On August 16, 2023, Payments Network Malaysia Sdn Bhd (PayNet) hosted the annual Malaysia Excellence in E-Payments Awards (MEEA) to recognise and celebrate the efforts of PayNet’s ecosystem of banks, non-bank participants, businesses, and government agencies for their contributions to the nation’s cashless agenda.

As part of the event, a panel from both the financial and tech worlds gathered for a discussion around Collaboration, Innovation, Inclusivity, and Customer-Centricity and how these themes will impact the nation’s transformation journey.

This panel featured Farhan Ahmad, Group CEO of PayNet;  YM Raja Teh Maimunah, CEO of AEON Digital Bank; Shailesh Grover, Chief Digital and Innovation Officer at Hong Leong Bank Berhad; and Alan Ni, CEO of TNG Digital. Facilitating the dialogue was Vincent Fong, Chief Editor of Fintech News Malaysia.

Key takeaways from the Panel:

• Bank-FinTech partnership and collaboration are critical in driving e-payment growth.
• Open banking and a common digital ID are key drivers of innovation for digital banks.
• New products and commercial models are needed to make payment innovation inclusive.
• Customers must be at the center of any innovation to make it useful.
• Right-sized regulation and fair pricing can significantly accelerate migration to digital.

Below is an overview of the program and comments in more detail.

The promise of innovation

The conversation started with exploring the exciting innovations on the horizon. The experts highlighted the value of open banking, bank-fintech partnerships, and inclusivity in transforming how e-payments can benefit the broader populace.

Shailesh Grover, Chief Digital and Innovation Officer at Hong Leong Bank Berhad pointed out how introducing new technologies enables the creation of novel financial products.

He cited an example where Hong Leong Bank introduced HLB@SCHOOL to teach young children good financial habits, illustrating the value of technology in shaping positive consumer behaviours from an early age.

The panellists recognised the importance of ensuring that innovation is not just for technology’s sake but is driven by actual use cases and tangible benefits.

While experimenting with new technologies is essential, the ultimate goal should be to serve customers more effectively.

Innovation in service of financial inclusion

Alan Ni, CEO of TNG Digital, shared insights into how digital innovation is aiding financial inclusion.

He highlighted that introducing digital wallets and mobile payment solutions has democratised financial access for underserved populations, including those without traditional credit profiles. 

YM Raja Teh Maimunah, CEO of AEON Digital Bank, echoed these sentiments, emphasising the significance of enabling financial services to reach marginalised communities.

She emphasised the role of digital banks in extending credit facilities to those previously excluded due to the lack of credit profiles, through the use of AI and alternative data.

Collaboration as the key driver

Throughout the discussion, collaboration emerged as a recurring theme. The panellists acknowledged that partnerships between fintechs and banks are essential for e-payments to deliver their full potential.

Farhan Ahmad, Group CEO of PayNet, stressed the importance of this partnership in driving outcomes that meet the needs of underserved markets across the country.

He highlighted that collaboration is at the core of value creation, enabling the financial ecosystem to leverage the strengths of both sectors to deliver innovative new products at scale.

Innovation can come from any side, but collaboration is necessary to enhance inclusivity significantly.

Cashless trends and societal implications

The conversation shifted to the growing trend of cashless payments and its impact on society. The panel discussed the emergence of cashless shops in urban areas and the potential concerns of excluding those who still prefer physical cash. 

While the convenience and benefits of cashless transactions were acknowledged, the panellists recognised the need to address the digital divide, particularly in rural and underserved communities.

The experts highlighted the importance of providing choices to consumers, acknowledging that while cashless payments are convenient for many, a demographic still relies on physical cash.

The transition to a cashless society must be gradual, considering different consumer groups’ diverse preferences and needs.

The digital divide

The digital divide is a critical concern regarding financial inclusion and reaching rural communities. The panel acknowledged the disparity in digital adoption between urban and rural areas. 

However, Alan highlighted that, despite the divide, Malaysia’s urban-rural penetration percentage is higher than other countries. 

He acknowledged that a chicken-and-egg situation exists; without enough users, there’s no incentive for merchants, and without enough merchants, there’s no reason for users to adopt digital payments.

Alan contributed a global perspective, comparing China’s successful e-commerce adoption. He emphasised that digital adoption in rural areas is closely linked to economic prosperity and enhanced livelihoods. The challenge lies in technology adoption and creating economic value that resonates with local communities.

Solutions for rural adoption

Alan shed light on TNG Digital’s endeavours in rural areas. He highlighted the significance of partnership and collaboration with local merchants and communities.

TNG Digital’s approach involves enabling rural merchants to participate in e-commerce, expanding their customer base and bolstering local economies.

These insights underscore the importance of localised strategies that acknowledge different regions’ unique challenges and opportunities.

The landscape of change and challenges

The dialogue commenced with a candid acknowledgement of the challenges posed by the evolving landscape during the PayNet talk. 

Farhan led the discussion with a realistic perspective on businesses’ complexities. He likened the integration of digital solutions to solving a puzzle with many intricate components, which may not always seem intuitive. This highlights the importance of understanding the multifaceted nature of digital transformation.

The panel delved into the dynamics of competition, effort, and resources required. The consensus leaned towards the idea that, while the effort invested in digital transformation might not always yield immediate and significant returns, banks and other businesses must remain relevant in an increasingly digital world.

Alan further emphasised the significance of customer-centricity in this process. He suggested that the key lies in catering to the target audience’s preferences. While digital onboarding and transactions attract tech-savvy customers, extending these solutions to rural areas remains challenging.

“Consider the small-scale entrepreneurs selling peanuts and ice cream, where transactions are frequent but the value per transaction remains minimal. Convincing them to transition to a digital onboarding model requires extensive efforts and resources, making it a formidable task,” said Shailesh.

“Thus, when asked whether the transition to digital onboarding is straightforward, the short answer is no,” he added.

The discussion echoed a vital aspect of innovation and transformation—understanding the diverse needs and technological readiness of different segments of society and developing a way to meet those needs in a financially sustainable manner.

Enabling policies and infrastructure

While acknowledging progress, the panel also recognised the need for enhanced policies and infrastructure to facilitate broader adoption of digital solutions.

The absence of a digital national ID was identified as a significant friction point in the onboarding process. The panel emphasised the importance of pushing the digital ID agenda to enhance the ease of customer verification and account opening.

Open banking was another topic of discussion. The panel agreed that there’s a need for a regulatory push to ensure open banking becomes a reality. This will promote data sharing and collaboration, benefitting consumers and smaller players.

Raja Teh emphasised the role of open banking in bridging information gaps and enabling better credit assessment for previously underserved segments of the population.

The discussion also highlighted the importance of implementing proportional regulation to effectively manage the delicate equilibrium between risk and innovation, which is critical for achieving sustainable growth.

PayNet Malaysia Excellence in E-Payments Adoption Award Winners

The event’s culmination was marked by the unveiling of the MEEA award winners, signifying remarkable accomplishments across diverse categories in the realm of e-payments. These awards spotlight the outstanding contributions of organisations that have showcased excellence in the digital financial landscape.

Among the winners was Hong Leong Bank Berhad, securing the title of Best e-Payments Bank; Shopee Mobile Malaysia Sdn Bhd, recognised as the Best e-Payments Merchant; and TNG Digital Sdn Bhd, acclaimed for Best e-Payments e-Wallet. Hong Leong Bank Berhad was also celebrated as the Best e-Payments Acquirer in the bank category.

At the same time, ShopeePay Malaysia Sdn Bhd clinched the same accolade in the non-bank category. CIMB Bank Berhad emerged as the Best Online Transfer Bank, and Beez FinTech Sdn Bhd stood out as the Best e-Payments FinTech.

Additionally, Malayan Banking Berhad received the Special Recognition Award for Best Customer Experience in the bank category, while TNG Digital Sdn Bhd secured the equivalent recognition in the non-bank category.

Further commendations were bestowed upon AmBank (M) Berhad for Best Industry Partnership, Public Bank Berhad for Outstanding Contribution to Cross Border Payments, Jabatan Pendaftaran Negara for Leadership in the Public Sector, Kerajaan Negeri Kedah for Leadership in the State, Kementerian Kesihatan Malaysia for Leadership in the Health Sector, and UiTM Cawangan Perlis for Leadership in the Education Sector.

Collaboration and future possibilities

The PayNet Talk event provided a platform for influential figures in the financial sector to share their insights on collaboration, innovation, and customer-centricity.

The discussions highlighted the symbiotic relationship between financial institutions and technology-driven entities, showcasing the strides in creating innovative solutions catering to diverse customer needs.

Meanwhile, the MEEA awards recognised and celebrated excellence in e-payments, honouring organisations contributing to the nation’s cashless agenda.

As the nation continues its journey towards a cashless economy, it’s imperative to ensure that inclusivity, innovation, and the needs of various segments of society are kept at the forefront of decision-making processes.