Banking sector to be competitive with more digital players

By ANIS HAZIM / Pic Source ARBM’s Facebook

DIGITAL banking new entrants that are able to offer meaningful products primarily in terms of assets and that demonstrate a high level of trust will pose a threat to incumbent banks. 

Al Rajhi Bank Malaysia (ARBM) CEO Arsalaan Ahmed said real competition is coming with the new entrants and the banking sector is set to become an exciting space over the next 12 to 18 months. 

“However, if the digital banks aren’t able to do that, they wouldn’t be a threat to existing players. On the flip side, incumbent banks need to get comfortable with the internal competition of digital channels. 

“The real threat to incumbent banks is by not allowing internal competition,” he said during a virtual media briefing on ARBM’s digitalisation plans last week. 

Arsalaan said Bank Negara Malaysia’s (BNM) digital banking licence efforts will create a new playing field in the country. 

“Now, banks are venturing into the area of digital banking and the government and BNM have released guidelines on open banking, cloud, electronic Know Your Customer and innovation,” Arsalaan said. 

He expects BNM’s digital banking efforts to create a new playing field in the domestic financial architecture. 

He noted that Malaysia’s online banking volume has improved 36% to RM12.1 billion as of June this year. 

“From the start of the year, the e-wallet volume has increased 89% to 468 million merchant participation and QR (quick response) payments jump 7% to one million registrations,” he said. 

Arsalaan foresees Islamic banking growth to outperform conventional banking growth in the country. 

“I firmly believe that Islamic banking will be the dominant type of banking in Malaysia within the next decade,” he stated. 

He believes Islamic banking can differentiate Malaysia from the critical market and compete against other financial markets. 

“So here at ARBM, what we want to do is support the growth of digital Islamic banking in the country. 

“As the largest Islamic bank in the world, it is really important we play our role in the development of Islamic finance market, such as in Malaysia,” he noted. 

According to him, ARBM is currently building its own one-of-a-kind digital bank with state-of-the-art technology. 

“In order to deliver that high ambition, we have engaged with certain partners, both internationally and locally such as the American consulting firm, Oliver Wyman Inc and Amazon Web Services Malaysia Sdn Bhd,” he added. 

The bank will also be on a hiring spree to ensure that ARBM has the top talents to drive the digital bank agenda. 

ARBM will focus on retail and small and medium enterprise customers to offer growth support within the industry.