Malaysian banks tackle barriers to agility and innovation

Industry leaders convened in Kuala Lumpur, Malaysia, recently to discuss the transformative power of agility and innovation in banking, highlighting the pressing need for technology modernisation, and overcoming organisational and cultural barriers.

At a recent breakfast roundtable themed Innovation at speed: Delivering superior customer outcomes when it matters, banking industry heads discussed the challenges and drivers for innovation in the sector.

The roundtable was jointly hosted by TAB Global, Mambu and AWS, and provided a platform for dialogue on Malaysia’s banking sector, one that is witnessing rapid evolution in technology, shifting customer expectations, and regulatory changes.

Fostering nimble practices and processes

Agility and innovation were prominent threads, as banks strive to keep pace with disruptive technologies and new market entrants, including the five licenced digital banks. Agility in the banking context involves embedding nimble practices and processes to adapt and innovate swiftly, enhancing customer outcomes significantly. 

Guests shared strategies for embedding agility into banking operations, which is seen as crucial for adapting to and thriving in a dynamic and fiercely competitive environment. One speaker highlighted that agility is not just about speed but about immersing it in organisational and cultural DNA to enhance responsiveness and decision-making capabilities.

The conversation touched on balancing the fast-paced demands of innovation with the stringent requirements of regulatory compliance, illustrating this with examples of how streamlined decision-making processes have led to successful innovation and improved customer outcomes.

The discussion highlighted that agility is not merely about speed but involves a strategic overlay that ensures responsiveness without compromising regulatory compliance or operational integrity—critical for regulated banks and financial institutions but not so much for financial technology and start-up peers.

Modernisation and transformation strategies

A significant portion of the dialogue revolved around the challenges of modernisation, particularly for the larger legacy banks that face the dual hurdles of outdated technology and cultural inertia. Panellists shared that navigating these challenges included fostering a culture of agility and innovation, rethinking IT risk management, and adopting end-to-end product management that integrates business and technology imperatives to improve customer-centric experiences. 

The discussion also addressed the conundrum of transitioning from legacy systems to more agile and responsive technologies. Modernisation for the participants means embracing technologies that can rapidly adapt to changing consumer needs while ensuring robust security and compliance frameworks, as one noted. 

Panellists also shed light on the specific challenges faced by larger, incumbent banks compared to their nimbler, digital-first counterparts. As one banker put it: “The journey of digital transformation is complex, especially when you are tied down by legacy systems that are not just physical but cultural.” 

Panellists also talked about leveraging open application programming interfaces (APIs) and embracing embedded finance, which they highlighted as a critical enabler of innovation, allowing banks greater connectivity and access to entire ecosystems of partners.

Overcoming barriers to change

The final point centred on identifying and overcoming barriers to agility and innovation in banking. Speakers shared their experiences and strategies for fostering a culture open to change and innovation. An instructive insight from the discussion was the recognition of internal resistance as a significant barrier.

One panellist posited that innovation is not just about new ideas but also about overcoming the inertia that exists within established institutions. Effective leadership was repeatedly cited as essential in driving change, with guests citing leaders who act decisively to set directions and goals, and align their organisations to stay abreast of new paradigms.

Incremental agility and small wins

The concept of achieving small wins through incremental agility and innovation was also discussed, emphasising how even minor enhancements could lead to significant improvements in customer engagement, satisfaction, and operational efficiency. This topic underscored the differentiated levels of agility between, and even within, more established banks and newer digital entities, with the former grappling with technology obsolescence risks more acutely. 

The consensus was that this is an area that deserves a lot more leadership attention and direction at the board level, where the level of understanding of the criticality of technology in modern banking and the appetite for investment to futureproof it are wanting. 

The roundtable, in addition to being a forum for sharing personal insights and industry best practices, provided a reflective space for senior banking leaders to contemplate the direction of their strategies in light of internal and external digital transformation pressures. It was an engaging and insightful meeting that allowed peers to meet and exchange ideas and perspectives, helping to forge a collaborative path towards progress in the Malaysian banking sector.