Digital banking will redefine the financial sector in Malaysia

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BigPay: digital banking will redefine the financial sector in Malaysia. (Photo by Mohd RASFAN / AFP)

  • In an interview with Tech Wire Asia, Big Pay CEO Salim Dhanani believes that the birth of digital banking in Malaysia will “redefine the entire financial services industry”, which in turn is “fantastic news for consumers”.

The Central Bank of Malaysia is to announce its first five recipients of the the country’s first digital banking licenses. The announcement, which is supposed to take place in the first quarter of this year, could happen anytime by the end of March. BigPay, a financial service from airasia Digital, is one of 29 non-banking companies in the running.

BigPay said it has created a consortium of strategic partners including Malaysian Industrial Development Finance Berhad (MIDF), Ikhlas Capital and an overseas conglomerate with fintech expertise, to support its bid. For the fintech app, a BigPay bank will allow them to further accomplish their mission of building a connected financial future for Malaysian consumers and entrepreneurs.

“If we get the license, we will be able to reach more Malaysians with a wider range of services – all with the aim of building a stronger Malaysia,” noted CEO Salim Dhanani. pick up from our previous interview with Dhanani, in this second part, he shared how the next digital banks would be ideally placed to take advantage of accelerated digital adoption among customers.

What are the digital trends that can enable inclusive financial services for Malaysians?

Take the example of credit. If you wanted a loan in the past, you would go to a bank branch – assuming you had time during their opening hours – and a bank representative would assess your eligibility. Eligibility was generally based on your job, appearance, and what few data points the institution has access to.

You will then need to provide a series of documents to verify the information they already have. Inevitably, many people did not have access to credit. It changes quickly. You do not need to go to an agency, you do not need paper documents, nor to have had access to credit before.

Fintechs have access to a wide variety of data and they have developed better algorithms to assess credit eligibility and all of this is done in a highly regulated manner to ensure consumer data is protected and used responsibly. Everything is done digitally and on the mobile app to avoid wasting time. This example is just for credit – there are many other financial products that are undergoing this type of digital transformation.

To emphasize, it is not only a question of making it simpler and more intuitive for the client to access financial products; it’s also about operating efficiently. There’s no need for bank branches, paper or manual processing with everything done digitally. This creates huge cost savings and allows fintechs to pass these savings on to consumers.

Finally, these lower-cost products mean that more people can access this micro-credit or micro-insurance policy, for example, while ensuring that fintechs have sustainable business models.

What are the digital solutions that would ensure a compliant and transparent fintech environment?

Our goal is to empower the customer – and that means being upfront and transparent with costs. In this sense, BigPay uses next-generation technology stacks that allow us to do two things: deploy products faster and better assess risk. The BigPay card comes with a card limit that we approve for our users and is subject to strict KYC verification and customer due diligence (CDD) requirements; a mandatory requirement under applicable laws for any party requesting the card).

For our e-KYC (Know Your Customer) technology process, we have an artificial intelligence that automatically associates the faces and identification documents of our users with the information provided during registration. We also have a strong AML infrastructure in place to ensure that our users’ capital is protected against money laundering, terrorist financing, and fraudulent or illegal activity.

Many people turn to digital products and services first for convenience, but they stay because high-value products such as personal loans, insurance, and investments are presented quickly and transparently. Customers have all the information they need up front and clearly. It is never presented in complex financial language that people outside the industry do not understand. This is important because customers need to understand information to make informed decisions.

Where is the fintech space going in Malaysia in the next two years?

Over the past ten years, Malaysia’s economy has grown, as has its middle class. But the reality is that one of the important drivers of sustainable economic growth for the lower and middle class is twofold: financial literacy and access to financial products – beyond debit accounts. This enables the creation of wealth for consumers, and this is the opportunity BigPay sees in helping to enable this.

[That said] Today’s consumers are digitally savvy and expect a high degree of personalization and convenience from their financial services. With each new generation of banking customers comes a more innate understanding of technology and, therefore, an increased expectation of digitized experiences. We see an increased importance for financial providers and digital players to have a personalized and unique proposition for their clientele.

Over the next two years we will see the launch of digital banks in Malaysia and new Fintech players offering customers a wide variety of products. With this, banks will be forced to adapt to a new competitive landscape, and all of this is great news for consumers. This means more access, better products and all at lower cost.

It’s the focus on technology, changing consumer behaviors and expectations, and a wave of new entrants which, when combined, will not only drive growth in financial services in general, but will redefine the financial services industry as a whole.




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