As with most other forward-thinking Southeast Asian countries, Malaysians have spent the last few years rapidly adopting the digital lifestyle. This sea change in consumer behaviour and expectation has necessitated an advancement in the digital transformation of local banks in order to remain competitive and relevant to a much more aware and demanding consumer.
While millennials are still maligned by the media, the truth of the matter is that many are settling comfortably into their thirties as we speak. Indeed, some are already parents themselves.
This is a demographic with definite purchasing power. It’s also a demographic in a lot of debt. And the problem is evident worldwide.
The UAE is a thriving market for banks right now, with gross assets increasing by 7.9% year-on-year in 2018 for the top 10 local banks. As a result, many major international players have been making moves in the region in recent months. Indeed, HSBC, which is comfortably one of the largest banks in the world, recently increased its stake in HSBC Saudi Arabia to 51% and smaller retail banks are beginning to follow suit.
In the telecommunications (telcos) sector, debt collection is often an afterthought. Debts in telcos are often small when compared to the financial and utilities sectors but they can still lead to losses. Indeed, losses due to bad customer debt can be as high as 2% of total revenue. However, it’s one area of their business that can easily be turned around and bring in more revenue from customers and companies already on their books.
There is barely an industry on earth that hasn’t been powerfully disrupted by technology. For some, the disruption has proven beneficial and they have emerged on the other side leaner, healthier and ready to face the next century with a wider smile and a more customer-centric attitude. Whilst retail banking is one of the industries that has truly embraced digital transformation, however, the debt collections sector still has a lot of catching up to do. But the future looks bright.
Utilities are something many customers take for granted. They need them, therefore they assume they will always be taken care of. Utility companies are, however, just as likely to take their customers for granted.
In such an environment, customer service in the utilities sector has never been more important. Because if customers forget that they need to pay for their utilities, they will invariably fall into debt and end up resenting their suppliers. So begins an endless cycle of codependent resentment.
In certain locales, field collections have long been an essential part of recouping debit. But everything needs to evolve eventually. As customers and collectors alike become more accustomed to the ease and convenience that modern mobile devices have brought to their lives, all methods of collections should take advantage.
The solution to optimising debt collections is already being utilised by many financial institutions - a combination of mobile devices and routing algorithms to plan routes and communicate in real-time with debtors. It’s a subtle disruption that could make the process that much easier for young and old financial institutions alike.