor sentiments, financial institutions can be observed to be introducing various ESG-related instruments, such as loans, bonds, and other corporate services. Several banks in Southeast Asia, for example, have launched electric vehicle (EV) loans schemes to offer customers preferential rates for the purchase of their green vehicle.

As customers begin to ask more probing questions about the ESG impacts of their purchase of goods and services, financial institutions will also be expected to meet higher ESG standards and advance the causes that their customers consider important.

Fortifying the ability to win

For retail customers, should we…

• Offer tailored ESG investment options for causes that retail customers and high net-worth individuals care about?
• Launch retail products that track and reward individual consumers’ contributions to ESG goals?

For business customers, should we…

• Develop ESG monitoring and reporting solutions as national digital utilities?
• Take on a more proactive role in managing ESG impacts for corporate borrowers?
• Offer lending incentives for companies or projects with a positive ESG impact (e.g., discounted interest rates, or prioritised lending for borrowers with an ESG agenda)?

Hybrid everywhere

Across the globe, organisations are investing in significant initiatives to support the hybrid working models that have since become mainstream. One recent survey, for example, found that only 7% of Asia’s workforce is now willing to commit to a completely on-site work arrangement. To help their business customers adapt to this new normal, financial institutions can be observed to be stepping up efforts to develop and introduce new solutions.

Several insurers, for example, are supporting their business customers in implementing telecommuting arrangements by allowing their employees to seek reimbursement for expenses on ergonomic furniture and wellness activities – expenses which were rarely allowed in flexible spending account programs prior to the pandemic.

Other innovative business models also include the introduction of global corporate health insurance plans that cover employees and contractors worldwide under a single plan, regardless of where they live or work.

Fortifying the ability to win

For retail customers, should we…

• Enhance virtual interactions with customers through robo-advisory and hybrid branches?
• Empower customers through financial education tools and platforms with embedded product offerings?
• Leverage branches as community hubs to support remote work activities?

For business customers, should we…

• Re-evaluate the insurance and banking needs of customers given the shifts in physical footprints?
• Provide solutions for increased technology investment/spending by customers?
• Collaborate with telecommunications providers to bring digital capabilities to underprivileged communities?

Greater uncertainties in life

Given the growing concerns on the volatile economic climate and rising costs of living, many consumers are starting to focus on securing their long-term savings and wealth. In one recent survey, more than two in five or 43% of respondents in Asia said that they have saved more since the start of the pandemic.

This shift has significant implications for financial institutions exploring opportunities in the life insurance and savings space. In Singapore, for example, COVID-19 was found to be an important trigger for people between 31 and 40 years old to kick-start their retirement planning, mainly due to a deepening realisation about the importance of planning ahead for uncertain times.

While some consumers have become more conscious about their financial health and savings habits, there may also be a contrasting flipside: another group of consumers may have on the contrary become even more risk-seeking. After all, in an uncertain environment where there is no telling what the future holds, some may perceive fewer reasons to save or accumulate wealth – and more reasons to invest in riskier assets. This perhaps explains the unprecedented foray of global financial institutions into unconventional areas, such as the metaverse, which has been gaining significant momentum in recent years despite its associated risks.

Beyond a consumer perspective, financial institutions should also seize opportunities to act as trusted partners for their business customers who are concerned about resiliency issues. In the UK, for example, challenger banks have sprung up to address the specific unmet needs of entrepreneurs and small independent businesses often overlooked by high street banks.

Fortifying the ability to win

For retail customers, should we…

• Alter automated portfolio builders targeted at the digitally native, high-risk tolerance segment?
• Incorporate elements of nascent investable assets classes, such as cryptocurrency exchange-traded funds (ETFs) and non-fungible tokens (NFTs) into our wealth portfolios?
• Formulate bite-sized insurance for asset classes that were previously uninsured?

For business customers, should we…

• Facilitate their post-pandemic recovery by reducing reliance on the office-centred economy, and enabling expansion to suburban ways of working?
• Promote business communities and partnerships for small and medium enterprises (SMEs) to build resilience in preparation 

Wellness: The panacea for stress?

Wellness has become a fundamental need. From retail goods to supplements, the consumer wellness market is booming: between 2021 and 2026, the Southeast Asia athleisure and lifestyle-related supplements markets are expected to grow at compound annual growth rates (CAGR) of 8%10 and 10% respectively.

This shift is driven in part by higher workplace stress, and an increased focus on mental and physical wellbeing. In an Asia-wide survey of 2,500 employees across nine industries, it was found that strenuous work demands have resulted in poor work-life balance. For 83% of employees, working overtime more than three times a week is common. Over 70% also report working on rest days or beyond regular work hours, with the impact even greater for those in more senior positions.

As consumers’ health and wealth priorities increasingly overlap and intersect, financial institutions should also look at how they can better integrate their offerings across these two dimensions. One global bank, for example, forged a relationship with a digital health technology company to incorporate motivational and scientific principles into their service offerings, with the objective of incentivising their customers to maintain a healthy and financially fit lifestyle.

Fortifying the ability to win

For retail customers, should we…

• Leverage our physical footprint to offer ancillary physical, mental, or financial wellness services?
• Act as a platform orchestrator of holistic wellness services?
• Offer wellness programs to incentivise consumers to improve their physical, mental, or financial well-being?

For business customers, should we…

• Help them to improve the wellbeing of their employees through a one-stop shop wellness solution?
• Offer ancillary wellness services bundled with product or service offerings?

Reverse urbanisation

With the pandemic triggering international travel restrictions and normalising work-from-home policies, Southeast Asia is experiencing a ‘reverse urbanisation’ shift – where more people opt for domestic tourism and larger homes in suburban areas.

In Malaysia, for example, 84% of those with the flexibility to work from home have deemed extra space for a home office necessary, as concerns on space, density, and privacy take priority over concerns on connectivity and travel time. Similarly, statistics in Singapore also showed that average quarterly sales went up some 18 per cent for smaller resale flats, but rose about 34 per cent for larger ones.

As the population concentration shifts from urban to suburban areas, financial institutions will need to relook their physical footprints, and localise their offerings to ensure that they remain relevant to their target customers. In the US, 2020 saw the record closure of 3,324 bank branches – but also the opening of another 1,040 branches – a phenomenon suggesting that banks are making active adjustments to rebalance their physical presence.

Fortifying the ability to win

For retail customers, should we…

• Re-examine our channel portfolio with a focus on the suburban population?
• Introduce new lending products for home buyers and those looking to upgrade their space?

For business customers, should we…

• Identify SMEs located in suburban areas as segments to sell and/or partners for distribution?
• Introduce peer-to-peer (P2P) products for neighbourhood communities in suburban areas? 

The Great Inequality

The pandemic has had a disproportionate impact on vulnerable populations, and increased the level of disparities between socio-economic groups in Southeast Asia. The result has been the rich getting richer, and the poor getting poorer. And it is not only just household incomes: the pandemic has also caused the inequality between genders and between large corporations and micro, small and medium enterprises (MSMEs) to increase.

With the growing bifurcation between different groups in society, financial institutions will need to re-examine their customer segmentation strategies – and rethink the value narrative for each of them. This could lead to the development of new offerings for wealthier segments – for example, self-directed, digital-led advisory services – as well as micro-financial products that are tailored to segments with lower levels of financial inclusion. In Southeast Asia’s ride-hailing segment, for example, we have observed players offering their freelance drivers insurance policies for earnings protection or accident coverage.

But more innovative models are also possible. In Europe, we have witnessed the introduction of peer-to-peer models to connect small groups of people with similar insurance needs. Under one such model, customers’ premiums are pooled together within the group, with one portion paid to the insurance company and another portion kept in a “cashback” fund. As claims are made over the course of the year, the cashback fund decreases. At the end of the year, any remaining cash in the fund is then redistributed to each customer in the group.

Fortifying the ability to win

For retail customers, should we…

• Pursue a value narrative, instead of a volume narrative, to cater to the increasing needs of the wealthy?
• Deliver services through tech-enabled channels (e.g., automated systems, digital banking), instead of physical channels (e.g., branches), to underserved segments?

For business customers, should we…

• Offer capability-as-a-service to SMEs?
• Develop solutions to address gender inequality in business?

New era of inflation and interest rates

Across Southeast Asia, consumers are grappling with the timing and magnitude of rising inflation and interest rates: in most major markets, such as Indonesia, Malaysia, Singapore, Thailand, and Vietnam, inflation rates – measured in terms of the consumer price index (CPI) – are expected to trend upwards in 2022.

With consumers facing growing pressure on price levels in their daily lives, price sensitivity may be set to increase in certain customer segments. In the US, digital banks can be observed to be offering their customers low-fee or sometimes no-fee products, as well as early access to their wages to avoid potential overdraft charges. Some players also support customers with secured credit cards that carry no interest, no annual fees, and no credit checks as another way for them to build credit – which can in turn improve their access to affordable loans.

As finances get tight, customers will also need the tools to better manage their cashflow. In this regard, budgeting and finance tracking applications have carved a niche in providing services to support their customers in tracking expenses, and monitoring subscriptions and other payments to lower overall bills.

Fortifying the ability to win

For retail customers, should we…

• Help them to better manage their debt servicing and insurance payments (e.g., temporary relief of debt servicing or payment plans, short-term credit offerings) to build more trusted relationships with them?
• Create personalised credit or insurance bundles to provide them with greater value and drive customer stickiness?

For business customers, should we…

• Re-evaluate their asset values to ensure adequate insurance coverage and the ability to service debt?
• Launch tools to help them manage and plan their cash flow and big ticket investments under different interest rate or inflation scenarios?
• Introduce competitive short-term credit to help them bridge cash flow deficiencies as their businesses adjust to rising costs?

Back-office self-service

Across financial institutions, the role of the back-office is rapidly changing to support enhanced enterprise integration and breakdown of silos across functions. As the role of digital expands – and machines and automation continue to redefine work and its delivery – a new delivery model is beginning to emerge in response to the need to improve agility, quality, and speed.

Known as the back-office self-service, this next-generation model entails moving away from manual interactions and towards proactive self-service and knowledge portals – typically with the use of artificial intelligence (AI) and machine learning (ML), as well as cloud platforms that streamline a single-user workflow and interaction tool across multiple functions. By reducing the number of touchpoints and maximising self-service, financial institutions can significantly reduce the cost to serve while improving the overall experience.

Activating the capacity for change

Should we…

• Prioritise automation in the back office to free up employees for more value-adding activities?
• Relook our hiring strategy to incorporate more developers in the back-office talent pipeline?
• Work more closely with business functions to create a more proactive self-service back-office model?

Middle-office goes remote

While transformation efforts at financial institutions have typically focused on the back-office and front-office arenas, the in-between middle-office is less often the centre of attention. But this is quickly changing: the middle-office, too, is now in the midst of a structural transition to become more remote than ever.

Without a doubt, this is a shift that has been accelerated at least in part by COVID-19. In the aftermath of the lockdowns, financial institutions with outsourced operations teams and more comprehensive support for browser-based applications had found themselves able to adapt more quickly to a remote environment, and perform their required functions without the need to access on-premise operations technology.

Apart from outsourcing, financial institutions are also leveraging the use of self-service portals and automation. A global bank, for example, recently launched a foreign exchange post-trade infrastructure platform for its brokerage business. By creating a single version of a trade and checking credit in real-time, the platform enables dynamic credit allocation across clients and counterparties – thereby cutting operational costs and reducing risks.

Activating the capacity for change

Should we…

• Outsource middle-office operations for greater agility and flexibility (e.g., peak capacity, distributed locations)?
• Explore the use of edge technology to automate middle-office operations, and reallocate talent towards more value-adding activities?
• Release physical office space allocated to middle-office operations and business continuity planning (BCP), or relocate to a more competitive location by leveraging remote work?

From global to local

With the recent, high-profile exit of a global bank from its Asian retail banking business, financial institutions in Southeast Asia are becoming acutely aware that having a global brand and reach no longer guarantees success on a regional or local scale.

Looking ahead, several advancements in the regional financial system will also further amplify the need for financial institutions to develop and execute hyperlocal, synergised strategies in order to remain competitive. These include, for example, initiatives to encourage greater financial integration within Southeast Asia, such as the promotion of cross-border payments between different regional markets under the ASEAN Payment Connectivity Initiative.

As regional banks double down on serving their local markets with highly tailored offerings and strategies, global banks operating in Southeast Asia will also need to re-evaluate their competitive positioning to ensure that they remain relevant. Several key players are already making moves in the market – for example, to acquire commercial banks and consumer finance companies with a greater focus on regional Southeast Asian markets.

Activating the capacity for change

Should we…

• Reassess our customers’ capital flow destinations to ensure that we are meeting their regional needs?
• Collaborate with regional ecosystem players to partake in new joint financial initiatives, and explore ancillary value-added services instead of ‘doing it all by ourselves’?
• Revisit our regional portfolio to evaluate our competitive position by region and/or market? 

Operationalisation of ESG

Strong balance sheets and positive earnings forecasts are no longer enough for companies to attract investments, expand their business, and enhance their reputation. Increasingly, stakeholders are evaluating firms on an additional parameter: how seriously and effectively are they addressing broader economic and societal challenges?

Indeed, the voices of regulators, investors, and society at large are growing louder: they are demanding transparency of ESG performance, as well as comparability and reliability. In a recent global survey conducted by KS&R Inc. and Deloitte with respondents across 21 geographies, an overwhelming proportion of companies said that they felt pressure to a large or moderate extent to act on climate change from all stakeholder groups – with regulators/government (77%), board members/management (75%), and customers (75%) exerting the most pressure.

While different stakeholders are approaching ESG with varying levels of depth and industry focus, three aspects remain common: protecting the environment, promoting equity, and fostering trust and stability. Given the increasingly widespread recognition of the important role that they must play in catalysing and accelerating our collective transition to a new economy, financial institutions have found themselves under the weight of growing expectations to lead change across all of these areas.

Activating the capacity for change

Should we…

• Approach sustainability with the same rigour as any other business agenda in the organisation?
• Make sustainability the new mandate for technology, digital, innovation, and transformation teams?
• Launch sustainability-embedded products or services for the retail and corporate customer segments?

Data-sharing made easy

Thanks to advances in data-sharing technologies, it is now possible to buy and sell potentially valuable information assets in highly efficient, cloud-based marketplaces. Combine this with a new array of privacy-preserving technologies, such as fully homomorphic encryption (FHE) and differential privacy, and we get the best of all potential worlds: sharing of data, while preserving security and privacy.

Though currently in its infancy, the data-sharing trend can be observed to be picking up steam. In a recent survey, it was found that more than 70% of global data and analytics decision-makers are expanding their ability to use external data, and another 17% plan to do so within the next 12 months. This trend is likely to continue an upward trajectory in the Southeast Asia region, where open data frameworks are also undergoing rapid development.

Other notable global case studies of financial institutions leveraging the use of big data can also be observed in Latin American markets – for example, in the smart use of big data by challenger banks to analyse different variables and offer credit lines to customers who have never had a credit product before.

Activating the capacity for change

Should we…

• Forge data-sharing alliances with other organisations to enhance our ability to personalise offerings for customers, and better address their pain points?
• Develop our data strategy alongside our business strategy to ensure that we are maximising data-sharing opportunities without comprising our competitive edge?
• Explore data-sharing business models to monetise our data assets and position for future growth 

Cloud goes vertical

Increasingly, financial institutions are looking beyond the horizontal cloud – or generic cloud solutions widely applicable to most players, and which focus on common business processes – and towards the vertical cloud, that is, specific industry-based cloud solutions capable of shifting the focus from cost savings to game-changing transformation.

Recognising this, most if not all leading cloud providers currently already offer a financial services cloud stack amongst their offerings. For their part, leading global banks can also be observed to have migrated their business applications from on-premise data centres to cloud platforms to implement a simpler, easily scalable IT infrastructure to support future growth, reduce development times, and improve efficiency.

Looking ahead, as the focus of cloud applications moves from generic to granular, financial institutions will need to consider – or reconsider – the ways in which they work with BigTech to build more specific, in-house cloud vertical solutions, rather than rely on off-the-shelf solutions.

Activating the capacity for change

Should we…

• Work with BigTech to create specific cloud vertical solutions for the financial services industry?
• Map business processes against emerging cloud-based offerings to fill any technology gaps and address bottlenecks?
• Differentiate technology plans for proprietary, in-house business solutions and off-the-shelf solutions?

Tech stack goes physical

In a hyperconnected world where smart systems have become mainstream, technology is no longer confined to digital assets. Consider, for example, that by 2025, 30% of new industrial control systems will include analytics and AI-edge inference capabilities, up from less than 5% in 2021.

This means that unlike earlier generations of physical devices, an outage could be much more than an inconvenience – it could be business-threatening. As the impact of the physical tech stack on business operations continues to grow, financial institutions will need to consider how to manage and maintain a new generation of connected devices, wireless networks, and edge computing to ensure the highest standards of business continuity and resilience.

With always-on tech stacks elevating the risks of mission-critical physical failure, financial institutions will need to consider how they can develop the new set of technology skills required to maintain, monitor, and manage the use of these platforms. In addition, their governance and oversight strategies may need to evolve to meet the needs of a new generation of connected devices.

Activating the capacity for change

Should we…

• Enhance the security and communication protocols of connected devices to protect business-critical assets?
• Impose stricter latency requirements and contingencies to reduce downtime of platforms?
• Enrich data science teams with multi-disciplinary expertise to discover new sources and uses of data?

Cyber AI

Cybersecurity has no doubt been a top-of-mind priority for financial institutions in recent years – and the number of concerted industry-wide efforts launched to combat these threats is testament to its importance. Notable examples include the Financial Services Information Sharing and Analysis Centre (FS-ISAC), which shares amongst its global members and trusted sources critical cyber intelligence, and works to build awareness through a robust offering of alerts, indicators, member insights, threat assessments, and analysis.

With the rise of remote and hybrid work arrangements, IoT technologies, and application programming interfaces (APIs), one particular area of concern for financial institutions is the exponentially increasing number of potential cyberattack surfaces. To protect these rapidly proliferating surfaces, financial institutions require a fundamentally new approach – one that would be able to keep up with both the scale and sophistication of attacks.

Enter cyber AI, a force multiplier that enables organisations to not only respond faster than attackers can move, but also anticipate these moves and react to them in advance. Using pattern recognition, supervised and unsupervised machine learning algorithms, and predictive and behavioural analytics, AI can help identify and repel attacks and automatically detect abnormal user behaviour, allocation of network resources, and other anomalies.

In addition, AI can also be used to secure both on-premises architecture and enterprise cloud services, although securing workloads and resources in the cloud is typically less challenging than in legacy on-premises environments.

Activating the capacity for change

Should we…

• Increase our research and development (R&D) investments in cyber AI to prepare for AI-level threats, and sell new solutions?
• Upskill or reskill cyber security personnel for cyber AI, and pivot their focus from triaging alerts and other low-level work to more strategic and proactive activities?
• Establish a consortium with cyber security companies and other financial institutions to develop standards and share best practices?

Blockchain: Ready for business

No longer mere hype, blockchain and distributed ledger technology (DLT) platforms are well on their way to driving real productivity gains across industries and sectors. In Deloitte’s 2021 Global Blockchain Survey, which covered 1,280 senior executives and practitioners in 10 geographies, we found that nearly 80% expect to see new revenue streams from blockchain, digital assets, and/or cryptocurrency solutions.

As blockchain and DLT technologies move from the periphery to the mainstream, financial institutions should consider how different use cases – beyond the usual cross-border payments, remittances, and Know Your Customer (KYC) applications typically deployed in the banking sector – can be applied to support their strategic imperatives.

In Southeast Asia’s insurance sector, for example, we are witnessing the emergence of several innovative blockchain business models. Amongst others, these include blockchain-powered digital ledgers that enable customers to upload their policies, provide their loved ones with the information they need in the event of a mortality event, and obtain instant notifications on upcoming premium payments.

Activating the capacity for change

Should we…

• Identify new delivery models, revenue streams, or business process improvements that could be unlocked by maturing blockchain and DTL platforms and standards?
• Identify leading blockchain players in our ecosystem, and collaborate with them on joint initiatives for practical use cases?
• Assess the state of our talent and ensure adequate blockchain and DLT expertise to build capabilities for future growth?

New era of inflation and interest rates

Previously, we discussed how the new era of inflation and interest rates is affecting customers and their purchasing power on the demand side. But financial institutions themselves are not immune to direct impacts on the supply side. For one, rising interest rates mean potentially increased operating costs and higher operational risks.

But higher interest rates are a double-edged sword. In terms of the upside, higher interest rates may mean a higher top-line for financial institutions, and a chance to identify strategic investments for a clearer growth narrative. The obvious downside, however, is that there would be an increase in non-performing loans (NPLs), and therefore higher credit risks.

For financial institutions, there is an urgent need to identify the costs that are most affected by inflation, and explore ways to reduce their impact on the bottomline without compromising growth priorities.

Activating the capacity for change

Should we…

• Pre-empt customers’ potential financial constraints through the use of data analytics, and proactively offer personalised assistance programs to build trusted relationships with them?
• Identify the costs that are most affected by inflation, and explore ways to reduce their impact on the bottom-line without compromising growth?
• Evaluate how positive top-line impacts from higher interest rates can be invested strategically for future growth (e.g., R&D, mergers and acquisitions, technology)?