Home SecurityMobile Security As digital banking grows in Southeast Asia, so do the security risks

As digital banking grows in Southeast Asia, so do the security risks

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One of the key trends in the Southeast Asian banking sector is the growing adoption of digital banking and the entry of new providers from nonbanking and tech backgrounds. Driving this adoption is evolving customer expectations and enhanced digital penetration, combined with the desire to serve the underbanked segments of society. But with that growth come an increase in security risks for digital banks and their customers alike.

Why digital banking is growing in Southeast Asia

According to a report by the Boston Consulting Group (BCG), published in December 2020, “the COVID-19 pandemic has accelerated this trend, as enforced digital transitions have embedded a more immediate impetus for change. These drivers will see Southeast Asia’s digital banking opportunity expanding significantly in coming years, reflecting a trend which has seen over 200 new digital banks established globally over the last decade.”

The rise of digital banking in Southeast Asia is part of a global trend. The BCG report highlights that “there has been a 190% increase in the number of [what it calls] Digital Challenger Banks since 2015, initially spurred by pioneering changes in regulation in the UK and Japan.” As a result, 45% of digital banks are now based in the Europe and Middle East (EMEA) region, 35% in the Americas, and 20% in the APAC region.

In Southeast Asia, Singapore is ushering the region into a digital banking future. While its rival Hong Kong had granted eight digital banking licenses last year, the Monetary Authority of Singapore (MAS) awarded digital banking licenses to four new entities in Singapore in December 2020. Malaysia and the Philippines are also reported to be readying the guidelines for issuing digital banking licenses in their respective countries.

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