Payments the key pillar in RHB’s ‘reframed digital strategy’

• 90% of its transactions came from digital or e-channels
• Looking to startups to give it innovation edge

 
IN a sign of how fast things change in the digital space, just 12 months after the Bursa Malaysia-listed banking group RHB launched its transformation initiative ‘Ignite 2017,’ it has reframed it, adding payments as a major component.
 
“Payments is a big part of the future as we are seeing a major shift in this sector,” said RHB group chief operations officer Rohan Krishnalingam (pic above), adding that the banking group aspires to be the leader in the digital banking industry.
 
Noting that consumer behaviour has changed rapidly over the past few years, he even predicted that automated teller machines (ATMs) will go the way of dinosaurs in five to 10 years.
 
“As it stands, 90% of our transactions came from our digital or e-channels. Two years ago it was 70%, and five years ago it was probably 40%,” he told Digital News Asia (DNA) in Kuala Lumpur on Dec 2.
 
“This is where you can see consumer behaviour shifting very fast, although in rural areas, many customers still visit the branches to do their banking – but this too will shift in the next five to 10 years,” he predicted.
 
A key factor comes from the regulator, with Bank Negara Malaysia pushing for less cash and fewer cheques. As it stands, RHB’s cheque usage has fallen by 15% already this year.
 
Bank Negara is also pushing for more electronic payments.
 
“Eventually, it will reach a point where people will visit ATMs less and less, because they can pay through their mobile phones,” said Rohan.
 
“So if you fast forward to five to 10 years, it’s inevitable that most payments will be cashless and electronic,” he added.
 
Enhanced customer service is another driver for RHB’s digital payments play, with convenience and time-savings being the biggest value proposition.
 
Pushing this further to its merchant customer base, RHB has also entered a two-year exclusive partnership with Malaysian digital retail solutions provider Ebizu.
 
The banking group has bundled its payment options into Ebizu’s cloud point-of-sale (POS) solution for its small and medium enterprise (SMEs) customers.
 
More than 70 merchants have already adopted the solution, from RHB’s base of 900 merchants who are using its Internet solutions.
 
P2P business
 
Besides the push from regulators and customers, especially those 35 and below, Rohan said there were two other factors for the digital imperative.
 
“From a technology perspective, the convergence of mobile, social and data analytics is driving a very fast pace of evolution,” he said.
 
The other factor is the evolution of business models, which has brought in unlikely competitors into the banking ecosystem.
 
“Digital disruption is happening to the banking industry, with many different business models today.
 
“And if you look at the largest payment players, it’s the likes of PayPal and Alipay which are taking up a lot of market share,” said Rohan.
 
Peer-to-peer (P2P) lending is another example of a new business model disrupting the cozy world of banking.
 
“You can see P2P lending is growing significantly in Singapore, where many people who find it hard to get loans will cross over to these platforms,” said Rohan.
 
“And look at the P2P players, unlike banks, they don’t need deposits to run the money-lending business. It’s disruptive to the banking industry,” he added.
 
The key to the money loaning business is good credit assessment, according to Rohan. “So if you [the P2P players] get the risk assessment part right, you don’t really need a deposit for a loan,” he added.

[We have removed two paragraphs here which contained incorrect information on a startup acquiring a P2P licence. Apologies to our readers]
 
Startups as a source of innovation
 

 
Rather than seeing startups as a threat, RHB sees them as a source of innovation. For instance, it recently announced a three-year exclusive partnership with Malaysia-based TableApp.
 
Rohan said this is where he saw RHB’s digital strategy coming to life.
 
“We have premium customers who are looking for concierge services instead of building such services from scratch – we partner with TableApp where we link our banking app with theirs.
 
“This is where we see our strategy coming to life because besides going into the digital payment space, the services offered by TableApp are complementary to our customers’ experience.
 
“With three million RHB customers wanting us to go digital, we have to build the ecosystem where more and more things are going digital,” he added.
 
In September, RHB entered an exclusive partnership with Startupbootcamp FinTech to bring digital innovations in financial services to the Malaysian market.
 
On Dec 2, Startupbootcamp Fintech held its ‘FastTrack’ event in Kuala Lumpur with the banking group.
 
Hosted by RHB, the event offered expert advice and exposure to innovative early-stage startups.
 
Seven selected startups were given direct access to an international network of mentors led by RHB executives and Startupbootcamp FinTech mentors, and received feedback in one-on-one mentor sessions.
 
“This is part of our strategy as we are also looking at these fintech startups as a source of innovation,” said Rohan.
 
“We hope that out of this process we are able to the Malaysian fintech startups to grow regionally, and to explore the possibilities of integrating their services with ours,” he said.
 
Malaysia and Singapore first
 
According to Rohan, the focus for RHB’s digital strategy will largely be in Malaysia and Singapore, followed by Cambodia.
 
“Malaysia and Singapore are … more mature, so our digital strategy for both markets will go on simultaneously.
 
“Cambodia is a very interesting market where the mobile phone penetration rate is extremely high, and users are digital savvy,” he said.
 
He said RHB might collaborate with social media platforms like LINE and WeChat to roll out its digital strategy in Cambodia.
 
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