Warming Up To Digitalisations

Singapore, Jan 11: The pandemic has brought about a raft of changes on how we do our banking these days. For one, a lot of people are now warming up towards digitisations in the banking industry. But what about those with low tech literacy? How are they coping with the change?
DailyStraits.com recently spoke to Silverlake’s Senior Executive Vice President and Customer Engagement Hong Yea Chee who provided us with some insights on the matter. Let’s read the full interview below.

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During the pandemic, we have turned increasingly to online services and paid for things digitally. Does this mean that physical money would soon disappear?

While online payments have certainly increased during the pandemic, the underserved and unserved banking population still depend largely on physical money for their day to day transactions. Digital transformation is much needed to provide more accessible and convenient services to this group.
Senior bankers have told us that their physical branches have seen a huge decline in traffic and that many of them might be unsustainable in the long term. Banks will need to digitally transform its services and be agile in reconfiguring and modernising their branches. A clear example is digital lending that can be provided digitally end to end, from product development and launch, to application and approval of the loan, including the onboarding with e-KYC (Electronic-Know Your Customer), without the need to visit a branch.

How does digitisation affect customer trust in banking institutions?

Banking institutions have traditionally garnered the trust of their customers. In the past, banks have been able to maintain that trust when they launched digital channels like internet and mobile banking. This has been based on the model that they own both the products and the distribution. However, the new wave of digitisation introduces competition from fintechs, Big Tech such as Google, Apple, and Facebook (now Meta), and closer to home the new digital banks which will soon receive licenses. Trust will soon no longer be an exclusive feature of traditional banks.

A large number of people might still have issues with digital banking. How can financial institutions win their trust?

There is an opportunity for legacy banks to digitally transform and still maintain trust – by maintaining clear and open lines of communication with its customers about its transformation processes. In Europe, where neo-banks and challenger banks have risen to compete with traditional financial institutions, studies have shown that customers still prefer their established accounts (where their salaries are credited to) with traditional institutions. But there is increased pressure for them to digitally transform. This is especially so on the distribution side where customers are seeking to consume financial services as part of their lifestyle. Research from PwC shows that financial services in Malaysia are making the shift from being transactional to being a lifestyle partner. This paradigm shift requires banks to be more open and to reach out to the ecosystem in order to win trust.

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How can we make banking services accessible to customers that either don’t have the means to purchase the necessary devices or who struggle with the technology?

Bank Negara’s blueprint for Malaysia includes the promotion of  an inclusive financial system through the digitalisation of financial services, especially for the unserved and underserved customer segments. The new digital banking licenses will  address this. For example, bundled offerings with telcos make mobile phones more affordable, and buy-now-pay-later (BNPL) credit will ease the financial burden. Traditional banks need to rethink their strategy around product and distribution and make their services more accessible and customer centric. Users want better personal financial management providing an overview of their savings, spending, and investments that is easy to understand, as opposed to a traditional bank statement.

How does Silverlake Axis solve the problems of the traditional banks and help them with the digital transformation?

Silverlake Axis has been the most trusted banking solution provider in Malaysia. Six of the nine anchor banks use our core banking systems. Back in 2012, Silverlake Digital Economy was formed to address the changing digital landscape for banks. Through our over 30 years of experience and expertise, MÖBIUS was created to help our banks transform digitally. MÖBIUS comprises a digital core for deposits, loans, and cards with an open banking platform to extend the bank’s services via APIs, and offers business processes like onboarding and loans origination. It’s a cloud-native technology that the bank no longer needs to run on proprietary systems, with cloud-native capabilities like auto-scaling, auto-healing, real time updates, or rollback to reduce complexity and lower cost.
MÖBIUS is designed to help banks to digitally transform and tap into external ecosystems without coding or few coding. Banks can continue to run their business as usual while launching the new digital products and services. The seamless integration of MÖBIUS helps banks operate digital banking processes smoothly alongside their traditional banking processes. This way, banks will continue maintaining trust with their customers by delivering a new digital experience without disruption.

How do you think things will progress with regards to digitisation in Malaysia’s banking sector?

With Bank Negara planning to award up to five digital banking licenses in the first quarter of 2022, we will soon see an increased rate of digitisation across the financial services landscape. The increased competition will accelerate the digital transformation journey of traditional banks.

How does digitisation affect Islamic banking? 

Digitalisation will improve operational efficiencies in general, and also help provide superior customer experiences in Islamic Banking which in turn will help to drive adoption. Technology can help put in place a mechanism to ensure Shariah compliance such as  ensuring that required steps in fulfilling shariah contracts are executed properly. Artificial intelligence can be applied in the auditing process of Islamic banking products and services. Blockchain technology could be used to trace the utilisation of Islamic social finance, namely for zakat, waqf, and sadaqah.

Editor’s Note: Look out for the second part of this interview in which we speak to Malaysia’s Country Head for Instarem Rajendar Dhorkay on how COVID-19 had accelerated Malaysia’s digital push in Payments.

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