Build strategy for banking platforms not preferred by 71% of CIOs in Thailand

Riddhi Dutta, Regional Vice President, Asia of Backbase
Riddhi Dutta, Regional Vice President, Asia of Backbase

Backbase, the global pioneer of Engagement Banking, announces the release of the APAC-focused IDC Infobrief, "Accelerating Customer-Centric Transformation by Balancing Build and Buy - A Collaborative Approach Towards Sustainable Digital Banking Architecture," which reveals that 58% of CIOs in Thailand are more inclined to embracing the adopt and build approach to manage risk while simultaneously enhancing their time-to-market capabilities.


This in-depth report draws insights from 125 banks and 316 CIOs in APAC, offering a regional perspective on digital transformation. Key Findings includes:

  • Among mid to large-sized banks in APAC, 65% chose to develop their engagement banking platforms in-house for digital transformation. However, out of these projects, build strategy for banking platforms resulted in 70% of failed digital transformation for banks in APAC due to the costly and lengthy in-house efforts
  • Digital experiences within many banks in APAC are falling short, as most of them have failed to fully capitalize on the benefits of digitalisation. This disconnect between banks and their customers is becoming apparent
  • Build Strategy for Banking Platforms Not Preferred by 71% of CIOs in Thailand for Digital Transformation
  • 58% of CIOs in Thailand have expressed a preference to embrace the 'adopt and build' approach in their digital banking transformation, which is above the APAC average standard of  48%
  • Case studies from Thailand reveal that the average duration to build an engagement platform is 11 to 12 months, while the adopt & build approach takes approximately eight months, resulting in a 25% faster time to market.
  • The top three challenges organizations in Thailand face on their Digital Transformation include Minimizing system downtime ( 61%), Operational risk of migration (58%) and Legacy infrastructure ( 48%). 


From the Infobrief, a staggering 80% of digital engagement platforms built in-house with budgets over USD10M face underperformance and have not yielded the desired Return-on-Equity (ROE) in their digital initiatives. 


“The Bank of Thailand is currently working on regulations for virtual banking licenses. Qualified license holders are expected to receive their licenses by the middle of next year. Licensed financial institutions and non-financial companies have approximately 1.5 years to launch  robust virtual banking services that can cater to the underserved and unbanked, with an expected rollout by the second quarter of 2025,” said Riddhi Dutta, Regional Vice President, Asia of Backbase, adding that “A customer-centric engage banking platform would be an essential building block for financial players to innovate to meet the needs of the new-to-bank and new-to-credit segment without needing to worry about the plumbing.”  

“Building in-house has been a de-facto strategy by banks, but it’s no longer feasible to deliver to the pace and scale that is required to be competitive. The complexities that come with the extensive amount of data layers, channels, features, upstream and downstream integration that needs to support legacy and modern systems to manage and orchestrate sophisticatedly is where in-house implementation breaks apart,” said Ashish Kakar, Senior Director of Research, APAC of IDC.


The Shortfalls in Digital Experiences


Despite having embarked on digital transformation since the 2000s, many banks in APAC remain at an early stage, failing to fully capitalize on its benefits and deliver compelling digital customer engagements.


The IDC Infobrief highlights a crucial disconnect between banks and their customers, where  most banking products and offerings are deemed "me-too" and limited. Customers face challenges accessing multiple services through disparate interfaces, lack a unified view of their portfolios, and endure lengthy onboarding processes. The demand for instantaneous approvals and streamlined digital processes remains unmet, while personalized experiences, segmentation, and relevant promotions based on customers' lifestyles, life moments, and goals continue to elude them. Additionally, backend operations suffer due to the lack of intelligent assistance in contact centers, leaving customers repeating information to different service officers due to the absence of a 360 degree unified customer view. This is a result of banks focusing on locking in a high amount of resources getting banking platforms into shape instead of prioritizing the creation of differentiated upstream customer journeys and experience.


“Over 150 modern and forward-looking banks have adopted and built on top of Backbase’s Engagement Banking Platform to accelerate their go-to-market visions and prioritize innovating differentiated digital customer engagement and experiences. A true platform comes with all the hygiene requirements from market fit, to security and regulatory compliance, to being versatile and customizable to support each bank’s unique customer needs. The platform is a composable fabric providing modularity and re-usable data and journeys for banks to help banks futureproof at scale, Dutta continued.


A Shift in Mindset: Embracing "Adopt and Build" for Accelerated Growth


The analysis in the IDC Infobrief finds the “Adopt and Build”  approach a pragmatic solution for banks to accelerate their go-to-market efforts, differentiating where it matters instead of  reinventing the wheel by building from scratch. By adopting a collaborative platform and building upon it, banks can achieve 40% faster time-to-market, where digital engagement banking platforms can be launched within 11 months, as compared to the traditional 20 months with a full "build" approach. In addition, “Adopt and Build" had proven to be 2.3 times more cost-effective than the traditional in-house "build" option.


Across six key metrics—market fit and differentiation, legacy risk, build risk, time to market, modernize talent & IT skillset, and regulatory compliance, the “Adopt and Build” approach was rated highest and had shown tangible advantages in comparison to the “Build” and “Buy” approaches.


This IDC Infobrief is the first of two consultative guides commissioned by Backbase to provide pragmatic guidance for banks to evaluate a more effective platform strategy that can drive accelerated and differentiated digital customer engagement.


To download the IDC Infobrief, commissioned by Backbase –  "Accelerating Customer-Centric Transformation by Balancing Build and Buy - A Collaborative Approach Towards Sustainable Digital Banking Architecture.", #AP241480IB June 2023, click here.