Bank Rakyat bets big on digital to woo younger clients
BANK Rakyat Bhd plans to invest substantially in its digital drive as the Islamic cooperative bank looks to break away from the brick-and-mortar traditional banking image and woo younger and tech-centric clients.
For a start, the cooperative bank will introduce its mobile banking app as it piles more initiatives and investments into digital channels.
A company-wide banking system called Core Banking System (COBRA) is scheduled to be operational this year and will play a key role in the cooperative bank’s digital ventures.
Bank Rakyat CEO Datuk Rosman Mohamed said the bank, which already has a strong urban and rural presence, wants to embrace the broader digital services to grow its customer base.
“Once COBRA goes live, there will be a bit of stabilisation and we can be in line with what our competitors are doing.
“For example, if you look at Bank Rakyat, we don’t have mobile apps like the rest of the banks in the country do.
“We want to enable our customers to apply for financial services from the app,” he said in an interview with The Malaysian Reserve.
Rosman was appointed the CEO of the Islamic cooperative bank effective Feb 1, 2020.
Most financial institutions have adopted mobile banking which enables customers to perform financial transactions with their smartphones.
The app includes third-party services which allow customers to make multiple transactions from a single platform. Other value-added services, such as debt management, financial planning and spending trackers will add value to the platforms.
Bank Rakyat has traditionally been dependent on walk-in customers instead of the digital platforms. It launched its Internet banking “i-Rakyat” only in 2007 when other banks had sped ahead with similar initiatives years before.
Malayan Banking Bhd (Maybank) introduced its online banking platform maybank2u.com.my in 2000, the first in the country.
Bank Rakyat is hoping its digital initiatives would woo millennials who will be the bank’s future customer base. The bank is at risk if it ignores other alternative digital financial solutions providers that have disrupted traditional banks.
“Bear in mind, digitalisation and customer experience have to come in handy because our customers will be the millennials who show no penchant in visiting a physical bank. So, this is one thing we are working on,” he said.
Bank Rakyat plans to allocate about 10% of its operating expenditure in strengthening its digital services.
“The whole idea of going big in our digital services is to stay ahead and competitive in the banking industry. We want to be a force to reckon with,” said Rosman.
The bank, which boasts a total asset of RM109.35 billion in 2018, is seeking a digital banking head to help steer its digital strategies and operating models.
“We are in the middle of hiring a chief digital officer, someone with digital expertise to help us start in the areas that have potential to grow,” Rosman said.
Rosman was the bank’s board member since April 1, 2019, before assuming the role of the bank’s acting MD from Aug 1, 2019. Bank Rakyat is also planning to launch its own e-wallet under the Bank Rakyat 2025 (BE25) strategy. Rosman said the initiative would add value to the bank.
“I see the potential of e-wallet in the world of cooperatives. We would like to work with the Malaysia Co-operative Societies Commission on how to use e-wallet within the cooperative ecosystem,” he said.
Malaysia’s largest Islamic cooperative bank has registered strong profit.
For the first nine months of 2019, it registered a profit before taxation and zakat of RM1.29 billion, a 4% increase from RM1.24 billion registered in the same period of 2018.