The adoption of digital and self service channels in Malaysia and Asia shows that the banks are sharpening their focus on adapting services to meet the demands of an increasingly tech-savvy consumer, said financial IT services firm Sungard's vice president, product management, banking, Dean Young, during an interview with Computerworld Malaysia.
Photo - Dean Young, Vice President, Product Management, Banking, SunGard, is based in Singapore.
Could you outline how banks in Malaysia and Asia are responding to the increase in mobile device usage by their customers?
The migration towards self-service and digital channels for all standard transactions is irreversible and will continue to increase.
The technology and device industries continue to innovate and other industries move to meet this consumer demand for mobile content, forcing banks to follow suit and roll out additional self-service functionality to the digital channels.
This introduces its own pressure on existing bank infrastructure and increases complexity of monitoring compliance across the bank's operations, but is driven by consumer and market demand. SunGard's Bank Readiness Report shows an increase in Mobile device usage across primary banking customers in both South East Asia and the Middle East by over 50 percent year over year.
Banks in Malaysia are quickly adapting to utilise the latest technologies to reach current and prospective customers. As you would expect, new technology and solutions gives the banks new infrastructure challenges, especially where customer requests need multiple channels to resolve.
Effectively, though, it's a phased approach with which the banks will have to consider understanding their consumers' needs and experience level before implementation.
The challenge for banks is in achieving the right channel mix suited to the consumers' acceptance level for digital engagement. The right channels go beyond digital interaction and the perceived need for services to 'go mobile'. These vary from market to market, and it's up to the decision makers in the industry to gauge that level, using the insights available.
Malaysian banks are making strides to improve interfaces, making them easier for consumers to complete functional transactions on their mobile devices. However, these transactions may also be less suited for the delivery or management of more complex transactions such as loan applications or refinancing.
With Smartphone penetration in Malaysia at about 63 percent, the explosion of new devices - which encourage mobility - are driving change in consumer demand and behaviour. The adoption of these technologies means customers expect all providers of services and products to offer instant access and a convenient, consistent customer experience across all channels. Whilst the banking industry does not set the trends in this new age of mobility, the evolving consumer behaviour paradigm impacts on all aspects of customer interaction, including online, mobile and the more traditional staff serviced channels.
Customers are demanding seamless, multi-channel sales and service experiences. These digital consumers place a high premium on convenience and are increasingly willing to seek out those providers able to meet their changing needs. Amid the growing proliferation of digital channels and rapidly evolving consumer behaviour, retail banks can no longer afford to adopt a one-size-fits-all approach in devising and enhancing their digital strategies. Effective segmentation is becoming increasingly important and challenging as customers no longer fit traditional segment groupings. Banks must adapt to these new complexities in order to meet customer expectations, drive growth and deliver profitability.
Is this technology adoption a local trend; how does it fit into the global context?
This adoption of technology into the banking industry is not restricted only to the more advanced countries. In fact SunGard's annual Bank Readiness Report for 2013 highlights consumer demand for these sorts of investments by banks and their desire to be able to do more over the digital channels than is currently provided for. Well over 50 percent of the survey participants wanted better functionality over the mobile banking channels, with this percentage increasing to 70% for internet banking functionality improvements.
The migration towards self-service and digital channels for all standard transactions is irreversible and will continue to increase. The technology and device industries continue to innovate and other industries move to meet this consumer demand for mobile content, forcing banks to follow suit and roll out additional self-service functionality to the digital channels. This introduces its own pressure on existing bank infrastructure and increases complexity of monitoring compliance across the banks operations.
According to the Bank Readiness Report, 38 percent of those surveyed in Malaysia have never used mobile banking, and a staggering 69 percent of Malaysian respondents say that online banking could be improved upon - the highest percentage in SE Asia.
What are some of the concerns and challenges for banks in moving towards digital banking?
The recent heavy investments in internet and mobile channels have meant a lag in traditional branch solution investments. Although banks have done an excellent job in providing great user experiences in the digital channels, the more important of customer requests cannot be completed solely on the digital channel so the staffed channels need to also rise to meet the new customer experience standards. The drive to digital channels is placing different demands and workloads on staffed channels and the branch network needs to adapt to meet these demands.
In addition increasing regulatory pressure will necessitate development of automated loan origination and more effective exposure management.
The need is for banks to shift from an attitude relying on transaction processing and operational capabilities to one that concentrates more effectively on customers' needs, requirements and demands. Although many banks are responding to these opportunities, the industry as a whole remains largely unresponsive to the demands of a more sophisticated and diverse customer base. Banks should persist in understanding their clients, strengthening their cross selling capabilities and embracing innovation to improve the service provided to their clients which will drive growth.
Customers are relying less on banks and taking a stronger interest in their own finances both in Europe and globally. Where did this fact come from? Tools such as personal financial management (PFM), budgeting, advice, and long term planning, are starting to play a more important role in consumer's decisions around the organisations that they interact with. SunGard Retail Banking's Bank Readiness Report shows that almost 40 percent of customers feel that they have little or no financial knowledge, but only 20 percent consider their bank to be "very helpful" in helping them to manage their finances. By investing in PFM software solutions as well as implementing staff training and deployments, banks could redress this imbalance and capitalise on the resultant sales opportunities.
Specific to Malaysia, 52 percent of Malaysian respondents to the Bank Readiness Report think mobile banking can be improved upon, which presents an opportunity to address public concerns and find solutions that offer convenience, flexibility and mobility.
What are some of the immediate trends for Malaysia's digital banking in the near term?
Firstly there will be further improvements in the range of functionality offered over the mobile channels to Malaysian consumers, such as location-based alerts around discounts and promotions and further personalisation of the virtual experience.
Secondly, the other side is that moving more functionality to the digital channels allows the banks to refocus their branches, perhaps with innovative layouts, more advisory services, leveraging technology such as touch screens and tablets, etc. This will allow bank branches to shift from an attitude relying on transaction processing and operational capabilities to one that concentrates more effectively on customer needs, requirements, and demands.
Banks should persist in understanding their clients, strengthening their cross selling capabilities and embracing innovation to improve the service provided to their clients, which will drive their future growth.
What are some of the opportunities for Asian banks with the increasing technology-savvy consumers?
Markets like Malaysia that have a progressive and tech-savvy populous that is connected and progressive can accelerate the migration of traditional transactional and service requests to the digital channels, thus reducing load on their staffed channels.
This allows those staff to be leveraged for more value-added activities, and for more cross sell and up sell activities.
It also allows for staff to focus on the advisory roles as customers still rely on their banks to deliver financial advice when considering major milestones in their life such as mortgages, pensions, insurance, etc. These are activities where face-to-face interaction is still valued and appreciated, if not demanded.
In addition, the move to digital channels and social media will enable the banks to gain a greater insight into their customer's behaviour, as seen in SunGard's Bank Readiness Report with 60 percent of participants willing to share more personal information to achieve a better service from their bank.