Smart Investor Malaysia


Changing Habits in a Cashless Society


Are you psychosocially fit to harness fintech solutions for your financial well-being?

The outbreak of the Covid-19 pandemic has accelerated the use of cashless payments in Malaysia. There is a surge in the usage of cashless payment as consumers start to adopt e-wallets like Touch ‘n Go, GrabPay, and MAE, besides the use of electronic payment through cards, mobile banking and internet banking during the Movement Control Order (MCO).

A cashless society does not necessitate that cash transactions do not exist in the economy but rather, financial transactions are facilitated by electronic means in an attempt to minimise the volume of cash transactions.

As the buzzword “fintech” is rapidly becoming a household name, early adopters may have already benefited from their early adoption of fintech solutions. There were many lengthy articles written on the benefits and risks of moving towards a cashless society as well as highlighting the risks associated with the adoption of fintech platforms such the potential compromise of client privacy, security and operational risks. In their quest for higher customer acquisition, fintech platforms provider may have overstated their claims with regards to their services.

Not surprisingly, certain segments of the society, which are either unconvinced of the benefits or lack the ability to reconcile with the technology, are still rejecting the use of tech-based solutions despite rapid adoption by the tech-savvy generation.


So, are we getting or feeling smarter as technology users? Is our digital financial literacy moving in parallel with the availability of fintech solutions to manage our finances?

As reported by EPF, our savings are not sufficient and some EPF members are opting for early special withdrawal under i-Lestari, i-Citra and i-Sinar due to the pandemic.

So, are cashless and fintech solutions the panacea to help us save, spend or invest better?

The main issue does not lie with using technologies per se for financial planning but rather, a lack of awareness in understanding savings and spending behaviour. This is because, if we cannot or do not have the self-disciple to save, knowledge and skills alone will not enable us to fully capitalise on investment opportunities provided by fintech solutions.

Let us try to understand ourselves. In this age of consumerism, by nature, it is our inherent behaviour to prefer current consumption over future consumption. The additional satisfaction known as marginal utility in Utility theory expounded that the marginal utility of current consumption is always higher compared to the marginal utility of future consumption.

In other words, it may be difficult for some of us to save for tomorrow unless we are incentivised to do so. As most people are not self-motivated creatures, we need external push and interventions from time to time to help shape our savings behaviour. In addition to this, psychologically, we dislike waiting.

But unfortunately, the incentive to compensate us for waiting and delaying our current consumption in the form of interest rate is negative. In this low or negative interest environment coupled with the availability of easy credit, plastic cards such as debit cards or credit cards, e-wallets or other alternative payment systems, the motivation to save becomes even lower, and spurs us to spend recklessly.


While we love the constant innovations or fintech solutions by companies in their attempt to provide a seamless experience for customers, we are becoming somewhat less patient. Spoilt for choices with a button or click-away conveniences provided by companies, our impulse to spend for instant gratification is magnified.

In addition, the theory also explicates that we tend to value current consumption even more over future  consumption during period of scarcity. Thus, it is no surprise that due to the Covid-19 pandemic, we may have the urge to spend and consume even more like there is no tomorrow.

Some of us are being lured into adopting exuberant lifestyles that are beyond our means as we are besieged daily by spam, scam calls, marketing gimmicks or repetitive unwanted advertisements.

While some of us are plunging deeper into the abyss of maintaining exuberant lifestyles that we find hard to extricate ourselves from, companies are getting unrelentingly creative in helping us to reduce our pain of losing money via innovations in electronic payment means. Accordingly, we do not just experience as much pain as our predecessor because we are just literally transferring the numbers or data via the electronic systems when we make our purchases. In consequence, we are inclined to spend lavishly on unnecessary items.

Things were markedly different back then when cash was used extensively. Our grandparents or parents may have better spending habits because they get to feel, touch, smell and count the hard cash of their money in their hands before parting with their money. The painful experience associated with seeing with their own eyes that the money is actually leaving their hands or pockets may have deterred them from spending on unnecessary items. This explains why they spend more on necessities that benefit themselves to equalise the pain inflicted upon parting with their money.

To put it in another way, if we could not be cognizant of our own innate behaviour by getting psychosocially ready, in harnessing the so called “smart” fintech solutions, we are not going to get smarter. On the contrary, we may become more mentally depressed.

Cultivating good spending habits and resisting temptations to splurge often require self-discipline, practice and planning. To be more unsusceptible to act impulsively when our brains process words frequently used by marketers such as easy, convenient, fast, instant, and limited, we should stop being hyperconnected all the time.

By not subscribing to this new religion of “irrational exuberance” (a popular term used by Professor Robert Shiller) in our daily spending habits, hopefully, then, perhaps, our life would be psychosocially and financially happier.

About the author

Dr Audrey Lim Li Chin is a lecturer and a researcher at Multimedia University (MMU) Melaka. She teaches International Finance and Derivatives. She is particularly interested in retirement planning, mental health, fintech especially in blockchain and data analytics. She is also a Certified Financial Planner, (CFP) and is currently pursuing Chartered Financial Analyst (CFA) certification. She is also the external educational advisor to Max Wealth Education Sdn Bhd.

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