KUALA LUMPUR: Malaysian banks are underspending in technology and could be challenged by Chinese big tech firms such as Alibaba and Tencent in the virtual banking space.
Hitachi Vantara Sdn Bhd managing director Moti Uttam said Global Data, a data analytics and consulting company, had projected Malaysia’s tech industry to invest about US$25.2bil by 2023, driven by increased demand for client computing and cloud solutions.
He said Global Data had also identified that mobility, cloud, data analytics, storage and business process outsourcing as the five leading information and communications technology (ICT) solutions to be adopted and implemented.
“The banking and financial services industry is forecast to only contribute 12.3% to the ICT revenue of US$25.2bil by 2023, coming in third behind the manufacturing and energy sectors.
“Hence, banks ought to look beyond their current offerings of deposits, payments and loans space and close the gap between themselves and digital and/or virtual banks.
“They also need to start creating a business model that addresses the demands, needs or pain points of a new generation and digitally-savvy discerning customers, ” he told Bernama.
In December 2019, Bank Negara explored the ideals of “digital bank” and intended to issue five digital bank licences but the plan was postponed to June 2020 due to the Covid-19 pandemic.
Uttam viewed the onset of digital banks as the impetus to the digital transformation in Malaysia as the plan was widely supported by the public.
Citing the PricewaterhouseCoopers (PWC) 2019 Report, he said it was noted that 77% of Malaysians are looking forward to digital banks and only 36% of them continue to trust the physical traditional banks to keep their data and monies secure.
Fast forward to today, he said that with Bank Negara’s virtual banking licensing framework taking flight from June 2020, the industry is seeing bank leaders paying more attention to the capabilities needed for digitalisation.
According to Bank Negara’s statistics, 35.1 million Malaysians have subscribed to online banking up to June 2020 as the banks are also observing more paperless, branchless, signatureless transactions over the web, he said.
Uttam said the banking industry was one of the early adopters of digital capabilities which began the journey in the late 20th century with the digital capabilities of banks growing gradually in the past two decades.
The financial and banking industry is one of the essential providers in digitalisation with the pervasiveness of mobile devices, resulting in the early adoption of online banking following the increasing demand for anytime, anywhere access, he said.
“They started with Internet banking, mobile banking, changing from swipe cards to newer chip-based automatic teller machine (ATM) cards and launching the Malaysian Electronic Payment System (MEPS) dash.
“Today, we see further enhancements with the use of a combination of password, PIN (personal identification number) token, two-factors authentication or QR code in the authorisation process, ” he said.
Further to that, he said more banking transactions are happening online instead of at the physical counters, and most banking transactions can now be performed over the web. — Bernama
Did you find this article insightful?
88% readers found this article insightful