Malaysian banks turn to financial wellness apps to compete as digital rivals prepare to take off

PETALING JAYA: There is a hive of activity among digital banks who believe that financial wellness and digital money management tools are at the forefront of growing market share in the new era of engagement banking.

64% of Malaysian consumer business decision makers said their company is increasing spending on digital and engaging financial wellness initiatives – the highest in the Asia Pacific (Apac) region; more than Singapore, Japan or Australia, according to a recent study commissioned by the Engagement banking platform Backbase and conducted by Forrester Consulting.

This will happen after submissions for a digital banking license have now been completed. The central bank is now in the process of choosing the five lucky ones to be awarded in the first half of 2022. Malaysia’s retail banking sector is now preparing for the onslaught of competition by bringing a host of new digital features to its customers.

Backbase (Apac) regional vice president Iman Ghodosi said the window of opportunity for banks to expand their digital offerings is now, and the latest report showed that Malaysians have an insatiable appetite for digital offerings.

For example, 67% of consumers surveyed said they use their institution’s existing mobile app, 87% believe that having a great mobile app is an attribute they value in financial services, and 82% do their day-to-day banking on their smartphone. ”

The retail banking sector in Malaysia is addressing this demand and ensuring that banks in the digital space can continue to compete against the upcoming newcomers. According to the surveyed decision-makers in the retail banking sector;

> 90% stated that they are planning or actively expanding their digital money management tools

> 88% said they are planning or actively expanding their digital money management tools, with almost half of them citing this as critical

Ghodosi believes the next six months will be a critical turning point in digital banking.

“Malaysians want a higher level of customer service and flexibility for the financial services they subscribe to. They want to have access to their personal finances anytime, anywhere and through any channel and have the tools to manage them. Traditional banks could lose ground if they don’t innovate quickly. “

Progress is not without its challenges, however, and Malaysian banks have been some of the tallest in the Apac region. Of the Malaysian retail business decision-makers surveyed;

> 74% stated that a lack of understanding of customer needs and results is an obstacle to the implementation or further development of digital money management tools in their company

> 66% said outdated legacy technology is challenging their plans

> 64% said organizational silos make things difficult

“The banking sector is facing challenges in all countries, but it was surprising that the challenges in Malaysia were above average. There is also a lack of understanding in Malaysia as to who owns the budget for this type of initiative. Is it considered a customer experience? Is it a corporate strategy? Or is it marketing? In fact, there are all three and more, ”said Ghodosi.

One of the biggest motivations for the increase in the money behind financial literacy is not profit, but the banks’ increased capacity to serve and protect their customers. Through these new channels of customer interaction, banks can now address needs they couldn’t before by leveraging data analytics, AI, and mobile technologies to make financial recommendations and improve user engagement. Trust in traditional banks in Malaysia is far higher than in digital banks, and initiatives like these are aimed at building their reputation.

For example:

> 64% of retail business decision makers surveyed said that preventing the exploitation of vulnerable and elderly customers is part of their company’s plans for developing such digital tools

> 62% reported helping customers build better financial habits; and

> 66% will offer financial literacy tools

Additional features these digital and engagement apps provide include spend analysis, billing planning, prepayment and income smoothing, automated savings and retirement planning tools.

“Banks can deliver so much value through these engaging digital services while also collecting valuable data from users. Our research suggests that digital money management apps are the primary interface between institutions and their clients as we move into the future. Consumer demand and industry sentiment show that we are only at the beginning of the journey, ”said Ghodosi.

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