According to the RFI Global 2022 Post-Pandemic Consumer Banking Expectations Report, prepared for Fico, the financial impact was also felt by even the wealthiest of Malaysians.
Fico is a US-based analytics software company.
“Among the mass affluent banking customers in Malaysia, 43% experienced a decrease in income due to the pandemic, with half of overall retail customers negatively impacted.
“Nearly half of the mass affluent, or 46%, deferred loan repayments as a result, just 3% lower than the wider retail banking market in Malaysia,” Fico said.
This disruption to income, it revealed, has left two in five affluent Malaysians saying they intend to reduce spending (40%), just as 39% of Malaysia’s retail banking customers plan to do.
The report also disclosed that despite the uncertain financial climate, the majority of Malaysian retail banking customers plan to maintain or boost their investments (77%) with most looking to maintain or increase savings (82%), and many will consider changing banking providers this year.
Fico said this increased propensity to switch lenders is highest among the mass affluent, defined as the high-end of the mass market or those with at least RM200,000 total investable asset holdings.
“In Malaysia, 5% of retail banking customers and 5% of mass affluent customers switched in 2021. That is set to at least double this year, with 10% of retail customers and 14% of the mass affluent saying they are very likely to switch.”
Top reasons cited by Malaysian respondents included a change in personal circumstances (31%), consolidation of accounts to where they now have a deposit account (25%), a desire for access to better investment and wealth management products and services (24%), as well as a change in where payroll is deposited (21%).
The report also highlighted that consumers are changing their banking behaviours, in response to the financial impact of the pandemic.
Aashish Sharma, senior director of decision management solutions for Fico in Asia Pacific, said the pandemic has clearly exacerbated financial hardship for customers regardless of income class.
“As borrowing and spending habits contract, customers will be on the lookout for avenues to grow their wealth and boost their savings.
“Banks must be able to proactively identify customers’ needs, and pivot their approach to alleviate financial anxieties while ensuring their products suit customers’ affordability and funding requirements.
“Banks must understand their customers’ needs on a deeper and more granular level, or risk losing them to competitors and alternative providers,” said Sharma.
On gravitating towards digital services, the report said many Malaysian respondents (47%) still consider the proximity of branches and automated teller machines (ATMs) as a top determinant for a main banking provider. However, it highlighted the importance of providing digital services.
The survey was conducted in 2021 by an independent research company adhering to research industry standards.
Some 1,003 Malaysian adults were surveyed, along with 12,885 consumers in Australia, New Zealand, Singapore, Indonesia, India, and Thailand.