SINGAPORE -- According to a new report from McKinsey & Company, smartphones and high speed Internet access are transforming banking habits in Asia where over 700 million people already regularly conduct transactions online.
"Consumers of financial services are turning to computers, smartphones and tablets more often to do business with their banks, while visiting branches and calling service hotlines less frequently," McKinsey reported.
In a survey of 16,000 financial consumers in 13 markets, the multinational consulting firm found a 33% rate of digital banking penetration among urban consumers in emerging economies, including China, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, compared to only 10% in the same survey in 2011.
In developed markets - Australia, Japan, Hong Kong, Singapore, South Korea and Taiwan - the penetration figure was 92% in 2014, up 33% from 2011.
Banks see plenty of room for growth in emerging markets, while customers throughout the region are increasingly selecting their banks on the basis of the digital services on offer.
In all markets, the surge in online banking is largely being driven by increasingly sophisticated smartphones and a much stronger digital banking "ecosystem".
In developed markets, 61% of the respondents had experience of mobile banking compared to only 19% in 2011. For emerging Asia, there was a fivefold increase over the same period to 26%.
The report found 72% of respondents in developed economies receptive to the idea of banking fully online without branches, and 44% in emerging markets.
Banks in the region are racing to enhance their online services. Last month in Indonesia, Bank Mandiri and Bank Rakyat Indonesia launched "branchless" banking systems for rural customers who lack access to banks in their localities.
Banks developing such systems typically appoint representatives such as business people and teachers as agents to handle new customers, who can then check balances and make transfers on mobile devices.
Singaporean banks have been working to improve the convenience and security. Last month, Oversea-Chinese Banking Corp. (OCBC) launched biometric authentication on their mobile banking app for Apple devices. Users can check their balances with a touch of the finger rather than keying in access codes and PINs.