How ready are Malaysian consumers for digital banks?

How willing are Malaysians to accept full- on virtual banks? Perhaps more than you think.

In a PWC report last November 2019 titled “Virtual Banking: Malaysian customers take charge”, 74 per cent of Malaysians say they were ready become customers of a virtual bank. Malaysians are most open to the idea of sharing their data, as long as they are confident the data is secure.

This tallies with another research conducted by FICO, a global analytics software firm, in its its Consumer Digital Banking Survey released in May this year.

The survey found that a large percentage of Malaysians had an expectation that they should be able to complete all aspects of account opening online or on their phone.

Out of the regular identity checks needed to open an account, 78 per cent of Malaysians thought they should be able to prove their identity by scanning documents or providing a selfie, 46 per cent expected to prove where they live without moving offline and 40 per cent said they should be able to set up a biometric such as a fingerprint scan at account opening.

If all actions required to complete an account opening cannot be accomplished in-session, only 45 per cent of respondents said they would carry out the necessary offline actions as soon as possible and 23 per cent said they would abandon opening the account.

Overall findings demonstrated that financial institutions that don’t facilitate a completely digital account opening experience could lose over 40 per cent of their new business.

FICO’s Consumer Digital Banking Survey was the result of an online, quantitative survey of 5,000 adults (over 18) across 10 countries carried out on behalf of FICO by an independent research company.

The study showed that 23 per cent of Malaysians prefer to open a bank account on their phone compared to 18 per cent in the US and 16 per cent in Canada.

“It is not surprising that Malaysian consumers are digital natives,” said Subhashish Bose,

Fico’s lead for fraud, security and compliance in Asia Pacific.

“It is demographically a young country, with 80 per cent of the population under the age of 50. Plus, the Malaysian government is actively encouraging development and investment in the digital economy which makes up about a fifth of the country’s GDP.

These factors have promoted a digital-first consumer base.”

The study showed that digital account opening is rapidly becoming the norm in Malaysia with 78 per cent of consumers saying they would open some kind of financial account online.

Of those that would open a financial account online, 65 per cent would consider doing so for an everyday transaction account, 45 per cent for a credit card and 28 per cent for a personal loan.

Leading the digital push were 25- 34-year- olds, with 76 per cent of them saying they would open a bank account online.

This dropped to 49 per cent when it came to consumers 45- 55 yearsold, but interestingly climbed back up to 61 per cent for those over 55 years of age.

“Malaysian households are often multi- generational,” explained Bose.

“So, this finding might be explained by younger generations helping their grandparents with their banking, especially if they are less mobile and can’t get to a branch.”

“As consumers’ reliance on online services grows in response to Covid-19, we expect further shifts in adoption and indeed an acceleration and acceptance in opening bank accounts digitally.

“It is important that banks closely examine any points of friction in their application process to ensure consumers are not abandoning a process or switching to a competitor,” said Bose.