Catching the FinTech wave

A survey on FinTech in Malaysia

In 2015 and the first half of 2016, US$345 million, representing 11% of total venture capital funding in Southeast Asia went into FinTech. The region’s growing economies and relatively large underbanked populations make it doubly attractive for new market entrants. We set out to assess Malaysian financial service players’ attitudes towards this emerging segment through an online survey and several interviews of top management from both the incumbents and newcomers. Here’s what we found.

82%

of Malaysian FIs see FinTech as a threat to their business
42%

of Malaysian FIs think customers are ready to embrace FinTech
47%

of Malaysian FIs say they have placed FinTech at the heart of their strategy
22%

of Malaysian FIs believe they may lose more than 20% of their revenues to FinTech companies

Threat or opportunity of a lifetime?

Financial technology (FinTech) is touted as a game changer — the revolution that is turning the financial services industry on its head. All this talk about how FinTech is blurring the lines between the financial services and technology sectors evokes a sense of upheaval and change, with the outlook and final outcome uncharted and uncertain.

For financial institutions (FIs), the question on everyone’s mind is, 'Is FinTech a threat or an opportunity of a lifetime?"

Like any revolution, fate favours the brave and the bold. Yes, there will be risks involved, but not taking a step into FinTech is a plan destined to fail.

Understanding that this is a considerable undertaking for Malaysian FIs, and in order to help them prepare for the FinTech disruption, the Asian Institute of Chartered Bankers (AICB) and PwC Malaysia collaborated to develop a Malaysia FinTech report.

Drawing from our proprietary survey and interviews with C-suites and other top management from both FIs and FinTech companies, we aim to present Malaysian financial service players’ attitudes towards FinTech, compare their perspectives against their global peers’, and offer insights into how they too can catch a ride on the FinTech wave.

Key messages

Top threats

A significant majority of our Malaysian financial institutions respondents are concerned about the threat FinTech poses to their business. Key concerns include:

1. Regulatory uncertainty

2. Pressure on margins

3. Information security

Both Malaysian financial institutions and FinTech companies agree that the top three areas most likely to be disrupted are:

1. Fund transfers and payments

2. Consumer banking

3. General insurance

Read the report

Top opportunities

For all its perceived threats, FinTech can be a source of advantage and opportunity if Malaysian financial institutions play it right. The three main opportunities related to the rise of FinTech are:

1. Differentiation

2. Cost reduction

3. Improved customer retention

To take advantage of these opportunities, Malaysian financial institutions will need to focus on three key areas:

1. Boosting customer experience

2. Improving operations

3. Blockchain

Read the report

The future

There is unlikely to be a one-size-fits-all winning strategy when it comes to embracing FinTech. However, we identified three key takeaways from the survey and from listening to the various FS players:

1. Act now. There’s no time left to wait-and-see

2. Challenge existing assumptions and embrace the customer's perspective

3. Drive the creation of a holistic FinTech ecosystem, and become the dynamic centre of it

Read the report