Ever tried applying for a business loan only to hit a wall of outdated processes? Many entrepreneurs have. But a quiet shift is underway—one driven not by banks alone, but by their collaboration with fintechs. From mobile wallets to AI-powered credit scoring, the banking sector is being rewired to serve today’s digital-first economy. Rena Kwok, CFA, Senior Credit Analyst at Bloomberg Intelligence, takes us inside this evolution. Through her lens, we explore how fintech is forcing incumbents to rethink their relevance—and what this means for startups looking to scale smart.
Banking, But Not As You Know It
Q: How is fintech redefining how traditional banks create and retain value in Asia?
A: Fintech is pushing incumbents to rethink their value propositions and customer engagement. Traditional banks increasingly partner with fintechs – for example, they have launched co-branded mobile wallets and embedded payment solutions to enrich their products and deepen customer engagements. In Thailand, Kasikornbank teamed with Grab and in Indonesia BRI integrated Alipay for Chinese tourists, illustrating how incumbents leverage fintech networks to gain market share. Southeast Asian regulators are also building digital infrastructure (for instance: Singapore’s Project Nexus and Mandala linking real-time payments across borders, and SGFinDEx enabling data-sharing) that banks can use to create cross-border, data-driven services. These shifts show banks are moving from silo, branch-centric models toward platform-driven ecosystems: they use digital channels, big data and AI-driven insights (chatbots, personalized offers, e-KYC) to create new revenue streams and strengthen customer loyalty.
Q: How do digital banks impact legacy players’ efficiency and market share?
A: The rise of digital banks has heightened competitive pressure on incumbents. Digital entrants broadly operate with lower fixed costs, forcing traditional banks to cut expenses and optimise the use of branches. Despite digital banks remain relatively small in Asia, they are growing fast. While, incumbents still dominate total deposits and loans, fintech players are slowly capturing chunks of retail and small medium enterprises (SME) banking. This competitive shift is prompting incumbents to ramp up their own digital offerings and partnerships to defend wallet share.
Q: Is fintech adoption shifting banks’ lending and funding strategies?
A: Fintech-driven credit platforms are reshaping how banks originate and fund loans. Alternative-lending models (P2P marketplaces, BNPL, digital banks) are increasingly reshaping the lending landscape. Incumbents are responding by overhauling their underwriting and distribution. There are a rising number of banks which adopt machine-learning scoring (leveraging mobile, e-commerce and social data) to serve customers with little credit history. Some banks are also partnering with Fintechs in co-lending or embedding lending services (e.g. offering digital instalment loans via tech platforms). On the funding side, incumbents might face thinner interest margins as digital competition grows, thus it becomes important for banks to diversify funding sources and use digital channels to gather low-cost deposits. In short, fintech adoption is pushing banks to mix new data-driven lending models and broaden their funding sources to stay competitive.
Q: Can digital transformation in banking be an investable credit theme?
A: Banks’ digitalization efforts are increasingly recognized as material to sustainable business performance. Successful digital transformation can improve profitability and strengthen risk management, which supports a bank’s credit metrics. However, execution risk remains key to watch. This means digitalization is a double-edged sword: banks that effectively execute digital strategies can achieve sustained efficiency gains and improved returns on equity, but those who lag may see cost overruns and competitive erosion.
Q: Which fintech tools or data trends are shaping modern credit research?
A: Fintech technologies and new data sources are revolutionizing credit analysis. Lenders now deploy AI/ML agents that ingest vast, real-time data streams such as mobile usage patterns, e-commerce transactions or social behaviour – to score borrowers without traditional credit histories. Open banking and API-driven data sharing further enrich credit models: banks can pull consolidated transaction histories or third-party app data (with consent) to refine risk assessments. Trusted digital identity systems also play a role – national ID databases and platforms which allow verified personal finance data to feed into credit scoring engines. In practice, lenders can increasingly use cloud-based analytics, big-data credit platforms and alternative-data vendors to gauge borrowers’ health.
New Tools, New Rules: Modern Credit Research in Action
As banks evolve into tech-powered platforms, the line between fintechs and traditional lenders is blurring. Rena reminds us that success lies not in resisting change, but in anticipating it. For startups, founders, and business leaders, the playbook is shifting toward agility, collaboration, and smarter data. The fintech transformation isn’t just about banking. It’s about building better systems for tomorrow’s economy—a story worth following.
Read the article in Chinese here.
