Alliance Bank's virtual credit card accelerates growth

• Have increased their credit card base by 25% in two months
• Built on Red Hat's microservices technology to deliver Banking-as-a-Service

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The recent digital banking venture of Malaysia's Alliance Bank – the Visa Virtual Credit Card (VCC) – has been a success, according to them. Since its debut two months ago, it has triggered a 25% uptick in their card base. "It has been simply overwhelming since we launched," stated Edwin Lee, Alliance Bank's Head of Cards and Loans. If the current growth trajectory continues, the bank expects to double its card base to 200,000 in the coming months.

The VCC is just part of Alliance Bank's Acceler8 digital strategy and the bank sees its introduction as a strategic leap to enhance customer security and privacy. The bedrock technology of the VCC is the Dynamic Card Number that generates a unique 16-digit code for each transaction. This technology ensures a high level of e-commerce security by providing single-use numbers for different subscription services.

“Every year we have a product or service that comes out," said Lee. The VCC was conceived during a brainstorming session at Alliance Bank, where customer needs drove innovation.

The ideation process was centred around evaluating the needs of various user personas, said David Lim of Alliance Bank's Credit Card & Personal Loan Products. As an instance, the team addressed the need of a father to limit his daughter's online purchases using his credit card – something Lim demonstrated using his own credit card for his daughter in the press briefing.

"We always prioritise the customer's needs," explained Lee. "We don’t devise solutions that serve only the bank's interests rather than the customers."

Turning any user's device into a secure virtual wallet 

Underpinning this technological leap is the open-source software company, Red Hat. Its microservices technology plays a critical role in facilitating Alliance Bank's mission of transcending the conventional banking confines to create a more agile, digitally enhanced ecosystem.

Ken Yong, Alliance Bank's Head of Group Transformation Office, compared Red Hat's technology to Lego bricks: component-based, endlessly adaptable, and critical for building robust digital services security. "In Red Hat, the openness is there, it's actually limitless," said Tammy Tan, Red Hat Country Manager for Malaysia. "How you do it is up to (your) imagination." 

The open-source platform from Red Hat also ensures the bank's digital applications are free from any hidden backdoors, due to the inspecting power of a community of coders. 

By partnering with Red Hat, Alliance Bank has been able to embark on its ambitions to establish a banking-as-a-service (BaaS) model. The bank aims to deploy a secure code across different platforms and apps that can turn any user's device into a secure virtual wallet. "We are offering a banking service as an app with 'zero trust' (framework)," said Yong. 

Yong shared that Alliance Bank's digital strategy mirrors the 'Intel Inside' model from the 1990s — becoming the robust infrastructure that powers a multitude of financial transactions across diverse platforms and ecosystems. This collaborative model could convert any app into a secure extension of the bank’s digital system.

Everyday app partners

To reinforce this vision, Alliance Bank is actively partnering with companies that can implement their banking services into "everyday apps", which are used more frequently than traditional banking apps.

For the VCC, Alliance Bank has already joined forces with MCash, Dental Mall, and VirtualFlex (via KA$Hplus). They are also negotiating potential partnerships with a dozen other companies. On the technology side, Red Hat, Visa Malaysia, CTOS Digital Bhd, Jirnexu, YTL Communications, and Touch ’N’ Go Digital count among their partners.

Alliance Bank sees fintech companies not as competitors, but as potential allies, explained Aaron Kee, Head of Digital Banking. This strategy, he suggested, is more sustainable for emerging digital banks navigating challenges such as liquidity risk management and compliance.

Speaking of challenges, Alliance Bank is steadfast in its journey of digital transformation. "The pandemic has accelerated our digital transition. Survival depends on our digital adaptation," Lee said.

As for the VCC, Lee promised there are ambitious plans for future enhancements, particularly if competitors see the value in offering dynamic card numbering. "They can start developing but we are a couple of years ahead," he emphasised. "This is just VCC 2.0. We have a full blueprint that we want to implement."