Retail Banks Increasingly Turning to Financial Wellness Apps for Competitive Edge

Retail Banks Increasingly Turning to Financial Wellness Apps for Competitive Edge

by August 25, 2021

Digital banking software provider Backbase’s new study found that Singapore’s retail banking sector is struggling to keep its lead against digital-only disruptors and soon-to-launch digital banks.

The “State of Banking and Financial Wellness” study conducted by Forrester Consulting reveled that consumers are demanding more digital services, including financial wellness and digital money management tools.

Once the realm of mobile-only digital payment providers and soon-to-launch digital banks, financial wellness apps are now ‘ground zero’ in the battle between the various players in the retail banking sector.

Source: Backbase Study – State of Banking and Financial Wellness

Singaporean consumers’ adoption and demand are driving the changes

Iman Ghodosi

Iman Ghodosi

Iman Ghodosi, Regional Vice President for Backbase in Asia Pacific said,

“Our research shows Singaporeans are the most digitally serviced when it comes to banking in APAC – more so than Australia or Japan – which makes the race for digital dominance between traditional banks and soon-to-launch digital banks all the closer.


It’s no wonder the retail banking sector is putting its foot on the accelerator and injecting another 70% additional spend into this area over the next 12 months, according to the study.”

Unlike other countries in APAC, the data shows that in Singapore, consumer adoption and demand are very much driving the changes.

Of the consumers who took part in the study, 74% of them have used their institution’s existing mobile app compared to a regional APAC average of just 50%.

86% conduct their day-to-day banking via their smartphone, far higher than the regional average, and higher than Japan or Australia.

Meanwhile, 55% of Singaporeans believed it was ‘critical’ that their financial institution assists them in managing their money through digital tools, compared to a regional average of just 32%.

Also, 72% want their financial institution to make personalised recommendations, based on their financial situation, to improve their financial wellbeing which is well above the regional average.

A massive 88% believed ‘excellent mobile app experience’ is an attribute they value from their financial services provider.

Singapore’s retail banks are responding, 96% said they were planning to or actively expanding their digital financial wellness offering. Of these respondents, 64% said it was of critical priority.

The fintech wolves are at the door

The study showed that urgency, focus, and action are as a result of the next wave of neobanks, fintechs and disruptors waiting to take market share with the next six months being an inflection point in the space.

Challenges for the sector do loom, unfortunately.

Of the Singaporean retail-banking business decision-makers interviewed, 60% said outdated, legacy technology scuppered plans, 66% said a ‘lack of understanding of customer needs and outcomes’ is a barrier to their company implementing or further developing digital money management tools, and 52% said ‘competing priorities’ slows things down.

Luckily, the challenges faced by Singapore’s banks were far lower than other areas of APAC.


Source: Backbase Study – State of Banking and Financial Wellness

Protecting the vulnerable

One of the most interesting and, until now, hidden motivations of retail banks for increasing spend and focus in this area, is the increased capacity for them to care for and protect their customers.

Through this new channel of customer interaction, banks can now meet needs that they previously couldn’t, by leveraging data analytics and making subsequent recommendations to the users.

For example, 78% of retail banking business decision-makers interviewed mentioned that ‘preventing exploitation of vulnerable and older customers’ was in their company’s plans which is far higher than the regional average.

74% said they plan to ‘assist customers to build better financial habits’, and 64% are going to ‘proactively help customers with financial distress’.

Something that may be seen as favorable when it comes to Environmental, Social, and Corporate Governance reporting that banks must adhere to.

Other more specific tools also mentioned included ‘setting up automatic savings’ (80%), ‘advanced pay and income smoothing’ (78%), and ‘budgeting assistance’ with 76% of decision-makers mentioning it was something that their company was planning.