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Sim Kee Boon Institute for Financial Economics

Digital disruption – A make-or-break in banking

NEWSLETTER

SKBI Newsletter | March 2025  

Digital disruption – A make-or-break in banking

Research Perspective

Industry Insights

gloria

Gloria Yang Yu,
Assistant Professor of Finance
at SMU 

belinda


Belinda Boa, 
Head of Asia Pacific Active Investments & Chief Investment Officer of Emerging Markets Fundamental Equities at Blackrock

The widespread digital transformation of banking can democratize consumers’ access to financial services, but it may also lead to digital inequality. A recent SMU study shows that digital disruption affects banks’ branch closures, entry, and pricing decisions.


When ATMs first launched, many believed they would replace bank tellers entirely.  Yet, as SKBI Advisory Board Member Belinda Boa points out, both continue to coexist today. We spoke with her to learn more about her perspectives on digital transformation and its impact on the financial industry.

Key Messages:

  • The high-speed mobile network improves the digital services of tech-savvy consumers, leading to the closure of some bank branches.
  • The competition landscape changes, and banks diverge in branching and pricing strategies.
  • Digital disruption benefits tech-savvy consumers through cheaper and more available financial services, while the non-tech-savvy ones lose out due to costly and limited branch services and lack of digital skills.

Authorities may consider subsidizing older savers opting for mobile banking to facilitate a smoother digital transition. This would offset the disparities among consumers at minimal cost.

read 

Jiang, E.X., Yu, G.Y. and Zhang, J., 2023. Bank competition amid digital disruption: Implications for financial inclusion. Working Paper (Revise and Resubmit in The Journal of Finance).

Key Challenges:

  • Age is correlated to the ease of using technology, and advancements in AI may boost tech-savviness among older generations.
  • Emerging markets like Indonesia and India may have a future advantage due to their high mobile phone adoption rates.
  • Although digital transformation brings cost savings, it also introduces uncertainty about the timing and extent of its effects on productivity.

Overall, Belinda pointed out that “the true impact of digital transformation is still unfolding, and only time will reveal the real winners and losers.”.

Meet the Author: 
Asst Prof. Gloria Yang Yu (Finance) joined SMU in 2018 after completing a Ph.D. in Finance from INSEAD. Her research interests are fintech and financial intermediaries.

 

Meet the Expert:
Belinda Boa is Co-Chief Investment Officer of BlackRock's Active Equity & CIO of Fundamental Active Equity Emerging Markets, where she is responsible for delivering investment excellence and success in the region. She is a qualified Chartered Financial Analyst who sits on the SKBI Advisory Board and member of the London Quant Group.

About SKBI: 
The Sim Kee Boon Institute generates financial economic research through multidisciplinary collaborations involving not only the SMU community, but also research talent from around the world as well as industry and public-sector partners. The Institute will focus its efforts on the areas of (1) Market Innovations and FinTech, (2) Sustainability and Green Finance, and (3) Household Finance and Behaviour. To maintain relevance to finance practitioners and policy-makers, SKBI also adopts a view on Asian and global economic trends. View SKBI’s research. 

About the SKBI Newsletter:
This monthly newsletter provides a unique platform to connect academic researchers and industry experts. It aims to enhance the outreach of academic studies, while fostering dialogue on key insights and challenges and stimulating new ideas and collaborations.

 

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