3 major bank types emerging amid Asean integration

MANILA, Philippines - The Australia and New Zealand Banking Group Ltd. (ANZ) has reported that there are three distinct types of banks operating in the Association of Southeast Asian Nations (Asean).

The report titled, ‘Shaping the Future of Asean Banking,’ examines the three different banking models which have emerged as better suited than large global banks to benefit from Asean’s growth opportunities.

These financial institutions have a regional presence, diverse customer base and long-term strategy to establish a successful presence in the region.

The three models identified in the report are regional banks, network banks, and partnership banks.

Regional banks are indigenous to the Asean, or the broader Asia Pacific region, they have largely took over European and US-based rivals that exited the region during the global financial crisis (GFC).

Network banks recognize the advantages of end-to-end banking services for customers, but are more selective or have less financial capacity to deploy resources in an onshore banking operation.

Meanwhile, partnership banks collaborate with other banks to support their customers’ offshore strategies, typically choosing partners that align with the international footprints and strategies of their customers, but do not impringe on their home markets.

ANZ Insights director for Financial Institutions Group Carli Renzi said the Asean is forecast to emerge as the fifth largest economy in the world and this growth, combined with the promise of Asean’s financial integration and internationalization, presents a compelling long-term opportunity for financial institutions.

He said that winners in Asean banking will have a clear understanding of which of the three banking models best leverage their competitive strengths onshore in the subregion or extend their capabilities, insights and reach via collaboration.

Renzi said the complexities of Asean’s economic structure and varying development stages remain an interesting challenge.

However, regional regulators seem to favor banks with a committed, long-term strategy and a strong balance sheet.

“For banks, Asean coverage is now imperative to helping customers enter into one of the world’s most dynamic markets,” he added.