Finance institutions in Malaysia most digitally evolved in ASEAN

A recent industry survey conducted by Ernst & Young has revealed that the financial organisations of Malaysia have progressed further on their digital transformation journeys than their counterparts in Hong Kong and the other advanced economies of ASEAN.

In a survey of executives operating in a broad range of financial services segments across the largest economies of ASEAN and Hong Kong (Singapore, Malaysia, Thailand, Indonesia, Vietnam and the Philippines), including commercial and investment banks, investment management firms, credit card companies, insurers, and wealth and asset managers among others, the accounting and consulting firm EY has found those in Malaysia to be the most digitally matured on average.

Altogether, more than a quarter of those surveyed (26 percent) stated that their organisations had now fully implemented digital operations, particularly those representing the banking sector, while a further ~47 percent said that digital projects had been initiated. Yet, 15 percent had only so far reached the proof-of-concept stage, and over 13 percent still had their digital transformations under consideration – running the risk of competitive disadvantage.

As a breakdown by industry, ‘wealth, fund and asset management’ respondents were the most progressed of the finance categories (further including ‘retail and other banks’, ‘insurance’, and ‘credit and payments’) in their digital transformations at ~33 percent having fully adopted, yet were also heavily divided, with half still indicating that digital was still under assessment – by far the largest number of any group.

As a contrast, while the insurance category has achieved only a ~17 percent rate of full implementation, industry organisations had initiated projects in ~46 percent of cases – compared to just 16 percent of wealth managers – and only ~17 percent of insurance providers were dragging their feet at the assessment stage. Similarly, over 48 percent of retail and other banks had initiated projects, while nearly 30 percent had already adopted digital.

With respect to the regional variances between the surveyed country bases, which together with the ASEAN-6 included Hong Kong organisations operating in the bloc, the EY survey reveals that the Malaysian finance sector has got the clear jump on its international competitors, with 36 percent of the country’s financial institutions having completed digital implementation. In addition, ~44 percent stated that their projects were underway.

Vietnam featured the next greatest number of digitally mature institutions at ~33 percent, yet had an equal number which had not passed the assessment stage and only ~17 percent which had initiated projects, while Singapore and Hong Kong also trailed Malaysia with respective full implementation rates of 29 and 18.5 percent. Indonesia, the Philippines and Thailand all showed promising signs, with implementation initiated in each country at rates of between 50 and 60 percent.

In an earlier EY senior executive survey on leading global finance organisations from the US and Canada, conducted by Forrester Consulting on behalf of the Big Four firm, over 60 percent of the high-maturity firms (those classified as digital transformation leaders) reported enhanced innovation as an effect of digital adoption, along with a similar number having improved customer satisfaction. In addition, the high-maturity firms felt way more equipped to deal with further business threats and market disruption.

Above all, from a simple business perspective, 63 percent had already increased revenue, and as one surveyed vice president of a large US insurance group put it, “Do digital transformation or don’t survive. You either master digital transformation or you’ll be left on the heap pile.” As to the most recent survey, EY Asean Financial Services Leader Brian Thung is a little more understated in conclusion: “With the expected boom in digital economy across Southeast Asia, financial institutions that seek to tap on this digital economic spur need to accelerate their transformation accordingly.”

Related: Synechron CEO Faisal Husain outlines the state of play for fintech in Asia.