Such failures are mostly caused by cost overruns and lengthy preparation and commissioning.

This, according to Backbase, a Dutch financial technology service provider, has led banks to become system centric and disconnected from the financial ecosystems.

In a press statement, Backbase said the assessment has been derived from its study of 65% of medium to large banks across the Asia-Pacific that have chosen to build in-house digital platforms.

Engagement banking expert Ashish Kakar attributed this to the fact that traditional in-house digitalisation strategies no longer support the modern and complex systems in the digital banking space.

He said many banks in the Asia-Pacific are still in an early stage in their digitalisation journey and have failed to capitalise on its benefits or delivered compelling digital customer engagements due to the lack of cutting-edge digital strategies.

“This is causing a disconnect between banks and customers, leading to most banking products and offerings being deemed limited,” he added.

“Building in-house platforms has been a de-facto strategy for banks, but it’s no longer feasible to deliver at the pace and scale that is required to be competitive,” Kakar said.

As an alternative, Backbase said, the “adopt and build” strategy is more pragmatic for banks to accelerate their effort by leveraging on an end-to-end engagement banking platform.

It said the approval for five digital banks has raised hopes for positive change in the digital banking landscape in Malaysia. These digital banks are expected to be operational in the next 12 to 24 months.

Backbase Asia regional vice-president Riddhi Dutta said that collectively, retail and business banking are projected to account for 25.5% of the GDP by 2025, making them a key contributor to the digital economy.