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Cloud ⍺ Series #11: Three Digital Banking Trends to Watch in 2021

November 10, 2020
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The pandemic has accelerated digitisation in industries, and financial services are no different. Biometrics, personalised services and increased cybersecurity controls are set to bring Malaysia’s banking sector into the future.

In 1994, Bill Gates said that “banking is necessary; banks are not”. 16 years later, his words remain true.

The banking industry has seen an eruption of change over the past two decades: from cryptocurrency to blockchain, from biometric log-ins to customised services. Afternoons spent lining up at the bank to set up a new account are now only a vague, unpleasant memory.

Digital banking is set to impact individuals and enterprises across the country. GovInsider examines three (3) trends set to transform the banking industry.

Biometrics

Passwords are easily hacked or forgotten, and so are not a very good way of securing bank accounts. Enter a new way of identity authentication: biometrics. These verify customers’ identities with fingerprint scanners or facial recognition technologies, so log-in information can’t be stolen or duplicated.

In 2019, Hong Leong Bank introduced an eToken that allows their corporate and SME customers in Malaysia to authenticate log-ins and approve payments with facial recognition tech. This eliminates the need for a physical token.

The eToken will also be integrated with Hong Leong Bank’s mobile banking app to create a more seamless experience. Customers can confirm transactions with just a “single tap”, according to the bank’s website.

This new service is expected to have a significant impact on customers’ banking experience. In the financial year before the app’s release, Hong Leong Bank processed more than 27 million transactions through its business internet banking platform. More than eight out of ten corporate and SME transactions were completed online.

This initiative was driven by the bank’s commitment to innovate around customer needs and preferences. “The introduction of facial recognition eToken is based on our understanding and insights on customers’ pain points when using a physical dongle and conventional passwords, which can be misplaced or forgotten,” said Yow Kuan Tuck, the bank’s Managing Director, Business Corporate Banking.

Besides using physical biometric features to authenticate log-ins, banks can also use behavioural biometrics to detect potential fraud, wrote BiometricUpdate.com. Banks can study how a customer usually interacts with their account, such as what time they usually log in, and the average value of their transactions.

The behavioural biometrics software alerts security teams on any drastically different behaviours, which may be a sign of a fraudulent transaction. They can decide to block the transaction or ask for additional authentication from the user.

An upside to behavioural biometrics is that there are no privacy concerns, according to BiometricUpdate.com. Each user’s behavioural data is converted to a mathematical representation, which holds no value for criminals.

Personalised services

Could a banking app suggest personalised promotions the way Netflix gives movie recommendations? With transactions moving towards more online, it’s much easier to observe customers’ cashflow, searches, app usage, location and even the demographic variables, wrote Silicon Valley Innovation Center. This information holds precious insights into customer behaviour.

Singapore startup Crayon Data’s Artificial Intelligence (AI) engine allows businesses to suggest updates and services that suit customers’ needs and lifestyle. This helps businesses engage with customers better, which improves response rate, loyalty and frequency of card usage.

Crayon Data focuses on serving lifestyle-related businesses, such as banks, telcos and retailers. These industries have access to multitudes of customer data, but don’t have the ability to make the most out of them, wrote The Business Times.

The startup’s simplified solution analyses banks’ data to create a personalised profile for each customer, based on their preferences. This can be done within a week. Banks can then use this profile to conduct more targeted marketing.

Using blockchain to address cybersecurity concerns

Banks hold reams of sensitive financial data. It’s no wonder that they experience 300 times more cyberattacks than other types of organisations.

Mobile and online applications have made payments easier, but they bring inherent risks. 78 per cent of banks in the Asia Pacific claims that real-time payment platforms have led to more fraud cases, according to a Jumio report. The report highlighted the need for additional identity and authentication technologies.

Additionally, Verizon found that web applications were the number one threat pattern for financial services data breaches in 2018, wrote Codete. Accenture found at least one known security risk in all 30 of the major banking applications it studied.

The most common causes of security vulnerabilities are insecure data storage, insufficient authentication, and direct code tampering, according to Codete. Internet of Things (IoT) presents yet more risks to digital banking. As nations move to become smart and connected societies, the large number of devices will increase the attack avenues for cybercriminals. Protecting these devices is even more urgent given the extensive volumes of personal data they collect, Codete reported.

TM ONE, Telekom Malaysia Berhad (TM)’s enterprise and public sector business arm, uses blockchain to address these cybersecurity issues. Its Blockchain Secure Authentication (BSA) is a new password-less authentication method, allowing users to securely access their online accounts and to securely approve an online transaction over web or mobile. It does not require a password for authentication, simple to use, extremely secure and almost impenetrable solution, represents the next layer of defence in securing online businesses.

Blockchain is a secure way of storing digital information since its records cannot be deleted. TM ONE has partnered with Korean tech company FNS Value Co to become the sole distributor to rollout BSA in Malaysia and Indonesia, says Thaib Mustafa, Head of Cybersecurity services at TM ONE.

It is the first patented authentication solution using blockchain technology in the world. BSA provides a secure and trusted access to the web and mobile services – protecting customers’ personal data and information; prevent security breaches, data leakages, ID and Password brute-force credential or digital identity attacks, he added.

The pandemic has accelerated digitisation in all industries, and financial services are no different. Biometrics, personalised services and increased cybersecurity controls are set to bring Malaysia’s banking sector into the future.

CELEBRATING SUCCESS
How Maybank is Leading Digital Transformation in Banking Sector

July 29, 2021
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Maybank, changing the face of traditional banking

Malayan Banking Berhad (“Maybank Group” or “the Group”) is the largest financial services and banking group in Malaysia. The Group serves its 22 million customers through a robust portfolio of financial products and services, including consumer and corporate banking, treasury activities, insurance, and asset management. These contributed to the Group’s annual revenue of MYR 51 billion in 2020. For the same year, Maybank Group had an operating income of MYR 6.48 billion and was the winner of the world’s best consumer digital bank in Malaysia and Indonesia. 

Despite topping local and international market charts with notable digital milestones like QRPay and Maybank Trade, the Group’s M25 plan persists on digitalisation as a key-value driver. The strategy is similar to its Digital Bank of Choice strategy set in 2020. With customers spoilt for choice in today’s market, it is a challenge to reach that pinnacle of customer experience and preserve customer relationships at the same time, especially if a brand doesn’t fully invest in digital roadmaps and collaborations.

“We must always have the user behaviour in mind when we are creating new digital services and/or products. Digital banking providers who provide the best user experience and can solve customers’ problems will continue to be relevant,” said Datuk John Chong, Group CEO of Maybank Community Financial Services.

In this article, you will see Maybank in its journey to improve service delivery capabilities in the era of hyper-digitisation and competition.

Improving the digital banking experience

Maybank takes inspiration from the rapid rise of digital banking and fintech startups in its pursuit to continue enhancing customer experience. The bank’s mission is to provide customers with simple and convenient access to its financial services using ubiquitous digital solutions.

In 2018, the Group revamped the Maybank2U mobile application and website to offer a seamless transacting experience. The mobile application, which now features enhanced payment capabilities and customer personalisation, boasts over 12 million mobile downloads with an impressive 7 million active users (excluding website users) in 2020. New upgrades have allowed customers to generate dynamic PayNow QR codes for on-demand transfers. The mobile app also features a display of remittance options for more transparent overseas fund transfers.  Apart from that, other Maybank2U experience-enhancing functions include Scan & Pay, a personal debit and credit spending tracker, and a customisable savings planner. 

As the Group recognised the growing importance of digital products and services, it launched MAE (Maybank Anytime, Everyone) by Maybank2U in 2020. This complimentary mobile banking and e-wallet application seamlessly integrate online banking with one’s lifestyle needs. MAE not only allows customers to have full access to their savings accounts, pay bills and transfer funds. It also offers newer fintech solutions such as expenses monitoring, in-app virtual debit cards and ‘Tabung’, an individual and group-goal based saving feature. 

Maybank Group received numerous feedbacks from customers with negative experiences from self-service options, such as chatbots and FAQs. Looking to offer a better solution, the Group implemented E-CLEVA, an integrated live video chat solution. With this new capability, insurance claims teams could provide real-time assisted claims support for motor and fire insurances, allowing the bank to process claims digitally and within 15 minutes. 

Building operational efficiency with digitalisation

As customers stay at home during the movement control order, Maybank Group saw a significant surge in the number of digital transactions and users on its platforms — zakat payments before the festive period, for example, has increased by 227% year-on-year (Y-o-Y). At the same time, QRPay saw a transaction volume growth of over 650% Y-o-Y. With active mobile users expanding by 34%, Maybank Group had to deploy cutting-edge technologies to maintain its business outcomes at a rapid speed. 

The Group placed a heavy focus on automating its back offices, namely to streamline back-end processes by implementing machine learning for processing credit applications, branch operations, remittances and trade services. It reinvented the technology stack to support every layer of banking operation by adopting technologies like robotic process automation (RPA), ICR/OCR (Intelligent or Optical Character Recognition) and application integration for certain ‘open’ operations. 

Other digitalising efforts include migrating transactions from branches onto the online payments platform and implementing Artificial Intelligence (AI) in Anomalous Parts Detection for vehicle claims submission. The Group also launched a fully digital Know Your Customer (KYC) capability, enabling a customer to onboard through app-integrated video calls. 

Maybank Group measures the success of all digital initiatives through two (2) measures — straight-through processing (STP) rates and customer turnaround times. These measures allow the bank to track and analyse the efficiency of its services, enabling more productive service delivery capabilities across various operations.

Enabling convenient, safe and secure transactions

The rise of digital banking is analogous to a double edge sword — on one end, you have greater convenience at your fingertips. But on the other side, digital vulnerabilities and frauds can now affect us more than ever. Maybank Group mitigates these risks by internalising a robust cybersecurity infrastructure that covers internal governance, human knowledge and network capabilities. 

The Group employs a best-of-breed Security Information and Event Management (SIEM) technology that enables continuous real-time monitoring of any internal or external cyberattacks. Coupled with its Regional Security Operations Centre, which centrally manages the operational level of system security, the bank’s security specialists can quickly and continuously detect and respond to malicious activities using the Splunk Enterprise Security platform. 

Driven by the surge of digital transactions, Maybank announced in April 2021 that it is discontinuing the SMS TAC (transaction authorisation code) for approving online transactions on both its apps. The bank intends to protect its customers with improved online banking security. Customers will switch to Secure2U as the preferred authorisation method for most transactions, excluding Financial Process Exchange (FPX) and Direct Personnel Expense (DPE). This alternative feature adds an extra layer of protection. Transactions can only be approved within 50 seconds on a registered device using Secure Verification (one-tap authentication) or Secure TAC (a six-digit TAC number generated on the mobile app).  

This new ability creates a safer and more conducive way for customers to transact. At the same time, Maybank Group can build a digital ecosystem that enables safe and secure transactions continuously, fostering digital trust with its users.

Accelerating growth through key partnerships

As non-banking institutions with digital banking licenses flood the market, Maybank Group ensures business competitiveness by engaging in strategic partnerships to introduce new products while enhancing existing offerings. The bank focuses on creating close C-level collaborations with technology disruptors to foster customer stickiness by integrating lifestyle propositions with financial services.  

At a time where customers are increasingly adopting digital products in their lifestyle, Maybank Group joined hands with the ride-hailing company, Grab, to drive the acceptance and ubiquity of cashless payments further. By integrating the two payment systems, customers of Maybank and Grab can choose between using their GrabPay or Maybank QRPay mobile wallets at the merchants they support. Direct cash top-ups on the GrabPay mobile wallet via Maybank2U enrich the online experience between these two digital apps.

The partnership with Grab doesn’t stop there. Maybank Group unveiled a new dual-faced credit card that enables customers to seamlessly collect GrabRewards points that they can then use to redeem vouchers and other rewards. Aiming to serve younger consumers further, the Group also teamed up with an e-commerce powerhouse, Shopee, to offer a lifestyle and e-commerce credit card. Similarly, users obtain rewards – Shopee Coins which they can spend on future online or offline purchases.

The Group also partnered with various property leaders including, UDA Holdings, Tropicana Corp. and i-City to offer “HouzeKEY”, an alternative home financing solution for first-time home buyers. Another partnership with Permodalan Nasional Berhad (PNB) saw the launch of ASNB e-channels on the bank’s platform.  The collaboration enables cross-system transactions and the viewing of account balances via Maybank ATMs or the Maybank2U app. 

Maybank is poised to conquer the fast-growing digital banking space with its wide range of digital products and services, seamlessly integrated into a customer’s everyday life. The Group continues to defend and grow key customer markets in the era of digitalisation without losing sight of its core principle; humanising banking.

TRENDS AND DIGITAL STRATEGY
The Bank of Tomorrow – Hizam Ghazali

July 28, 2021
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Banks have been at the forefront of digital transformation. They have always been the leading adopters of technology and have led the way to show how customer journeys can be digitalised.

As consumers, we seldom have to go to banks now and the banks have come to the consumer’s smartphone. Add to this the plethora of new innovative financial services made available by start-ups and tech giants alike. Consumers are besieged with choices.

Despite all the progress, this is still Day One for the banking industry. The per-capita consumption of financial services in our country and globally is still at low single (3 to 4 services) digits. Financial services are the backbone of every personal life, and every business and industry.

“There are huge opportunities to improve this consumption by taking away points of friction and improving accessibility. TM as a digital enabler to the banking industry, we see there are four (4) distinct innovation opportunities as we look into the next decade”, says Hizam Ghazali, Head of Digital Services, Telekom Malaysia Berhad (TM). 

Some of the potential innovative services opportunities are:

#1 Invisible banking
Most of us are not excited about making a trip down to the bank. It is often considered a waste of precious time. Bill Gates famously quoted way back in 1994, “Banking is essential, but banks are not.” The vision is to help us consume banking and financial services without visiting the bank or even transacting over the banking app. Akin to the famous “Intel Inside” campaign, can banks enable us to live better lives but still be invisible, make it so easy to consume that we are not even aware of its existence? The key is to embed the services seamlessly into the existing customer journeys, be it shopping or furthering your education. The more the invisibility, the greater the ease of consumption. It has taken us over two and a half decades to understand the vision that Bill Gates espoused.

#2 Ecosystems
Ecosystems are a way of organising the business to enable a high degree of collaboration between various stakeholders (customers, partners, employees, investors, government). It is a new business model which harnesses the idea of co-creation by the various industry stakeholders. Almost all digital-native businesses that we know such as Google, Amazon and GRAB are examples of the ecosystem in action. Banks have this incredible opportunity to build their own ecosystems as well as become part of others to drive growth. Through the use of Open Banking Application Programmable Interface’s (API’s), banks can now enable third-party fintech companies to access their core banking capabilities and develop innovative products to serve customers. The biggest benefit is the ability to innovate and take new services faster to market. The ecosystem owner focuses on the user experience and relies on the stakeholders to help drive innovation, market outreach and other capabilities. While GRAB started with the Mobility Ecosystem, they saw incredible growth during the pandemic in their Delivery Ecosystem and their future growth agenda is with the Financial Services Ecosystem.

#3 Hyper-personalisation
A critical pillar of differentiation for banks moving forward will be their ability to personalise services for the customers. Open Banking is an enabler for hyper-personalisation. This allows customers to opt-in and allows the bank have oversight of their financial investments across all providers. Then, through the use of big data and Artificial Intelligence (AI), they can be in a good position to generate customer-specific insights and offer very personalised solutions. These personalised solutions can be an aggregation of the bank’s products as well as third-party providers. Enabling this frictionless, personalised user experience has been the strategy adopted by several of today’s banking leaders in response to the competition from big-tech. Offering this at a large scale requires tight integration of technologies and partnerships.

#4 Security
While we saw a massive uptake of digital banking in the last 18 months, it has brought about a huge spike in cybercrime. Banking related phishing attacks have seen a twenty-fold increase in the same period of time. The situation is aggravated as the less digital-savvy population, which is the most vulnerable, starts adopting digital banking services. Banks are responding to this challenge with increased measures to authenticate users and add additional layers of security. These additional security measures are impediments to the greater use of digital banking. We believe there is an opportunity for banks to use some of the latest technologies including biometrics and AI to enable a secure yet frictionless experience.

Research firm, twimbit has estimated that the per capita consumption of financial services is set to explode and reach about 15 to 20 services by the end of the decade. While the competition is intense, there is enough opportunity for all market participants, simply because of the growth in innovation.

“I am excited about how the financial services industry is going to evolve in the coming decade. The convergence between these four (4) innovation opportunities will open a plethora of new possibilities. We are seeing more banks, e-commerce businesses and other financial institutions adopting digital components such as Robotic Process Automation (RPA) to enhance its daily operations, processes and of course, customer experience. We look forward to partnering with the industry to enable this new vision of possibilities,” Hizam added.

Enterprises Taking Transformation Forward

July 27, 2021
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Q The Government’s initiatives under JENDELA, Digital Nasional Berhad (DNB) and MyDIGITAL, are imperative building blocks to drive digital transformation in the country. However, 70% of digital transformations fall short of their objectives. What makes digital transformation challenging for enterprises?

According to IDC, 55% of Malaysian organisations do not have an integrated enterprise-wide digital transformation strategy, and 91% of Malaysian enterprises are either on stage one or two, of a five-stage IDC maturity curve. Many of the challenges faced broadly falls under access and complexity.

The lack of access to the required skills is a large challenge, especially talent steeped in what IDC terms as third and fourth platform technologies and technology delivery models. These include cloud computing, Internet of Things (IoT) and mobility (underpinned by 5G), and big data analytics and machine learning, all of which need to operate in a secure environment. Implementing digital transformation requires multi-domain expertise spanning business and technology, which is hard for enterprises to acquire. Emphasis is often placed on processes and not outcomes. Employees often need to be retrained. Business continuity takes precedence over targeted investments.

Q How are enterprises creating    more    value   by leveraging on technologies to ensure successful transformation?

In the journey towards establishing a Digital Nation, the private-public and people are embracing technologies hence accelerating digital transformation efforts.

BFSI: Techwire Asia found that more than 70% of Malaysians are looking forward to a digital banking revolution. Malaysian banks are transforming digitally to align to customer needs, improve operations, meet compliance, enable open ecosystems by leveraging emerging technologies to address new opportunities.

Healthcare: The healthcare sector is turning to digital solutions to realise the promise of connected digital healthcare. Enhancing patient experience, increasing diagnostic accuracy, and improving patient care are some of the goals that the healthcare sector is hoping to achieve as a result of digital change.

Q Why  TM  ONE   is  the  right partner in supporting your transformation journey?

Emerging technologies are shaping the industries from continuous remote diagnostics, conversational Artificial Intelligence (AI), distributed cybersecurity, industrial robotics and automation and more.

To facilitate and accelerate digital adoption, TM ONE has built its offerings along four (4) technology pillars of digital transformation – Cloud, cybersecurity, smart services and professional services. Cloud carries the weight of digital change squarely on its shoulders. TM ONE Cloud α empowers enterprises with a comprehensive, customised, end-to-end, cloud solutions that deliver agility, innovation and growth. It is complemented by TM ONE cybersecurity solution, known as CYDEC (Cyber Defence Centre), which offers the best continuous, real-time and predictive protection spanning private and public networks, data, identity, and devices and infrastructure–to mitigate attacks on brand and reputation, online fraud, and mobile channels. Smart services are the most visible ambassadors of digital transformation, taking Malaysia a step closer to the Digital Malaysia aspiration. Whereas TM ONE Professional services help leaders create vision and roadmaps, enabling predictable, business-aligned digital transformation.

This article was written in collaboration with The Edge.

eKYC is Key to Unlocking Malaysia’s Digital Banking Revolution

September 05, 2019
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A study conducted by Mckinsey shows that there is a potential cost reduction of 90% in customer onboarding cost by enabling eKYC.

I’ve moderated and sat in a fair number of fintech panel discussions over the years, a question that is brought up 9 out of 10 in every discussion is “What do you think are the key technology shaping fintech and banking in Malaysia?” and some variation of that same question. 

If you’re like me who have attended too many fintech conferences, the answers will come as no surprise to you. The common answers are often; blockchain, artificial intelligence, open banking, virtual banking, and mobile payment.

Yet despite the importance of electronic Know Your Customer or eKYC and digital identity, very rarely you will hear any panellists in these conferences pointing out the impact of eKYC and digital identity in Malaysia’s banking and fintech ecosystem. 

study conducted by Mckinsey shows that there is a potential cost reduction of 90% in customer onboarding cost by enabling eKYC. The same study also indicated that digital identity could potentially enable 1.7 billion of the unbanked population to gain access to financial services. 

A separate study by Refinitiv further breaks down the cost of KYC, much of the cost is largely attributed to staffing costs, which supports the idea that digitising the KYC process could significantly reduce the cost of customer onboarding.

It is a fact that has not gone unnoticed by Bank Negara Malaysia, in 2017 the regulator issued the eKYC framework for remittance companies and subsequently in 2019, a similar draft was issued for money changers. 

Though there is development particularly within the Money Services Business (MSB) space, the regulator has not made any formal announcement on eKYC guidelines for the wider financial services sector. 

There have been some nuggets of information though, during the MyFintech Week earlier this year, BNM’s financial development and innovation department director Suhaimi Ali mentioned that there are currently 11 banks trialing eKYC solutions.

Suhaimi did not disclose further the nature of the trial nor the details of the provider but credit reporting agency CTOS who is also present at the event shared in a separate session that they are trialing their eKYC project with several banks and they are looking to enter Bank Negara Malaysia sandbox.

Meanwhile, Muhammad Ghadaffi Mohd Tairobi, the Vertical Director for Banking, Financial Services & Insurance of TM ONE acknowledges that there are many benefits of Digital ID from a business perspective, as it will save time and money by reducing it to over the counter transactions, increasing productivity and enabling seamless and digital driven experiences for customers. He believes that eKYC then becomes an important process for the banks to perform customer on-boarding faster compared to traditional way of over the counter.

However, Ghadaffi’s key concern was on managing digital ID fraud. He said “This is why TM ONE eKYC solution is in compliant with Risk Management in Technology (RMiT) and Data Residency and Sovereignty requirements to assist the BFSI industry in the successful implementation of this initiative”.

Written by: Vincent Fong, Fintech News

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