According to VMware Digital Frontiers study, Malaysian banks are embracing more technologies to build on consumer trust. (Photo by Mohd RASFAN / AFP)

Malaysian banks embracing more technologies to build consumer trust

The Malaysian financial ecosystem is expected to see positive growth, especially among banks. While the pandemic initially slowed down growth in banking, it is now picking up fast as sectors like e-Commerce are booming, and fuelling economic activity.

Today, more technologies are being implemented not just by banks but also by other financial players looking for a piece of the pie. The adoption of fintech in the Malaysian financial ecosystem is enabling organizations to unlock more potential, especially in regard to catering to growing consumer demands.

One of the most sought-after sectors in the industry is digital banking. The nation’s central bank, Bank Negara Malaysia (BNM), recently closed applications for digital banking licenses. The response has been beyond impressive, with a large number of contenders vying for the five precious licenses on offer. The Visa Consumer Payment Attitudes study shows that Malaysia is experiencing a significant acceleration in digital adoption due to the pandemic in the past 18 months. What is more interesting is that the study showed that over 74% of Malaysians are aware of digital banking, and a majority (66%) are interested in using their services.

According to the VMware Digital Frontiers 3.0 Study, the customer battleground for Malaysia banks and other financial services have now shifted online with 55% of Malaysians surveyed now preferring to engage with their banks via apps rather than visiting in-person at a branch, leading ahead of its Southeast Asian counterparts Singapore (51%), and Indonesia (53%), on par with the Philippines (55%), but slightly behind Thailand (72%).

At the same time, regulations like the Risk Management in Technology (RMiT) policy were created to ensure Malaysian banks and financial institutions properly manage their cyber-risk exposure by establishing the necessary risk frameworks, governance structures, policies, and procedures. With the perpetually increasing use of technology in the financial services industry, BNM saw it necessary to put in place this framework to minimize operational disruptions and maintain confidence in the system from outside threats.

The headquarters of Bank Negara Malaysia. (Photo by MOHD RASFAN / AFP)

With more Malaysians happy to interact digitally with financial services firms, harnessing frontier technologies to deliver superior digital offerings and consumer experiences is now becoming a priority for them.

Creating a personalized digital experience today not only keeps consumers coming back but also builds the trust of consumers. For financial service organizations, this means rethinking their core processes and operations that will empower superior digital experiences for their consumers. This includes a high level of security and protection of data, ease of use across all devices, and faster speed of service.

For Devan Parinpanayagam, Country Manager at VMware Malaysia, financial services organizations must create a trusted digital foundation to leverage frontier technologies to accelerate innovation and deliver digital experiences that will excite Malaysians. This way they can establish a viable ecosystem that is also financially inclusive for all, and bolster Malaysia’s growth as we steer and move towards becoming the “Heart of Digital ASEAN”.

“As Malaysia primes the ground for digital banks, this will be an opportune time for financial services firms to harness next-generation technologies such as Cloud and shape new direction and growth for the industry. With trust and customer-led digital experiences emerging as the key drivers for growth, VMware will remain committed as a trusted partner in enabling Malaysia’s financial services firms with digital innovations so they can respond, adapt and accelerate businesses’ growth, as well as build a more cohesive and inclusive ecosystem.”

Compared to other ASEAN nations, Malaysian consumers are also embracing newer technologies more than ever before. The use of artificial intelligence in financial services seems to be creating a greater trust among consumers with a third of survey respondents saying they would allow an app to help make investment decisions over an individual that works for the bank.

Trusting AI in finance

AI in finance continues to innovate solutions and help provide better and faster decisions. Today, loan approvals, transactions, and even fraud detection can be completed in seconds with sufficient data in the AI model. To ensure they meet all regulatory compliance, banks are also building their fintech models and updating their data management systems to be able to cater to increasing consumer demands.

More banks now realize they need to embrace fintech or be left behind. As Malaysia accelerates towards the digital future ahead, digital engagement models will continue to be readily embraced within the nation’s financial ecosystem as demonstrated in the study where it was found that Malaysians are relying on their smart devices more, with 63% of respondents stating that their mobile phones are now more important than their wallets when conducting financial transactions.

Next-generation technologies in banking like facial recognition are also becoming a trusted security interface for Malaysian consumers. While more than half of Malaysians surveyed are comfortable with financial services organizations having access to their data, trust is still is a priority when picking a provider. True enough, there is plenty of room for improvement for financial services organizations to not only deliver superior digital consumer experiences but also secure digital experiences that will not compromise consumers’ privacy.

Thus, progressing forward and embracing the full potential of what the tech innovations may offer, Malaysian banks and other local financial organizations should continue to focus on three main areas, as outlined by VMware.

These include:

  • Building a multi-cloud future with app-driven innovations in a consistent and secure environment. Unlike other industries, financial services face more regulations in the journey to the cloud. While the private cloud is preferred due to its security, the flexibility of the public cloud allows them to try more applications as well. Having a multi-cloud future allows them to leverage the capabilities of various cloud services while still maintaining their security posture.
  • Enabling future-ready workforce solutions is also key in enabling a seamless and secure workforce. As remote working continues, even in the financial industry, securing employees and their workloads is vital. Providing them the right digital experience to work on also enables greater outcomes.
  • Lastly, financial service organizations must look towards an intrinsic cybersecurity approach. This provides them an additional layer of robust protection for mission-critical operations and infrastructures to fast-track business innovation and resilience.

For Malaysian banks and other financial service organizations, they would now need to see how they can build on the trust that has been granted to them by Malaysian consumers and make the right decisions when it comes to dealing with customer data and technology.