The Asia-Pacific region has established itself as a leader in fintech, but established banks there are unlikely to be replaced anytime soon, according to a white paper by LexisNexis Risk Solutions.
“In Asia-Pacific, we have seen an ecosystem of fintech companies emerge that are focusing on the applicability of technology like blockchain, artificial intelligence and biometrics has emerged with the aim of working with conventional financial institutions, rather than replacing them,” Chris Foye, manager of financial crime compliance at LexisNexis Risk Solutions, said in the paper.
The paper referred to a report by IDC Financial Insights finding that of fintech vendors that gain more than a third of their revenue from financial institutions, four of the top nine are in Asia.
“‘Challenger banks’ have emerged in the U.K. and elsewhere to disrupt big banking institutions, including crowdfunding/P2P platforms, payment processors and lenders,” Foye said. “Yet in recent years there have been no signs — and no instances — of banks disappearing due to tech interlopers.”
The key is finding ways to “encourage and regulate digital disruption at the same time,” according to John Price, fintech commissioner at the Australia Securities and Investments Commission.
Banks are ideally suited to that purpose, Foye said, being intimately familiar with regulation and compliance obligations, and many have established innovation labs to experiment with ways to bring innovation to consumers.