Reporting by the Banking Insight Editorial Team

Our exclusive interview in this edition of Banking Insight taps the acumen of Mohd Rashid Mohamad, CB, Group Managing Director/Group Chief Executive Officer of RHB BANK BERHAD, whose decades-long career is a unique meld of his experiences as an ex-regulator and subsequent practice as an international banker. He is an AICB Council Member and also serves on the Institute’s Human Resource Committee.

Q: Global banking is sailing through some choppy waters right now, stemming from a crisis of confidence in the US. Off the bat, what could this mean for banks in Asia and how should we prepare for not just this event, but any future crisis?

Throughout my 30-year career, the markets have definitely evolved over the years and I have witnessed various financial market milestones in different capacities, including:

  • Asian financial crisis 1997/98;
  • Global financial crisis 2009;
  • European debt crisis 2011/12;
  • Covid-19 pandemic 2020/21; and
  • SVB Bank run 2023.

I have always believed that there are opportunities amidst challenging times. I have learnt a great deal from each crisis and continue to learn and sharpen myself from past incidences. I believe that the risk of contagion from the US and Switzerland is low. The respective regulators in both countries have acted swiftly in containing the crisis, and ASEAN banks, in general, have had very little exposure as well as linkages to the latest crisis in the US and Switzerland.

Furthermore, banking systems in the ASEAN region are sound, resilient, and well-capitalised with healthy liquidity positions, underpinned by a stable and diversified funding base. The banks in ASEAN also conduct regular stress tests and are closely monitored by regulators. With that being said, we would still need to watch out for spillovers from the recent events, which could lead to market volatility, tighter credit access, and possibly slower global growth.

Looking ahead, while each crisis will have its nuances and differences, I believe that banks must always take precautionary measures by strengthening risk management practices, invest deeply in technology, and build solid relationships with stakeholders to boost confidence in banks as the core institution of the economy.

Q: As one who has experienced banking through the lens of a regulatory body such as Bank Negara Malaysia (BNM) as well as industry, how has it shaped your approach and priorities in finance?

Prior to helming the Group Managing Director role at RHB, I spent 14 years at BNM as a regulator, before moving on to other roles at local and international banks. Being at different levels within RHB Banking Group has exposed me in managing different situations and crises through different lenses over the past eight years. My biggest takeaway has, and will always be, to seek opportunities through any crisis or difficulties. Being in my current role comes with its set of challenges, but I look forward to learn something new every day.

Q: The expectations of next-gen banking customers are different from their predecessors on many fronts: round-the-clock service, digital-first solutions, social values and responsibility. How should banks transform to meet these evolving customer expectations?

Over the past few years, we have witnessed a rapid evolution in customer expectations, accelerated by the Covid-19 pandemic, as well as the entrance of fintech players that are disrupting traditional banking across the value chain. Customers now prioritise service excellence and a seamless digital/online experience as well as increased commitment to sustainability/environmental, social, and governance (ESG) aspects of financial institutions.

In addressing these changing expectations, we believe that banks should adopt measures to:

a. Improve customer experience. This can be done by:

  • Reducing red tape across the customer’s banking journey, with 24/7 access, supported by online self-service models via live chat or chatbots, as well as a physical model via self-service terminals.
  • Offering personalised products and services based on customer personas through the use of data analytics, such as risk profile, occupation, and age.
  • Double-down in enhancing relationship management. From this perspective, RHB has continued to embed a strong culture of service through our RHB Way Programme, constantly upskilling frontline staff as well as simplifying and automating processes. As a result, RHB has improved its Net Promoter Score, achieving the Top 3 position amongst Malaysian banks in 2022.

b. Provide customers with a seamless digital experience by:

  • Continuously improving features and functionalities of internet and mobile banking systems. RHB has improved online transactions in 2022 with 81.8% transactions conducted through digital channels.
  • Embedding better digital experience through ecosystems and partner offerings. For instance, RHB has partnered with EcoWorld, enabling prospective home buyers to obtain a 30-second approval-in-principle on their mortgage application via the RHB MyHome app. Consequently, 49% of RHB’s mortgage sales were accepted via the RHB MyHome app in 2022.
  • Strengthening online banking platforms with more features and functionalities. In this respect, RHB has introduced new features, such as fixed-deposit placement and redrawing excess home-loan payment. The bank also recently reinvigorated its online and mobile digital platforms to provide a more secure and user-friendly customer experience by migrating to RHB Online Banking.
  • Offer first-in-market and distinct digital product offerings. RHB introduced currency purchase on its online banking platforms via its multi-currency account (MCA). Customers are able to convert up to 24 currencies and use the MCA debit card to transact overseas without incurring the risk of fluctuating currency exchange prices.

c. Increase ESG commitments:

RHB’s Sustainability Strategy and Roadmap is anchored against its three core pillars of (i) sustainable and responsible finance, (ii) embedding good practices, and (iii) enriching and empowering communities. It is further strengthened by our sub-pillar of developing a pathway to a climate resilient future.

Under the Sustainability Strategy and Roadmap, we have identified five key performance indicators supporting our sustainability aspirations as listed below:

  • Mobilise RM20 billion in sustainable financial services by 2026;
  • Empowering over two million targeted individuals and businesses across ASEAN by 2026;
  • Achieve carbon-neutral operations by 2030;
  • Diversity, equity and inclusion in the workplace; and
  • Launch and implement the Group Climate Action Programme, which will be the catalyst towards developing the Group’s net-zero pathway and our sector’s decarbonisation strategy.

As at 31 December 2022, the Group has mobilised over RM12 billion in sustainable financial services through our business activities of lending and financing, capital markets and advisory, wealth management, investments, and insurance businesses, more than 40% above our annual target.

Q: Your predictions on what banking will look like a decade from now?

Based on current trends, I believe that banking will continue to rapidly evolve digitally. With customers’ preference shifting more and more towards online transactions, banks will most likely move towards digital channels for broader reach and accessibility, while brick-and-mortar will continue to exist and remain relevant for certain products and services where engagement with customers need to continue and serve as a local community-based touchpoint.

There will also be an intensified adoption of new technologies such as generative artificial intelligence technology that has gained traction, most notably ChatGPT. In this respect, there will be multiple use cases that can potentially be adopted across the banking value chain to be deployed in the near future.

In addition, cross border financial systems have been gaining traction in recent years, in parallel with customer demands. Banks will be forced to adapt to changing preferences and deliver more innovative solutions to cater to the cashless agenda. Apart from that, new features, such as banks’ ‘Buy Now, Pay Later’ services, have made it easier to integrate financial services into customers’ daily lives, given the rise of various digital platforms and ecosystems. We expect this trend to continue and non-financial providers and platforms will continue to interconnect with banking systems to provide a seamless experience for customers.

Sustainability will also be a key priority for banks as climate change continues to gain global attention. Banks will need to prioritise sustainable finance and investments as well as ensure that ESG considerations are integrated into all aspects of its business and decision-making processes.

Q: What core competencies do you think should be prioritised in order for banking to remain relevant?

In order to remain relevant, I believe that it is important for banks to foster a culture of innovation, allow its employees to think outside the box, and stay ahead of the competition. As a financial institution, I believe that we must prioritise and adopt a strong customer-first culture.

At RHB, we believe that customer experience is a key differentiator which sets us apart from our competitors. In line with the group’s Together We Progress 2024 corporate strategy, ‘Winning in Service’ by delivering service excellence is one of our key drivers in everything we do. As such, we aim to deliver a consistent experience to our customers across all touchpoints. Through continuous employee upskilling, we are committed to improving product knowledge and service quality of our frontliners.

Additionally, we believe in delivering continuous innovation, together with improved digital capabilities and process automation, in order to improve productivity and efficiency. This includes enabling straight-through processing for instant loan approvals and introducing e-Know Your Customer capabilities. We have allocated RM500 million for IT and digital modernisation initiatives and operational improvement spend by 2024.

In future-proofing our workforce, we deeply emphasise investing in upskilling and reskilling them with future-ready skills. To further provide our employees with a competitive edge, given the competition for talent that is taking place today, we have rolled out an employee upskilling programme called RHB’s Future Skills Programme to further develop our people across five key areas, i.e. agility, critical thinking, design thinking, digital literacy, and data analytics.