digital banks

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What’s next for the digital banks in Malaysia?

With Malaysia’s digital banking licenses finally allocated, the selected recipients have said that they would need about two years to plan and strategize how exactly they plan to utilize their licenses, especially in offering products to the market for both consumers and enterprises.

Globally, companies that have been allocated digital banking licenses have been performing splendidly, meeting customer expectations and providing them the services that they really need. As such, the success of digital banks has been a wake-up call for most traditional banks that are still looking to transform their services.

Following the announcement in Malaysia, Tech Wire Asia caught up with William Dale, Mambu’s Commercial Director in APAC. Mambu has been working closely with a number of parties involved in license applications in Malaysia.

Should traditional banks be worried about the competition from digital banks?

Traditional banks that are already making good progress on their digital transformation strategies need to be cautious of these new digital banks, but if they’ve put in the work selecting the right technologies and understand what their customers really want and need, then in every likelihood they won’t suffer too much.

It is the traditional banks that don’t have a solid plan for digital transformation that risk being left behind as the new breed of digital banks enter the market. Consumers today expect to be able to manage all aspects of their life with a few clicks and swipes on their phones, including their finances, so financial institutions need to ensure they’re really meeting their customers’ expectations if they want to remain competitive in this new era of banking.

How is Mambu working with some of the applicants for the license?

Mambu has been working with many applicants for the past two years. With such a large customer base running on the Mambu platform, we have seen many examples of what works and what doesn’t, which has allowed our teams to advise the applicants on all aspects of launching a new digital bank, including technology architecture, security and resilience best practice, and also the various business models and product sets that have been successful.

These insights have assisted the applicants with their submissions to Bank Negara Malaysia and as soon as the licenses have been awarded, we are ready to execute the MVP launch plans that we have jointly developed with the applicants.

Why are consumers looking forward to digital banking even though traditional banks offer similar services?

While some of the products and services may be similar, digital banks have some clear advantages over traditional banks, most notably in speed, convenience, and cost. They can also offer their products and services to a much broader audience due to the lower cost of customer acquisition and servicing.

Digital banks operate in the cloud and use next-gen technologies like artificial intelligence, machine learning, and data analytics to create hyper-personalized, customer-centric products and services that directly meet the needs of their customers.

Ultimately, digital banks make banking easier; it’s faster, more convenient – for example, you can set up an account in just a few minutes on your phone – and the account servicing fees are generally significantly lower than those of traditional banks.

On a macro level, digital banking will also help to improve financial inclusion in Malaysia, with consumers that are currently left unbanked or underserved by traditional banks much more likely to be able to access products provided by digital banks.