Malaysian firms lose 40% of new accounts as locals look to open online

Only 6-9% of customer finish applying for a non-fully digital account opening service.

Banks and finance firms in Malaysia looking to expand their customer base should consider giving a fully-digital account opening experience to their consumers. A survey by analytics software FICO found that those who don’t facilitate this service could lose over 40% of new business.

Around 78% of Malaysian respondents expect that they should be able to complete all aspects of account opening online or on their phone.

The respondents revealed that they should be able to prove their identity by scanning documents or providing a selfie. Meanwhile, 48% expected to prove where they live without moving offline, whilst 40% said they should be able to set up a biometric such as a fingerprint scan at account opening.

If not met, 23% of respondents indicated that they would abandon opening the account, making a fully-digital account opening experience incredibly important for banks and finance firms looking to expand their headcount.

“There is research to show that only 6 to 9% of applicants move through the funnel and complete the process,” said Subhashish Bose, FICO’s lead for fraud, security and compliance in APAC. “The most important metric that banking executives need to understand is the difference between application completion for authenticated versus non-authenticated applications, as well as how many applicants with saved or abandoned applications return to complete the process.”

Digital finance accounts are becoming the norm in Malaysia, with 78% of consumers indicating that they will open a financial account online, the survey found.

Of these, 65% would consider doing so for an everyday transaction account, 45% will do so for a credit card, and 28% for a personal loan.

Further, more than 1 in 5 Malaysians (23%) said that they prefer to open a bank account using their smartphones, higher than the 18% of US respondents and the 16% of Canadian respondents who indicated the same.

Malaysia’s young demographic may have contributed to the higher number, according to Bose.

“It is not surprising that Malaysian consumers are digital natives. It is demographically a young country, with 80% of the population under the age of 50. Plus, the Malaysian government is actively encouraging development and investment in the digital economy, which makes up about a fifth of the country’s GDP. These factors have promoted a digital-first consumer base,” he noted.

Leading the digital push were 25-34-year-olds, with 76% of them saying they would open a bank account online. This dropped to 49% when it came to consumers aged 45-55.

Notably, around 61% of Malaysians aged over 55 years old are interested in opening a bank account online, which may be a case of grandparents getting influenced by their younger family members given the multi-generational structure of a Malaysian household, according to Bose.

The ongoing pandemic will also push consumers to rely more on online services, he added.

“As consumers’ reliance on online services grows in response to COVID-19, we expect further shifts in adoption and indeed an acceleration and acceptance in opening bank accounts digitally. It is important that banks closely examine any points of friction in their application process to ensure consumers are not abandoning a process or switching to a competitor,” he added.

Photo courtesy of Ben Cheung (Pexels.com).