The evolving banking landscape: insights for CFOs in Asia

The banking sector in Asia is renowned for its resilience and adaptability, and it must continue to innovate to thrive. As we approach 2025, several key trends are reshaping the financial landscape, particularly affecting the dynamics between CFOs and their banking partners.

Key trends influencing CFOs in Asia

Asian CFOs are increasingly focused on navigating a complex environment characterised by digital transformation, regulatory changes—especially regarding data privacy and protection—sustainability initiatives, and the rise of fintech. These trends present both challenges and opportunities that CFOs must address in collaboration with their banks.

Challenges and opportunities

Sandeep Sethi, CEO of Sustainable Solutions Consulting, underscores several pressing challenges facing banks that directly impact CFOs:

• Economic uncertainty: Fluctuating interest rates and macroeconomic volatility affect clients’ financial health, prompting CFOs to seek proactive strategies from their banking partners.
• Regulatory demands: Rising regulatory requirements, particularly in AML and cybersecurity, necessitate that banks prioritise IT investments, directly influencing CFOs’ financial planning and risk management.
• Technological disruption: The rapid emergence of technologies like generative AI requires CFOs to work closely with banks to ensure they remain competitive and compliant.
• Geopolitical factors: Ongoing geopolitical tensions complicate the banking landscape, compelling CFOs to engage with banks that can navigate these challenges effectively.

Despite these hurdles, Sethi notes potential opportunities for CFOs, such as exploring new trade corridors and benefiting from enhanced return on equity in a high-interest environment, especially for firms with robust transaction banking relationships.

Digital Transformation: A collaborative journey

The COVID-19 pandemic has accelerated the shift towards digital banking, fundamentally changing customer expectations and operational models. As CFOs drive their organisations' digital transformation, collaboration with banks is essential for leveraging technologies like AI, machine learning, and blockchain.

Sethi points out that while banks have made significant investments in upgrading legacy systems, the digital transformation journey continues. CFOs are increasingly focused on aligning their financial strategies with these technological advancements to enhance user experiences and streamline processes.

"The rapid gains in AI, the rise of open banking frameworks, and the demands from a digital-first generation will drive digital transformation in the coming years. Banks increasingly need to drive transformation not for productivity gains but to offer more personalised value-added solutions." Sandeep Sethi

Evolving regulatory environment

The regulatory landscape is continuously evolving, particularly in data privacy, AML, and consumer protection. CFOs must ensure that their organisations comply with these regulations, necessitating strong partnerships with their banks to navigate the complexities of governance and risk management.

Sethi anticipates increased scrutiny on AI and digital assets, emphasising the need for CFOs to engage with their banking partners to ensure compliance and mitigate risks associated with these technologies.

"Regulators will need to do a fine balancing act – on the one hand supporting innovation and on the other hand ensuring that customer protection and safety and soundness of the financial system is not compromised." Sandeep Sethi

Sustainability and ESG initiatives

CFOs are under pressure to align their financial strategies with sustainability goals, and banks play a crucial role in this transition. Sethi observes that integrating ESG criteria into banking practices is vital for attracting environmentally conscious investors and clients.

CFOs should leverage sustainability-linked loans tied to Key Performance Indicators (KPIs) to secure favourable financing terms.

"The transition to net zero will often mean the need for corporates to divest from certain businesses and acquire new sustainable businesses, and here again, the CFO having an ongoing dialogue with the M&A teams at the banks could be very useful for corporates to achieve their strategic growth objectives," Sethi advises.

Inclusion and diversity

Sethi highlights the importance of diversity and inclusion in banking. As younger generations prioritise these values in potential employers, CFOs must ensure that their banking partners also prioritise diversity to attract top talent.

"Diversity and Inclusion helps banks to benefit from different perspectives and skills and is thus still relevant in 2025. It is, in fact, one of the key factors the younger generation seeks in potential employers, and banks will need to have it as a key part of their strategy if they want to remain an attractive place for young talent." Sandeep Sethi

Advisory for 2025

As banking leaders and CFOs prepare for 2025, Sethi emphasises the need for resilience and flexibility. CFOs should continue to invest strategically while remaining agile to seize new opportunities as supply chains evolve and new trade corridors emerge.

"Building a culture of continuous learning and establishing a dynamic risk management model will be critical. CFOs and banks that foster resilient operational and IT systems, while remaining adaptable, will thrive in an uncertain world," concludes Sethi.