Digital banking technology provider audax Financial Technology is challenging traditional financial institutions to look beyond the balance sheet to secure their future in an increasingly integrated global economy. As banks struggle with low return on equity (ROE) and the weight of legacy systems, the evolution from being simple providers of capital to active mediators of data is becoming a commercial necessity.
Kelvin Tan, CEO of audax Financial Technology, believes that while embedded finance has been a topic of discussion for several years, the industry is still in the early stages of a long-term transition. Although high-growth markets like China and Korea have demonstrated execution at scale, much of the global banking sector is only beginning to understand the model’s true potential for customer acquisition and servicing efficiency.
“The reality of the matter is it’s only been about five years where you have some level of embedded finance execution globally,” explained Tan. “If this was a child, we are talking about year two, where the baby has learned to jog a little bit and move a little bit faster than stumbling around as a toddler.”
For most retail and SME banking operations, the primary driver behind adopting embedded finance is the urgent need to address ROE. Investors increasingly compare banking returns to those of technology companies, placing pressure on executives to acquire and service customers at a fraction of traditional costs. By plugging into external ecosystems—ranging from ride-hailing apps to social media platforms—banks can scale their reach without the overhead of physical infrastructure or expensive direct marketing.
However, the next frontier of digital growth lies in what happens after a bank successfully integrates into these ecosystems. As financial institutions gain access to vast streams of data from non-banking partners, the opportunity shifts from simple underwriting to the creation of entirely new asset classes.
Tan suggests that the ultimate role for a modern bank is as a trusted custodian of identity and a mediator of information. “What happens when you have access to all that data in your own infrastructure? Could you not create data as a product set in and of itself?” he asked. “I see banks evolving from being a provider of balance sheet and services to a mediator of data, if done well. They have the security, they have the trust element, and they have access to data if they run embedded finance at scale.”
This transition requires more than just a surface-level digital transformation. Many institutions remain held together by aging infrastructure and programming languages like COBOL, which present significant risks as the pool of developers capable of maintaining them continues to shrink. Furthermore, traditional incentive structures often prioritise short-term returns over the decade-long investment required for true modernisation.
The industry is now reaching a point where the window for change is narrowing. Financial institutions that fail to modernise their cloud and data infrastructure within the next few years risk operational failure. This sense of urgency is particularly visible in Singapore, where government policy and a high concentration of talent have fostered a progressive fintech ecosystem.
Regional interoperability is also accelerating, particularly across Southeast Asia. Projects like Project Nexus are pushing for interoperable payment rails, while private enterprises are already creating cross-border wallet connectivity. Tan noted that while requirements still vary by country due to fragmented data sets and rails, the move toward full interoperability for payments and eventually credit is inevitable.
As the industry looks toward 2026, the focus is shifting away from the initial hype of artificial intelligence toward practical tools that drive productivity. While AI is already making development and marketing teams leaner, its role in secure production environments remains complex. Instead, the rise of stablecoins as alternative payment rails is emerging as a more immediate topic for global schemes.
The potential for stablecoins to settle transactions in real time provides a viable alternative to traditional global payment rails, forcing a fundamental discussion about how money moves across borders. While these changes may take years to fully mature, the groundwork is being laid today through the integration of banking services into every facet of the digital experience.
Ultimately, the success of a bank will depend on its ability to move beyond its traditional boundaries. By embracing the role of a data mediator and leveraging embedded finance to solve the ROE challenge, financial institutions can remain relevant in an economy where they are often the invisible infrastructure behind a third-party user interface.
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