Raise the stakes when competition intensifies

PETALING JAYA: Banks are upgrading their game plan in digital space to gain a stronger presence and prepare for competition with new players entering.

According to an analyst, the acceleration of digital transformation in the banking sector is due to the Covid-19 pandemic and the emergence of new entrants in digital banking.

“The competition between established banks and the new market participants will arise in the form of product offerings, prices, customer experiences and innovations. Customers will have more choices in terms of products and services and will find those that can meet their needs efficiently and inexpensively, ”the analyst noted.

Bank Negara is expected to issue five digital banking licenses in the first quarter of 2022. The central bank announced that it had received 29 applicants for a digital banking license by the June 2021 application deadline.


In terms of the percentage of new consumers for digital services by geographic location, data from the Google e-Conomy Report 2021 and the Association of Banks Malaysia showed that Malaysia ranks highest in digital growth from non-metropolitan areas in the region (see chart on page 1). .

Maybank, the largest bank in the country and the fourth largest bank in Southeast Asia by assets, is stepping up its digital capabilities to improve the customer experience.

Datuk Seri Abdul Farid Alias, President and Chief Executive Officer (CEO) of the Maybank Group, tells StarBiz that he expects the new digital providers to transform the competitive landscape for the banking industry. More importantly, it will enable everyone to participate in the digital economy.

Farid: We also strive to offer our private customers and SME customers the best experience.Farid: We also strive to offer our private customers and SME customers the best experience.

Maybank started developing its digital banking strategy in 2014 and all new digital services in the market are the result of that strategy.

An analyst for a local bank-backed brokerage firm says Maybank’s five-year strategic plan will not give it the upper hand over the competition.

Farid said: “With the launch of Maybank’s next five-year strategy, M25, this year, we outlined three strategic priorities, namely to be digitally, creating new value drivers and anchoring sustainability in the entire business of the bank.

“As part of the strategic priority of being digitally throughout, we will continue to sharpen our capabilities by focusing on digital offerings and solutions to improve the customer experience in a highly digitized environment. We also strive to offer our private customers and small and medium-sized enterprises (SMEs) the best experience. “

The bank is committed to adopting solutions that address key challenges, namely making online banking more accessible, implementing and integrating costs and expertise, and addressing security concerns. The movement restrictions have opened new doors, particularly to customers using the bank’s digital banking platforms such as Maybank2u and the MAE app.

The steady growth in transaction volume and value in Malaysia shows customer acceptance of e-commerce transactions.

In November 2021, Maybank2u’s transaction volume for both web and apps was 1.47 billion, compared to 1.15 billion for 2020 as a whole: a 35% year-over-year growth.

In terms of transaction value, the bank recorded RM640 billion in 2020 and it would see an overall growth of more than 20% this year.

The bank has approved loans / financings totaling RM 1.87 billion to more than 15,000 SMEs through digital SME finance since it was launched in September last year.

Datuk Khairussaleh Ramli, Managing Director and Group CEO of RHB Group, says that RHB’s digitization journey will be guided by their ongoing digital transformation plan.

Khairussaleh: We are steadily achieving our goal of digital new customer acquisition of 50% by 2023.Khairussaleh: We are steadily achieving our goal of digital new customer acquisition of 50% by 2023.

This focuses on four pillars of its digital strategy, namely creating customer-centric travel, digital engagement and acquisition, accelerating digital payments and digital support across the region by building a better customer value proposition through partnerships with digital ecosystems using the application programming interface (API) . Connectivity.

The group has committed to spending RM 500 million on digital and information technology (IT) modernization over the next few years since its allocation in 2018 as part of its digital transformation plan.

“Our goal is to increase digital transactions, including ATM transactions, to over 95%, to increase customer acquisition via digital origination to 50%, to be among the top 3 in DuitNow transactions and to increase ecosystem partnerships to 15% the group’s sales by 2023, ”he said.

RHB’s digital transactions increased from 64% in 2017 to 93% this year.

“We are constantly striving to achieve our target for digital customer acquisition by 50% by 2023, whereby we expect that 15% of group sales come from our partnerships in the digital ecosystem via API.”

The group’s digital strategy focuses on equipping its employees with current skills so that they can adapt to the changing business environment. This is in line with the government’s digital aspirations that a digital economy should contribute 25.5% of gross domestic product by 2025.

On the digital front, CIMB Group Samir Gupta, CEO of Consumer Banking, said digitization remains a key priority in CIMB’s Forward23+ strategy plan, both within the bank and for its customers.

Samir: Our goal is to provide our customers with more personalized, relevant and tailored offers and financial solutions.Samir: Our goal is to provide our customers with more personalized, relevant and tailored offers and financial solutions.

According to analysts, the strategic plan will help the banking group compete against the new entrants in the digital space.

The group takes a focused approach on where to invest across the company to ensure it is unlocking key segments and high growth opportunities in the region.

“As we continue to improve our current platforms and improve usability and reliability, we are also making good progress in developing our next generation mobile banking app with a planned rollout in 2022. This ensures that our platforms are future-proof . ”And able to support both our customers and our organization in the financial services landscape after Covid-19 and beyond.

“We will continue to strengthen and improve our digital banking platforms to improve the customer experience. In the future, we want to offer our customers more personalized, relevant and tailored offers and financial solutions, ”said Samir.

In Malaysia, CIMB’s online banking service, Clicks, fared significantly better in 2021 than it did in 2020, where it saw a 50% increase in digital transactions and a reliability / availability of 99.20%.

Digital sales also grew significantly with products in the past year.

In October 2021, digital sales of CIMB products represented 48% of total sales in Malaysia, compared to 37% a year ago. Samir says the group sees a similar trend regionally in other markets.

Renee M. Bullock-Cann, Country Head of Wealth and Personal Banking at HSBC Bank Malaysia, says Malaysia is a priority growth market for HSBC and will continue to invest in new technologies.

HSBC Bank Malaysia Country Head of Wealth and Personal Banking Renee M. Bullock-CannHSBC Bank Malaysia Country Head of Wealth and Personal Banking Renee M. Bullock-Cann

In the past two years, HSBC had shifted its digital investments from about half (53%) to nearly two-thirds (64%) further into global capacity.

“We have seen significant improvements in the early digital activation of new customers around the world. Specifically, in Malaysia we saw a 42% growth rate in the proportion of digitally active new customers last year and a 72% year-over-year growth rate for the country’s mobile active customers last year, “she said.

The bank is also working to improve branch efficiency and the customer experience by digitizing more customer service channels, with the ultimate goal of creating a “paperless” branch in its 54 branches across the country.

“We also see digitization as an important growth lever for our wealth business. Customer demand for digital capabilities is growing rapidly, and nearly every second product sale in our global retail business is done through digital channels. Worldwide, we receive more than a billion logins a year from our private bank customers alone, ”she says.

Lim Yau Seong, Head of Operations and Technology at OCBC Bank (M) Bhd, says 42% of the bank’s asset income comes from its digital skills.

OCBC Bank (M) Bhd Head of Operations and Technology Lim Yau SeongOCBC Bank (M) Bhd Head of Operations and Technology Lim Yau Seong

This has grown steadily since OCBC first introduced the ability to conduct wealth transactions without personal contacts in 2019, with 2019 and the bank expecting revenues to continue to rise with the launch of their digital wealth trading platform in the next year.

OCBC’s digital corporate customer base has also grown from 48% to 56% over the past three years, with digital native SMEs accounting for 53%.

He anticipates that digital business initiatives for online banking by SMEs will represent a significant portion of the bank’s business revenue over the next five years.

Credit Suisse says in its latest report Malaysia Market Strategy Outlook 2022 that banks have scaled back their branches with the increasing shift towards digital platforms for conducting banking transactions.

It sees more leeway for banks to further reduce their physical presence. It is no coincidence that, despite ongoing efforts to improve their IT platforms, banks are reporting record low cost / income ratios.

On the question of whether the Maybank branch network should be restricted with regard to digitization, Farid says that physical branches will coexist with his digital banking offerings, as both channels serve different business requirements and customer segments.

“Our current presence of 352 branches in Malaysia complements our online platforms and applications such as Maybank2u Web and App, MAE App and Maybank2u Biz App,” he says.

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