Malaysia overlooked a critical period between 2018 and the onset of the Covid-19 pandemic to modernize its banking industry and assert itself as a digital leader in the region. As that opportunity slipped away, banks are now facing steeper challenges to foster growth, according to veteran banker Andrew Sheng.
“That window—from 2018 through the pandemic—was ideal for a major shift to digital. During that time, daily life moved online—work, shopping, even financial services. That’s when banks should have fully embraced digital transformation, but we missed the mark,” he told The Business Times.
Sheng highlighted how other countries aggressively upgraded their financial technologies in response to rising competition, evolving customer expectations, and shifting regulations. Meanwhile, Malaysian banks largely remained conservative, slow to act, and hesitant to innovate.
“Back then was the moment for full digital reinvention. Yet, I find the digital services offered by Malaysian banks to be rather outdated,” said Sheng, who is 79 and currently serves as an adjunct professor at the University of Malaya and Tsinghua University.
Sheng, who formerly chaired Hong Kong’s Securities and Futures Commission and held senior roles at both the Hong Kong Monetary Authority and Bank Negara Malaysia, was named one of Time magazine’s 100 most influential people in 2013. He also served as chief adviser to China’s banking regulator.
He noted that while banks like CIMB and Maybank once pursued bold regional expansion, those efforts have lost steam. “Since 2018, their risk appetite has diminished. Then the pandemic hit—a prime moment to push digital, yet I don’t see proactive, personalized offerings. My bank understands my spending, but it doesn’t provide tailored investment suggestions or intuitive digital features,” he said.
Sheng believes the shortcomings extend beyond just the lack of cutting-edge technology. He sees them rooted in outdated customer service and a reluctance to modernize.
“Some banks are still relying on traditional call centers. Try calling at midnight—you’re either connected to someone overseas, like in Bangladesh, or there’s no service at all,” he remarked.
Even basic digital tools like chatbots, which are widely used across Southeast Asia, are either poorly implemented or underutilized in Malaysia. Sheng sees this as a systemic issue, stemming from internal culture and governance—not a lack of technology.
“Convincing a bank to modernize when much of its workforce lacks digital fluency is a huge leadership challenge. Boards and CEOs must prioritize digital strategy, but many are ex-bankers or business executives who recognize the threat but fail to fully grasp it,” he said.
Tech Companies Are Redefining Finance
As Malaysian banks stagnated, technology companies surged ahead—not just supporting financial services but redefining them. Sheng argues the real disruption isn’t from traditional fintech, where banks use tech tools, but from what he calls “TechFin”—where tech firms disrupt finance from the outside.
“Since Covid, the main story isn’t fintech—it’s the tech industry integrating finance. TechFin is overtaking traditional finance,” he explained.
Tech firms have superior software, access to vast data, fewer regulations, and more agility than banks. They also operate with significantly lower debt burdens.
By contrast, banks are highly leveraged, heavily regulated, and struggling to compete. Sheng noted this isn’t just a theory. Across Asia, consumers are using mobile-based QR payment systems—often operated by tech firms, not banks. The winners, he says, are e-wallet providers like Alipay, WeChat Pay, and nimble fintech startups.
The disruption isn’t limited to payments. Sheng cautions that core banking services—lending, wealth management, insurance—are being unbundled and digitized by quicker, more agile players.
“Platforms leveraging crypto, blockchain, and decentralized finance are outpacing traditional banks. And this shift is only gaining speed,” said Sheng, who will deliver the keynote at Malaysia’s upcoming MyFintech Week in early August.
