Infopro was founded in 1987 and has won countless awards since then. How has FinTech changed in the 30 years since you started?
Technology has changed and we have to follow it. We invested quite heavily in R&D – up to last year, our total R&D expense (or investment) is more than MYR320 million – and this will continue. We are the older generation of FinTech. At this point in time, we need to reinvent ourselves by embracing many of the new disruptive technologies (AI, machine learning, big data), and the way that we do R&D also needs to adapt to the pace of the change in technology. As such, we need to be more agile.
It’s not totally new to us, but we need to adapt to the rate of change. It’s happening almost every day, everywhere around the world. This is the challenge we are facing. Our operation is basically global – more than 80 per cent of our business is from overseas. We have subsidiaries in Singapore, The Philippines, Dubai and China. There are slight differences in the application and incentive, so sometimes we need to look at the local context, like is there anything that we can adapt or adopt.
Take China, for example: it’s moving very rapidly in the digital intelligence space. In fact, China claims it’s ahead of the US in artificial intelligence, which I don’t doubt because there are many AI projects in China where they’ve invested millions of dollars. Even in the banking space, for example, some banks embark on AI projects and immediately put in one or two thousand staff. Not many companies in the world can do what the Chinese are doing. We definitely have something to learn from that.
What’s the next step for FinTech in the banking sector?
The mode of operation is going to change very drastically. Previously, 70 per cent of transactions take place in bank, with the rest through electronic channels (be it Internet banking or ATM). Today, we find that only 10 to 20 per cent are through the bank. Furthermore, in the electronic channel, mobile accounts for more than 50 per cent of transactions in many countries and banks.
In your opinion, who is more welcoming and adaptive to FinTech: Malaysian businesses or Malaysian customers?
A lot of businesses are followers. The majority of FinTech affects the customers directly. The way most of FinTech introduces a solution is by improving the customer experience (what we call CX or UX – customer experience or user experience) of dealing with the bank. In the past, if you want to perform a transaction, you had to go to an ATM or the bank, but today you can do it on your mobile. And on the mobile, there are different ways of doing things; in the past, you might do something in five steps, now on the mobile, people ask ‘why can I do it easier in two or three steps?’ We need to address the user experience and find ways to improve it.
With things like eWallets, online banking, and cryptocurrency, do you think we’re on the path to becoming a totally cashless society in the near future?
We are moving in that direction, but it’s practically impossible to be 100 per cent cashless because there’s still a sizeable unbanked population – people who don’t have any bank accounts or have not interacted with the bank in the past (typically in rural areas). In Malaysia, the percentage isn’t as high as, say, Indonesia or the Philippines, but there’s still a significant unbanked population (I think easily around 20 per cent or so). But today, mobile penetration will enable them to have connection with financial institutions, one way or another. Ultimately, the mobile is reaching out to those areas that banks cannot afford to set up a branch, or service the people. But the moment they have a mobile, they can be reached by others, and many FinTech companies are offering their services to connect them to the financial community. With this, gradually, there is less physical cash.
The most classic case is China – Alipay and WeChat Pay dominate the market, and the transaction rate is frightening. You can buy sundry goods by scanning the QR code, you can hitch a ride by taxi and pay through your phone, and they’re hitting daily transaction rates of more than 600 million per day, across the country.
In Malaysia, Bank Negara is promoting that – not just eWallet, but all the electronic transactions that will eliminate cheques and physical handling of cash. That will help the country as a whole, lowering transaction costs and, of course, make banks more profitable and the whole system more efficient.
TEXT FLAVIA GALEOTTI & EUGENE NG
PHOTOGRAPHY ROBIN YONG ART
DIRECTION AUDREY LIM