A recent study finds that Asia's bankers think Europe and the US lead in adopting AI tech, but are such perceptions justified?

It is often striking how bank managers today think that firms in other regions have the tech edge and that they need to catch up. This may be a version of the “grass is greener on the other side of the fence” way of thinking.

An example of this comes from analytics and software company FICO, which recently polled risk officers in Asian banks. (FICO said it works with 45 of the world’s 50 top banks.) It found that 91 per cent of them see their firms lagging behind banks in the US and Europe in terms of implementing artificial intelligence technologies. The remaining 9 per cent indicated that they were at least on a par with their US and Europe counterparts, while not a single respondent felt they were ahead.

And yet three years ago in its inaugural award category for best digital bank, Euromoney chose Singapore-based DBS for that slot. DBS is one of the biggest brands in Asia. Its main office in the Asian city-state is futuristic beyond the dreams of science fiction, and the organisation has made digital tech the core of its business strategy. The Monetary Authority of Singapore, the local higher education scene and the financial community appear to be on the front foot over tech, often far more so to this writer than is the case in the US or Europe.

Of course, the US has its Silicon Valley, and the UK and Switzerland set the pace in certain regards (Switzerland, for example, is home to a number of leading banking tech firms such as ERI Bancaire, Avaloq, Appway and Temenos). But Asia appears to be ahead of other regions in adopting digital tech. After all, when Credit Suisse rolled out its global private banking mobile service a few years ago, it chose to launch it in Asia first, not back home in Zurich.

A less surprising story some time ago was a comment from fintech firm Finastra, whose CEO was quoted saying (source: CNBC 14 January 2019) that European banks trail behind those in the US when it comes to embracing technology. After all, the US enjoys the perceived digital edge that comes not just from California’s Silicon Valley but the clusters of expertise and innovation to be found in the Northeast and parts of the South. (Texas, for example, is now as much about tech as it is about energy and livestock farming.) Even here, however, it might be that such perceptions could be mistaken in some ways. The UK, for example, is ahead of the US as far as this author knows from personal experience, in adopting “chip and pin” tech to speed up payment transaction for debit and credit cards.

Perceptions whether accurate or not can be important because CEOs can make big and expensive decisions as a result. For example, a bank boss who thinks his home turf is lagging behind another region might want to boost capital spending at home, or double down on the existing lead of foreign operations. If executives don’t get the true picture, this could lead to mal-investment.

These considerations don’t mean executives polled by FICO are wrong on the specific issue of AI adoption. Much may depend on the methodology of the study, how many respondents came from the emerging markets of Asia as well as the more advanced hubs in places such as Hong Kong and Singapore, and so on. Even so, given how the image of Asia to the outsider is that of digital ferment, wealth managers would be well advised to treat all such surveys carefully. From where this publication is standing, Asia appears to be adopting digital tech at a robust pace.