Manila, Philippines – A recent report from S&P Global Ratings found that banks in South and Southeast Asia may anticipate an increase in technology-related expenditures by as much as 20% annually over the next two to three years.
Technology costs are also likely to increase as regional regulators urge banks to address tech outages or expect firmer penalties, as reported by the debt watcher.
It was also reported that regulatory oversight is further intensified on digital payment systems, online banking platforms, and cryptocurrency exchanges amid concerns about data breaches, money laundering, and other financial crimes.
Furthermore, the credit rater noted that the demand for online banking services rose during the pandemic. This resulted in an increasing number of digital transactions over the past years.
The Philippines in particular recorded a 52.8% jump in 2023 from the previous 42.1% in 2022 in terms of the share of digital payments in total retail transactions. The said figure slightly exceeded the Bangko Sentral ng Pilipinas (BSP’s) goal to achieve 50% by 2023.
Talking about the findings, Nikita Anand, analyst at S&P Global Ratings, elaborated, “We see banks in South and Southeast Asia continuing to invest in technology to ensure system stability and robust disaster recovery planning. Technology costs accounted for about 12% of operating expenses on average for their sample of rated banks.”
Anand further said, “Although costly, such investments are necessary. Otherwise, banks face stricter actions—such as bans on new businesses or additional capital requirements. This could have a material impact on growth and profitability and in turn affect ratings.”
