How banks in Malaysia are keeping up with the digital shift

Striking the balance between mobile and online offerings as well as physical branches is key.

As digital business becomes more important and customers seek an efficient and easier way to conduct their transactions, banks in Malaysia have been undergoing a broad-based digital transformation that touches on their technology, culture and operations.

At the Kuala Lumpur Leg of the 2019 Asian Banking & Finance Retail Banking Forum, bank executives gathered to discuss the shift to digital banking in Malaysia and their strategies and struggles to adapt to new ways of doing business.

Encik Ahmad Shareza Abdul Rahman head, Mass Banking, CFS Malaysia of Maybank, said that they are looking at network strategies to reformat traditional banking and create new ways to reach customers such as the use of bank kiosks on campuses.

Banks can all agree that there is a need for a simpler way for their customers to turn into digital. Mohd Suhaimi Bin Abdul Hamid, CEO of Standard Chartered Saadiq, emphasised that their bank's digital agenda focuses on making digital transactions easier by re-engineering digital at a price to support their plans for mobile and online banking. He stressed that if customers find their digital banking solutions easy to use, then they can also influence others to use it. 

Hamid cites how their earlier plan of launching six branches to run e-banking services - without tellers and a head office - failed to get a headstart in Malaysia as he suggests that the success from other countries didn't necessarily meet local requirements. With this lesson in tow, he stresses the importance of digital campaigns to grow client awareness of their mobile and online offerings especially since they don't have 'many branches' with which they can service clients. "These clients are starting to think [more] independently using digital compatibility by mobile and internet banking...and so we also do a lot of campaign digitally to grow client awareness on how to use mobile phones, for example," he said. 

However, Badrul Hisham SVP, head retail & SME Deposits of RHB Bank mentioned that customers in Malaysia are still slow in adapting to online banking tools. In an effort to make digital banking easier, RHB Bank introduced the concept of e-Know your customer (KYC). Although progress is slow, they are seeing good results as the move capitalises on the tech-savviness of Malaysia's millennial demographic. As of January 2019 about 78% of the Malaysian population were active social media users from 2016-2019, data from statista show.

On September 2017, the Central Bank of Malaysia (BNM) announced plans to issue regulatory parameters for the conduct of electronic know-your-customer (e-KYC) processes for remittance transactions as part of growing movement to regulate such transactions. Countries like Australia, Thailand and India also have some form of e-KYC regulation in place.

As banks embark on broad-based digital transformation plans, deterring cybercrime ranks high on the priority list. Encik Abdul Rahman, head of mass banking for Maybank & CFS Malaysia suggests that banks need to strike the balance in beefing up their cyberdefences with their digital agendas. "We do have a team that looks very closely but for specific controls, we do have additional layer that loosens the background rather than in front. In the past, what we used to do is we put everything upfront and hope that the front gate is good to cover up everything else. Now, we've balanced it and we put controls in the back at the same time," he said.

When asked why Maybank does not ask for verification like other banks does, Encik stated that it isn’t necessary since their services are only used as an e-wallet and not a full Visa account where online transaction with cash would be involved, adding that the balance between its benefit and risk would be fine. By Kathleen Balinong and Kim Castro 

The Kuala Lumpur Leg of the ABF Retail Banking Forum was held on 08 May 2019 at Fairmont Jakarta. For inquiries, please email [email protected].