In the second day plenary of the Temenos Regional Forum held in Manila, senior banking and technology leaders shared a grounded and forward-looking view of how financial institutions across Asia Pacific are transforming. As artificial intelligence (AI) moves from experimentation to implementation, banks are increasingly grappling with execution constraints, regulatory ambiguity and the need for cross-functional alignment. Rather than racing ahead with deployment, many institutions are taking a measured approach—prioritising use case clarity, embedding governance from the start and building organisational readiness for sustainable digital innovation.

Banks must move beyond digitisation to become truly digital-first

Chi Li, senior director of field and partner marketing at Temenos, opened the session by sharing findings from a recent global survey of more than 400 banking executives. She reported that banks remain focused on three core business goals—improving customer experience, driving product innovation and enhancing operational efficiency. However, there remains a clear divergence in how banks pursue these objectives.

She noted that a portion of banks continue to digitise existing processes without rethinking their underlying operating models. These institutions may adopt new technology, but they struggle to accelerate innovation or scale impact. In contrast, a smaller but more advanced group of banks is redefining their delivery and governance structures to become truly digital-first. These banks are pulling ahead by embedding digital capabilities across business functions, integrating front and back-office operations and accelerating time to market.

Still, even among these leading institutions, challenges remain. Chi pointed to data fragmentation, skills gaps and overreliance on vendors as common constraints. Many banks lack the internal capability to manage complex transformation initiatives and instead depend on external providers. This can limit agility and weaken long-term strategic control.

She urged banks to build not just technological capability, but also the organisational readiness and execution capacity required to sustain transformation.

AI adoption rising, but governance and risk concerns remain

Chi highlighted that interest in AI—particularly generative AI—is at an all-time high. However, actual deployment remains limited. While many banks are piloting generative AI use cases in areas such as customer service and content generation, only a minority have moved into production. Most are still adopting a cautious, watch-and-learn stance, wary of potential pitfalls such as hallucinations, model inaccuracy and lack of regulatory clarity.

She emphasised that explainability, auditability and accountability cannot be added after the fact. Governance must be embedded into the AI journey from the outset. As financial institutions operate in regulated environments where trust is paramount, any use of AI must be transparent and accountable, both to internal stakeholders and external regulators.

This means AI adoption must be grounded in well-defined business outcomes, supported by secure, high-quality data, and implemented within a framework that ensures ethical and compliant use.

Horizontal integration supports scalable innovation

The subsequent panel discussion broadened the conversation from AI to the operating model transformation required to support digital innovation at scale. Foo Boon Ping, president and managing editor at TAB Global, observed that leading banks are moving beyond vertical innovation confined to business units. Instead, they are pursuing horizontal integration—aligning digital, data, risk, compliance and product teams across the enterprise. This integrated model enables banks to reduce duplication, increase speed to market and build a more cohesive customer experience.

He added that technology is no longer just a support function but a strategic enabler of growth and risk management. Banks that embed digital capabilities directly into their core platforms can unify delivery across products and channels, breaking down silos and improving agility.

This approach also strengthens risk oversight, as it allows banks to manage exposure and compliance more effectively through consolidated data and centralised governance.

From adoption to intentionality: Responsible AI leadership

Neil Tan, chairman of the Artificial Intelligence Association of Hong Kong, reinforced the importance of use case clarity. He explained that AI adoption should not begin with the technology itself, but with a clear understanding of the business problem to be solved—whether it is improving fraud detection, enhancing onboarding or personalising customer engagement. Without this clarity, banks risk implementing models that are not fit for purpose, fail to scale or produce unintended consequences.

He noted that most banks remain in exploratory phases with generative AI, held back by real concerns over data leakage, explainability and regulatory acceptance. In such an environment, responsible innovation depends not just on deploying tools, but on embedding governance into the operating model.

Tan introduced the idea that to become “AI-native,” a bank must go beyond tool deployment. It requires reshaping workflows, decision rights and talent models to support continuous learning, human oversight and ethical guardrails. Becoming AI-native is a mindset and organisational shift, not just a technology upgrade.

He stressed that explainability and accountability are not optional—they are central to adoption. Banks cannot build trust, either internally or externally, without being able to explain how decisions are made, what data was used and who is accountable.

The role of leadership in aligning innovation with governance

Both panellists agreed that leadership in AI and digital transformation is no longer defined by speed or budget. Instead, it is about intentionality—aligning strategy, execution and governance in a coherent way.

Foo observed that banks with clear governance mechanisms and cross-functional coordination are better equipped to execute transformation at scale. These banks are increasingly forming dedicated teams to manage AI risk, ensure regulatory compliance and align digital innovation with long-term institutional goals.

He added that in the current environment of rising regulatory scrutiny and stakeholder expectations, banks must demonstrate that innovation is not just possible but responsible. Institutions that can deliver change with clarity, control and consistency will emerge as leaders in the next phase of digital banking.

Frankie Wai, business solutions director at Temenos concluded the panel by noting that the real differentiator is not just technology, but the ability to embed innovation into a sustainable operating model. As the discussion made clear, the future of banking in Asia Pacific will depend on how well institutions balance creativity with governance and connect strategy with delivery.

Invited guests include:

• Ronit Ghose, Global Head for Future of finance, Citi Global Insights
• Nikhil Sharma, Head of Growth, Onyx Digital Assets, Onyx by JP Morgan
• Benjamin Chodroff, Head of HSBC Lab, Innovation and Ventures, HSBC
• Hari Janakiraman, Head of Industry and Innovation, ANZ