With the wave of new fintech companies entering Malaysia, a question that often pops up in conversation is whether the banks are asleep on the wheels or are they actively beefing up their tech portfolio in response. The Fintech News Malaysia reached out to executives within the top 5 banks in Malaysia to understand their views on fintech and what they’re doing in response.
Hong Leong Bank
Thoughts on Fintech Malaysia
Domenic Fuda, CEO and Group Managing Director, Hong Leong Bank feels that the fintech landscape has really been flourishing this past 3 years with both homegrown and regional players entering the market. He believes that the fintech ecosystem has much room to grow in Malaysia especially in areas like lending and KYC, while payments are wallet he opines are more crowded than others.
He commented that, “The growth in FinTech has been impactful at innovating and disrupting financial services – it opens up not only the eyes of the consumers, but also awakens incumbents to the possibility that there may be new avenues of delivery and fulfilment. However, only a select few of these FinTechs will win in the long run.”
Response to Fintech
Domenic believes that fintech companies need to work together with incumbents, such as banks, in order to be successful. A collaborative approach as opposed to a disruptive one would be well suited for a highly regulated sector like finance.
He adds, “Partnering with FinTechs offer opportunities for the incumbent in many areas – from delivering cost reduction opportunities, differentiated offerings, and customer retention, to prospects for additional revenues.”
Domenic says that Hong Leong Bank as a whole has embraced the fact that collaboration is the way to go, towards that notion they have previously launched the HLB Launchpad, a three month mentorship programme. The programme is the first public-private partnership between HLB, Cradle and Malaysian Business Angel Network (MBAN).
Other than that partnership, in recent years Hong Leong Bank has also embarked on investing in deep technology like Artificial Intelligence, in 2016 the banking group deployed cognitive banking technology with IBM Watson.
Moving forward, Domenic said that they are currently exploring and piloting technologies like Augmented and Virtual Reality, Robotics, Blockchain and Application Program Interfaces while at the same time digitising their front, middle and back office.
On the Future of Fintech in Malaysia
In the near to medium term Domenic feels that the verticals that would be most disrupted in the Malaysian Fintech landscape will be Payments & Digital Wallets, Lending and KYC.
Commenting on the payments landscape he feels that the introduction of chinese players like AliPay and Wechat will be a game changer but however he questions if Malaysia will follow the same evolution in consumer behaviour as the Chinese market did.
As for the lending market Domenic has observed many new approaches in loan underwriting for both secured and unsecured loan using alternative data from telcos, utilities, and social media platforms, he expects to see more players entering the market using alternative data to offer better customer experience through faster loan turnaround times and disbursement compared to traditional banks.
KYC on the other hand, Domenic believes is key to banks being truly digital. It remains a tedious tasks for consumers as they have to be physically present to meet face to face with bank representatives for many types of banking products. Bank Negara Malaysia has recently published the e-KYC guidelines for remittance companies and is currently mooting an industry wide adoption. Domenic is of the opinion that should e-KYC be approved a wave of change would be seen on how customers apply and sign up for products digitally in the future.
RHB Bank
Thoughts on Fintech Malaysia
In seeking RHB’s thoughts on fintech in Malaysia we spoke to Jambugesvarar Marimuthu, Head of Digital Strategy and Innovation for the bank or more fondly known as Jambu by his colleagues in the sector. He feels that Fintech in Malaysia has gone past its infancy and is approaching the point of maturity with the private and government sector becoming increasingly welcoming towards Fintech.
He was cautious to not be overly positive as he feels that we have yet to achieve the status of a fintech hub. Jambu believes that the sector would require more regulatory change, consumer education and most importantly strongre collaboration between banks and fintech companies to allow more innovation to happen in the sector
“We also have a long way to go, apart from few real mature players, there aren’t much Fintech innovation happening locally and it appears that many are trying similar things (aggregator, wallet etc). We need to increase innovation aspect of it to be diverse and also cover business model innovations and more. It is only when we have more and more innovative mature Fintech can we see stronger collaborations between banks and Fintech,” said Jambu
Response to Fintech
Acknowledging the need for a symbiotic relationship between banks and fintech companies Jambu said that RHB has embarked on several initiatives. In 2015 was when RHB really started their journey, where their main focus was primarily to understand the needs of fintech and identify possible synergies to work together. Following that, RHB has since ran two hackathons with Startupbootcamp to source for innovative solutions.
Jambu added that RHB is already working with 2 of the leading fintech companies in Malaysia namely MoneyMatch and Funding Societies. He said on top of that RHB will also continously work closely with the Fintech community to discover more opportunities to collaborate while also contributing to growth of Fintech in the market alongside with regulators like Bank Negara Malaysia and Securities Commission Malaysia.
Jambu says that RHB will continue to actively work closely with the Fintech community to discover more opportunities to collaborate while also contributing to growth of Fintech in the market.
On their own technology portfolio front, RHB has also launched such as RHBMyHome mortgage app which enables users to apply for mortgage loans, submit their documents and check the status online. Alongside with hat RHB has also launched the RHB Rider Service is an account activation service that allows RHB customers who have opened an online account, to request for a Bank’s staff to visit their office or home for KYC and account activation.
Jambu also hinted major transformations to their key channels of customer engagement, which he says will be their biggest initiative this year set to be launched in the 3rd quarter of 2018.
On the Future of Fintech in Malaysia
Jambu believes that in the future Artificial intelligence powered conversations will be the main touch point for customer interactions. He also predicts that blockchain will continue to become more and more significant in the world with financial industry services leveraging on it for secure movement of transactions and assets. This will greatly reduce cost of operations for the banks and improve turnaround time in money transfers and potentially in the areas of securing asset ownership such as securities asset or house etc.
He shares similar opinion as Domenic that mobile wallets especially from established players such as Ali Pay, Wechat Pay, Apple Pay and others will continue to disrupt payment market and impact bank’s revenue but at the same time we also believe that while there are many wallet players emerging it will eventually transition into only a select few key players remaining. But this will definitely impact customer experience and behaviour greatly.
Public Bank
Image Credit: WikiMedia Commons
Thoughts on Fintech Malaysia
Fintech News Malaysia reached out to Seow Loo Vic the Head of Fintech and Digital Innovation to get a gauge on Public Bank’s fintech playbook. He feels that while there is significantly less media coverage on fintech than Singapore, Malaysia is home to many real innovation being developed by local talents.
Overall Vic is positive on the outlook of fintech in Malaysia, he feels that the mobile processing power improvements, liberalisation of the regulatory guideline by Bank Negara will do wonders for the sector. At the same time he also feels that the introduction of Chinese players like Alipay and Tencent’s WeChat Pay will shake up the local market with incumbents investing to maintain their foothold against the Chinese giants.
“Mobile payment is the buzz now and will go main stream from 2018 onwards” said Vic
Response to Fintech
In keeping with Public Bank’s pragmatic nature, when Vic commented on the bank’s response he emphasised that Public Bank has and always will be prioritising shareholder’s value, adding that while they embrace technological changes they will remain prudent at all times and only prioritise initiatives that have a clear economic value.
He also pointed at out that Public Bank will be working on several initiatives this year which includes their own mobile wallet and also collaboration with local wallet players to create a web of payment services for bigger audience. Public Bank was also previously reported to be working with Alipay to offer mobile wallet services
On top of that he also mentioned that Public Bank is working with several fintech companies on Big Data and Artificial Intelligence initiatives. The names of the company was not disclosed.
On the Future of Fintech Malaysia
Vic feels that there are a few technologies that will revolutionize the banking sector by improving efficiency, coverage and profitability namely eKYC, Open API, Artificial Intelligence and blockchain. He shared that these technology does not disrupt the financial industry existing processes but rather complement the traditional processes or existing services and as customers demand for more sophisticated services and transparency for better management of their finances, banks will turn to technologies that cater for existing services without the need to reengineer established processes radically.
CIMB Bank
Image Credit: Wikimedia Commons
Thoughts on Fintech Malaysia
In early 2017 Olivier Crespin was headhunted from DBS where he was the Group Head of Digital Banking to lead CIMB’s dedicated fintech unit as its Chief Fintech Officer. Since his appointment at CIMB Olivier has made limited statements to the media, we had the rare opportunity to speak to Olivier to get a sense on CIMB’s views on fintech.
“The Malaysian fintech scene has progressed favourably in recent years from the introduction of new solutions in the market (such as e-wallets, online payment systems), alternative funding models (i.e. crowdfunding, peer-to-peer financing), and increasing technology adoption involving customer acquisitions and onboarding.” said Olivier
He is of the view that the facilitative environment enabled by the Malaysian regulators coupled with Malaysia being a conduit to the rest of ASEAN will attract fintech innovators to the country, creating stronger talent growth, catalyzing innovation, and driving adoption.
Response to Fintech
Olivier said that CIMB has always been fast moving and quick to respond to the evolving landscape,he cited initiatives like CIMB EVA, Rekening Ponsel and Beat Banking as an example. CIMB Eva is an Artificial Intelligence enable virtual assistant that helps CIMB customers with their banking needs. Rekening Ponsel is a branchless banking concept in Indonesia. Whereas Beat Banking is a partnership between CIMB Thai and mobile operator Advanced Info Service, to enable CIMB customers to perform banking transactions at Advance Info Service branches.
Olivier also pointed out that CIMB is also actively working with a number of fintech companies from regional players like MoneyThor and Active AI to large giants like Alipay. Olivier added that they have also set up an Innovation lab within CIMB Fintech to develop proof of concepts and run pilots in collaboration with other FinTech partners
“We also look to form smart partnerships and integrate strategic verticals to provide a seamless experience to our customers. The customer is at the centre of everything we do. We look to stay connected and engaged with our customers while providing them with a holistic personalized solution” said Olivier commenting on the matter.
Personally what’s most interesting to us is that CIMB is working on a mobile centric digital only bank in the new markets that CIMB is in namely, Vietnam and Philippines and we’re secretly hoping that this would also be adopted in Malaysia in the near future.
On the Future of Fintech Malaysia
Olivier came up with a convenient acronym to outline the future of fintech, he says the future is in ABCD – Artificial Intelligence, Big Data, Codes (QR) and Data. He believes these technologies will disintermediate, create greater transparency as well as provide new use cases and better insights.
Maybank
Thoughts on Fintech Malaysia
As Malaysia’s largest bank we’d be remiss if we did not reach out to Michael Foong its Group Chief Strategy Officer to find out more on what Maybank is doing about Fintech in Malaysia.
“With the advent of the recent technological boom, some of the most game-changing technological innovations have become embedded into our societies. The smartphone, Uber, Facebook, Instagram, Whatsapp, and many more. These technologies have fundamentally changed the way we live and have become part of our everyday lives. This has also had the added effect of raising our expectations from a user experience and convenience perspective.” said Michael Foong, Group Chief Strategy Officer, Maybank
He further commented that a gap was created, between what customer expectations and what banks were able to provide due to this, his observation is that many fintech companies are popping up in Malaysia specifically to attempt to tackle this space. He thinks that Malaysia in particular has huge potential in the FinTech space. According to Michael, this is due to 2 main reasons: The open mindedness of regulators towards innovation and technology, and the rapid rate of change in the Malaysian digital landscape.
Response to Fintech
Maybank views fintech as an opportunity rather than a threat, Michael feels that the emergence of technology in the financial sector has opened up new opportunities that allow banks like Maybank to reach a bigger market; offer an enhanced customer experience; and improve the efficiency of systems and operations.
In recent times Maybank has been seen organising their annual Maybank Fintech programme with the key criteria of “Go-to-market” partnership where both parties can leverage on each other to tap into an opportunity,
Alongside that Maybank has also launched their Maybank Fintech Sandbox last year, the platform aims provide opportunities for start-ups and innovators to develop and test new ideas by leveraging on the banking group’s internal digital and technology expertise. The sandbox will also provide fintech companies with the environment, tools, simulated data, APIs to experiment around.
On their payments capability front, Maybank was of course recently known for being the first bank to launch a digital wallet called MaybankPay and their recent soft launch for Maybank QRPay. Maybank has also been reported to partner with the likes of Alipay and Wechat Pay.
Despite the excitement of the fintech development within Malaysia, Michael was quick to reveal his more pragmatic side and said, “However, it is important to see through the hype and exercise disciplined restraint to ensure that the resources expended bring meaningful benefits”.
On the Future of Fintech Malaysia
Michael pointed out one specific area of interest that will have a great impact is in the payments sector. He expects that competition from digital entrants and strategic partnerships will intensify in the realm of digital payments and lending.
He added that technology is changing how, where and when payments are made and who the facilitating parties are, from fintech startups to non-payments industry operators such as Facebook and Apple, these companies have transformed and revamped the way we think of payment and the transferring of value.
Many of the bankers in this article mentioned about Alipay and WeChat Pay, interested to find out more? Read our take on how these Chinese giants will fare in Malaysia here
