Driving growth through innovation
Malaysia insights: innovating for growth
EY invited 13 senior business and technology executives from among Malaysia’s top financial institutions to an exclusive roundtable luncheon to discuss the challenges and approaches in striking the right balance between innovation and risk in an evolving regulatory landscape.
The discussion uncovered a few prevalent themes around innovation, non-bank competition, customer expectations and fintech collaboration as they discussed ways to help financial institutions stay competitive.
While we will always need to bank, how we interact with these institutions and other non-bank financial services providers have changed dramatically with the advent of technology.
Digital companies are disrupting customer expectations by setting a new benchmark for customer experience, which includes outstanding service quality, intuitive processes, 24/7 availability, self-service, transparent pricing, high personalisation, and consistent experience across all channels.
The EY 2016 Global Consumer Banking Survey reveals that an increasing percentage of banking customers is becoming open to using non-banks. Forty percentage of customers feel that they depend less on their banks as primary financial services providers and used non-bank providers for financial services in the last 12 months.
“There is a double-digit shift [to using non-banks] here and in Asia Pacific, you would see a huge shift in China and India as well as in high-growth markets like Malaysia, Indonesia, Vietnam and Singapore.”
- Liew Nam Soon, Managing Partner, Financial Services, ASEAN, EY
A crucial flaw in the banking psyche is the notion that they understand what the customer needs. As a result, many products are designed with the assumptions on what they think their customers really want.
Banks are aware of innovations and the value fintechs bring to the table. Many institutions have set up incubators to collaborate with fintechs for solutions. These efforts, however, can be dampened by a pervasive risk-averse mindset practiced by financial institutions.
There are obvious differences between banks and fintechs; while the former are risk-averse institutions, laboring under the weight of legacy and compliance, the latter are bold and agile entities.
While industry experts agree that these differences can cause a divide, they emphasised that bank and fintech collaboration is crucial for the future of the banking industry.
The level of understanding among regulators have increased. For example, Bank Negara Malaysia recently set up a fintech regulatory to help startups experiment with new products and services in a safe environment.
The quotes and views of third parties above are not necessarily the views of the global EY organisation or its member firms. Moreover, they should be seen in the context of the time they were made.