SAP Malaysia managing directorTerrence Yong

SAP urges banks to embrace omnichannel banking for success in the Digital Economy

With banking customers getting more sophisticated and expecting superior, always-on, always-connected services;SAP is encouraging local banks to embrace omnichannel banking to achieve end-to-end digital transformation in an aim to build lasting customer relationships and win in the Digital Economy.

“Digital technology is dramatically changing the banking industry by influencing the way we bank and also turning money into the ultimate digital service,” said SAP Malaysia managing director Terrence Yong.

“To be successful, banks require an innovative digital banking strategy that supports a variety of channels to attract and keep customers while combating increased competition from traditional and non-traditional players,” Yong added.

“Omnichannel banking enables banks to focus on providing a consistent channel that offers an optimised, seamless experience and meets immediate customer needs. For banks, this is an opportunity to fully understand the customer by coupling individual digital channels to sophisticated analytics engines. As a result, they can focus their attention on more profitable customers and activities that drive revenue,” he further said.

In recent years, Malaysian banks have been on a positive growth trajectory and this has been largely due to lessons learnt from the financial meltdown of 1997. Today Malaysia has a different – and much healthier story – altogether. Banks have greater market capitalisation, and policies placed by Bank Negara Malaysia have resulted in sustainable growth.

That said, there is yet another element that has contributed tremendously to the sustainable growth of Malaysia banks.  This crucial element is technology – and its evolution – aided by carefully focused technology investments by the banks themselves.

“In the past, multiple issues have plagued the banking industry when it comes to technology, parts of which have stemmed from silos of legacy solutions. These often led to integration challenges and efficiency issues,” said Yong.

“Thanks to increasingly challenging business environments, banks have found that revisiting their IT architectures have been necessary to reduce cost, increase turnaround time and improve efficiency. With these architectural review Initiatives, benefits in multiple areas such as channel capabilities, in particular, digital channels and streamlining of processes were seen.”

Yong said that many Malaysian banks are turning their focus towards improving their digital channels with an emphasis on mobile banking capabilities, attributing this in great part to cater to an ever demanding Gen-Y, also known as “millennials” or “the youth of today who are growing up in the era of the Internet and digitisation”.

As a result, the traditional brick-and-mortar strategy of banks has seen a stunning change in dynamics.

Overcoming Current Challenges with Technology

As banks tackle the challenge of adding new digital channels, Yong suggested for banks to look towards challenges and how best to overcome potential issues around customer touch points such as:

  • Fragmentation: Across any single bank’s channel landscape, there is usually no single, cohesive voice and appearance in promotions, products and services, messages, and onboarding as well as support processes.
  • Complexity: The system landscape may be costly to run or change. Sometimes, it may even be difficult to integrate new innovative third-party services, which are necessary to enhance the bank’s services and capabilities
  • Agility: Customers who interface with banking systems are becoming increasingly sophisticated and demanding modern conveniences. This requires a level of agility and flexibility in system interfaces. The speed of delivering regulatory and operational change is key to driving innovation and keeping customers.
  • Self-service: Driven by experience in their personal lives, customers are expecting and demanding more. Their expectations revolve around being in control, and having an engaging personalized experience.

“Banks today are looking to capitalise on deep customer insights to understand not just who their customers are and what they want to buy, but also how, when and where they want to do business with the bank. An omnichannel experience that uses each channel to market, sell or service customers is needed as customers of today want personalized, tailored products and services, as and when needed,” he said.

Technology as an Enabling Platform of Growth

Besides capitalizing on deep customer insights, Yong asked for banks to consider two means that banks can take into consideration in managing the environment, and to meet the need to reduce IT costs without compromising on technological advantages.

“The first is a move to look at partnerships and profit sharing with vendors. Basically, banks and partner vendors share the cost of development, along with potential profits derivative of the system.  This could provide banks some help in such costs, instead of bearing the brunt of the entire IT cost.

“The other possibility is for banks to consider longer ROIs. Typically, banks have always looked towards a short ROI due to the immense pressure they face from stakeholders, especially where outlay in the IT arena is concerned. Instead of only considering three or four year periods, banks may have to consider staggered payback instead.

“Whatever the chosen model may be, one thing is certain. Technology as an enabling platform of growth is here to stay – and banks should start viewing technology as investments towards sustainable growth; rather than a cost booked in their ledgers,” said Yong.

“Leveraging technology to improve the bank’s capabilities also drives a very strong focus on enhancing the overall customer experience, through lower-cost digital and multichannel integration and marketing, improving security, and extending touchpoints on mobile devices.

“The vision of digital banking includes the ability to give customers an optimised and engaging experience, no matter which interaction channel is used, to meet their needs for a simple means to leverage their wish for ‘anytime, anywhere’ banking,” he concluded.

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