Digital Banking: Potential surge in the use of mobile devices in Malaysia

In many countries, mobile devices are fast becoming consumers’ primary computing device. With that, a new set of possibilities open up for financial institutions interested in capturing new markets. Smart phones, especially, are expected to represent more than 50% of shipments worldwide of smart-connected devices by 2018. The quantum leap in the use of mobile phones is exemplified in some African countries including Kenya where virtually every adult has an account with a mobile payment management firm that manages money transfers. The number of bank accounts in Kenya increased from 2.5 million in 2007 to more than 15 million in 2011. According to the Global Findex database 2015, the income of rural recipients in Kenya increased by 30% as a result of money being sent home more frequently via the mobile phone.

Before this phenomenon, large amounts of money had to be physically transported over vast tracks of land across the country exposing the holder of the money to security risks. In addition, wiith the cost of building mobile towers being much lower than that of laying of cable lines as well as the high cost of setting up bank branches in remote areas, it catapulted the proliferation of mobile phone ownership. Hence African consumers benefitted by leapfrogging into the digital era.

While the African situation may not be similar to that in Malaysia, for certain common reasons, the surge in mobile phone banking would also take place. As it is, approximately 20% of Malaysian

banking transactions are happening on mobile phones. More than 20% of all money transfers and approximately 15% of bill payments are being conducted on mobile devices. Mobile bill payment is expected to grow 20% from today till 2018 as friendlier user apps will facilitate more efficient and smooth experiences for smart phone users. Malaysian banks may therefore position themselves for growth in their businesses by preparing for the growing number of customers who use their devices. It is estimated that by 2018 the average customer will make 300 digital transactions in place of each branch visit. The mobile banking app today is extremely important because at many banks especially the ones that do not have a large branch network, the number of online banking transactions conducted from smart devices already exceeds the number conducted through all non digital channels, including branches and call centres.