RFI Global’s 2022 Post-Pandemic Consumer Banking Expectations Report, prepared for FICO, confirmed
that the pandemic has aggravated financial hardship for retail banking consumers in Malaysia, with 1 in 2
experiencing a drop in income. It has also revealed that many are motivated to search for better banking
offers, and that the inclination to switch lenders has increased year over year.
Disruptive impacts from the pandemic differed across the region
While a considerable 23-30% of Australian and New Zealand respondents experienced a negative
impact, 50% of Malaysians, 40% of Singaporeans and 63% of Indonesians saw a decline. Respondents in Thailand suffered the biggest blow, with 70% saying their income had been reduced.
The report uncovered that more than 1 out of 4 consumers across the region (27%) and nearly half (49%) of Malaysian respondents have deferred loan repayments. While nearly 1 in 3 (31%) in India and nearly half in Thailand (47%) deferred loan repayments as a result of COVID-19, this was much less common in Singapore (12%), Australia (9%) and New Zealand (7%).
Despite the uncertain financial climate, the majority of Malaysian retail banking customers plan to
maintain or boost their investments (77%). Most are looking to maintain or increase savings (82%), and many will consider changing banking providers this year.
Increase in customers’ intention to switch banking providers
Surprisingly, while the report indicates that most customers were highly satisfied with their main banking
providers, up to 20% of APAC banking customers who responded said they plan to change banks in 2021. In contrast, only 10% said they changed banks in 2021.
This increased propensity to switch lenders is highest among the mass affluent (defined as the high end
of the mass market or those with at least MYR200,000 total investable asset holdings).
In Malaysia, 5% of retail banking customers and 5% of mass affluent customers switched in
2021. That is set to at least double this year, with 10% of retail customers and 14% of the
mass affluent saying they are very likely to switch.
Top reasons cited by Malaysian respondents include a change in personal circumstances (31%),
consolidation of accounts to where they now have a deposit account (25%), a desire for access to
better investment and wealth management products and services (24%), as well as a change in
where payroll is deposited (21%).
Financial impacts felt by even the wealthiest of Malaysians
Amongst mass affluent banking customers in Malaysia, 43% experienced a decrease in income due
to the pandemic, with half of overall retail customers negatively impacted. Nearly half of the mass
affluent (46%) deferred loan repayments as a result, just 3% lower than the wider retail
banking market in Malaysia.
This disruption to income has left 2 in 5 affluent Malaysians saying they intend to reduce spending (40%), just as 39% of Malaysia’s retail banking customers plan to do.
Across APAC, the mass affluent are more likely to step up their borrowing compared to the wider market
(16% vs 8% ). In Malaysia, specifically, more of the mass affluent plan to increase borrowing
(19%) than retail banking customers (6%).
The report further revealed that 80% of the mass affluent are opting to maintain or boost their
investment levels with banks, versus 77% of Malaysia’s overall retail banking market.
Impacts of the Pandemic on banking intentions
Consumers are changing their banking behaviors, in response to the financial impact of the pandemic.
More than 4 in 5 of Malaysia’s retail banking customers will either increase or maintain their savings (82%). Across the region, the sentiment to maintain or increase savings was highest in New Zealand
(94%) and in Indonesia (87%).
Despite a dip in borrowing plans year over year, the level of borrowing for APAC retail banking customers
still remains higher than pre-pandemic times as consumers deal with the lasting effects of the disruption.
“The pandemic has clearly exacerbated financial hardship for customers regardless of income class,” said
Aashish Sharma, Senior Director of Decision Management Solutions for FICO in Asia Pacific. “As
borrowing and spending habits contract, customers will be on the lookout for avenues to grow their
wealth and boost their savings. Banks must be able to proactively identify customers’ needs, and pivot
their approach to alleviate financial anxieties while ensuring their products suit customers’ affordability
and funding requirements.”
Gravitating towards Digital
Many Malaysian respondents (47%) still consider the proximity of branches and ATMs as a top
determinant for a main banking provider; however, the report highlighted the importance of providing
digital services. As many as 72% of APAC retail banking customers chose a fintech product over the
option to use their banks’ main services. This was highest in Malaysia (94%) where customers did
so as they wanted ease-of-use, time savings and easier application processes.
Comparing 2021 to 2019, APAC consumers are increasingly gravitating towards digital channels at every
stage of their application journey: initial enquiries and research (up 14%), follow-up enquiries (up
15%), and banking applications (up 15%).
How Banks can Ensure the Customer is at the Center of Actions and Decisions
- Transform operations and data silos through the use of sophisticated analytics technology and centralized management platforms.
- Make data-driven decisions by predicting, analyzing and optimizing customer interactions in real time for an event-based, profile-driven approach to relationship management.
- Develop precise insights into optimal interactions and offers that would work best for customers
- Create a digital twin (a type of virtual model used for simulation purposes) to leverage this continuous learning and test out radical new approaches and strategies in a low-cost, low-risk environment
- Deliver hyper-personalized offers and customer actions in a scalable way
“Banks must understand their customers’ needs on a deeper and more granular level, or risk losing them
to competitors and alternative providers,” said Sharma. “Maintaining customer satisfaction alone will no
longer suffice; customer experiences must be radically enhanced. Customer-centricity will be key to
consistently delivering hyper-personalized experiences and retaining customers.”
This survey was conducted in 2021 by an independent research company adhering to research industry
standards. 1003 Malaysian adults were surveyed, along with 12,885 consumers in Australia, New
Zealand, Singapore, Indonesia, India and Thailand.
Learn more here and at www.fico.com.
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