Q&A with Fico lead for fraud, security and compliance in Asia Pacific
Question: We refer to your survey revealing that Malaysian consumers are more comfortable opening bank accounts on their smartphones than American and Canadian consumers. As the survey was conducted prior to the escalation of the Covid-19 pandemic, how do you think the pandemic will impact this? Will more Malaysians be comfortable opening bank accounts on smartphones? Why so?
Subhashih: Malaysia is a mobile- first country with high smartphone penetration. According to Mal aysi an Communications and Multimedia Commission’s ( MCMC) 2018 Internet Users Survey, close to half of Malaysians already use their smartphones for banking needs, such as bill payment, money transfer and checking of bank balance.
FICO’s survey showed that 78 per cent of Malaysian consumers said they would open a financial account online and 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.
The Covid-19 pandemic has essentially accelerated adoption of online banking. We have seen in three months a spike in digital banking that probably would have taken years to achieve.
Older generations for example who may have always visited a branch have had to embrace digital banking due to the movement control orders that had people sheltering at home. Given the expectation that pandemic conditions and social distancing will continue for some time, we believe digital banking is a trend that will stick as people look to save time and effort.
Question: What do you think about Malaysia’s digital landscape, specifically for its financial system? Do you think enough is being done to support growth of the ecosystem to date?
Subhashish: The Malaysian government has also been actively pushing for digital transformation within the financial landscape. In 2019,the Securities Commission Malaysia announced a series of FinTech cooperation agreements with several regulators in major financial centres like Hong Kong and Singapore to help shape the regulatory approach and encourage the growth of digital finance within Malaysia.
Most recently, BNM’s release of the Exposure Draft on Licensing Framework for Digital Banks indicates the need for digital banks to focus on financial inclusion and support the underserved.
All these point to the country’s ef for ts to trans form the financial landscape, however, these initiatives are not a silver bullet when it comes to digital transformation. Individual banks are on a journey with their customers that requires a fundamental change in approach.
Banks will need to look at how they manage risk, improve decision making and alter their front- end offerings. A lot of this will require adopting predictive data analytics with deep AI capabilities across the business in a way that delivers the best return on investment for the organisation. The process will take years, but the leaders have already started.
Question: Malaysian consumers underscored the need for financial institutions to start facilitating completely digital account opening experiences. If they don’t, these financial institutions could apparently lose over 40 percent of their new business. What is your advice to financial institutions on this front?
Subhashish: With new customers now getting more comfortable with the digital env i r onment , f i n a nci a l institutions must stand ready to capture these opportunities by making sure the digital account opening process is seamless and simple for consumers.
Our survey revealed that nearly a quarter of applicants (23 per cent) will abandon opening an account digitally if the actions required to complete an account opening cannot be fully accomplished insession.
Banking executives need to understand the difference between application completion for authenticated versus nonauthenticated applications, as well as how many applicants with saved or abandoned applications return to complete the process.
Financial institutions need to look at these numbers closely. The most important metric that banking executives need to understand is the difference between application completion for authenticated versus nonauthenticated applications, as well as how many applicants with saved or abandoned applications return to complete the process.
Thankfully, there are several technologies available in this space to help financial institutions onboard consumers remotely. One example is how mobile applications can use identification documents and ‘selfies’ to verify consumers during the onboarding process.
Users simply have to scan their ID card and snap a front facing photograph of themselves. In the background, such solutions perform document validity checks like hologram and edge detection, as well as apply facial recognition and liveness detection using Artificial Intelligence to confirm the customer’s identity.
Financial institutions can take advantage of such solutions to acquire more customers.
Question: Going forward, what are your thoughts on the Covid-19 pandemic and how this will change consumer’s digital consumption or digital dependence?
Subhashish: I think the pandemic has enabled, and to a certain extent, forced an accelerated adoption of digital tools among consumers. Many consumers have now tried and got used to doing daily activities online from shopping for groceries and meals to maintaining social interactions and we can expect this “new normal” to persist even after Covid-19.
However, what is also important is making sure no one slips through the cracks and ensuring that every Malaysian is equipped with the relevant digital skills necessary for them to keep up in a post- Covid reality.
Beyond adoption of smartphone or online banking, I expect that the zoom revolution of video calling will see innovation such as meetings with bank staff in areas like mortgage lending or wealth management conducted in this way.
Customers will see the benefit in avoiding travel, reduced waiting times and reaching the best qualified staff as more than balancing out the familiarity of a face-to-face meeting.
Try to see the silver lining of the pandemic. There are many good things to come out of it. People are reengaging with daily exercise, examining their consumerism, spending more time with family, placing new value on the natural environment and looking at how they can contribute to others.
Change can be hard, but mostly I have been impressed by how people have adapted. Digital banking is one small example of that but it is a change that is here to stay.