According to a recent study by Roland Berger, nearly 600 retail banking branches in Malaysia are expected to cease its operations in the next 10 years.
The research, done by the leading European consulting firm titled “Branching out – The Future of Retail Banking Networks”, stated that the downsizing of banking operations is in line with advances in financial technology (fintech) which has seen customers begin to switch to digital services.
“We expect 18% or up to 11,000 bank branches to close in Southeast Asia in the next 10 years. The closure of these retail banking branches is expected in six markets, including Malaysia,” Roland claimed. Apart from our country, Roland also expects the number of retail banking branches to decline in other countries in SEA such as Thailand, Indonesia and the Philippines.
Roland Berger’s Senior Partner, Philippe Chassat, said the closure of bank branches in Malaysia is also in line with the government’s target for digital services. He argued that the move to promote investment infrastructure and support the formation of a vibrant fintech ecosystem was to ensure a stable transition towards digital finance.
“For example, Malaysia aims to collect at least 15 million e-wallet users, which is almost half of the country’s population by 2025. The government also supports investment in the necessary infrastructure. (Additionally) Malaysia has also introduced a large incentive program to accelerate the use of e-wallets,” Philippe was quoted as saying.
Last year, the government through the Pelan Jana Semula Ekonomi Negara (PENJANA) channeled a RM50 e-wallet credit incentive, which benefited 11.36 million Malaysians. As reported by Berita Harian, the program saw a whopping RM567.9 million benefited by the recipients.
Philippe added that in the next 10 years, the socio-economic and technological conditions in most regions will see radical changes taking place in the banking sector. He also said that banks around the world need to accelerate the journey of branch transformation, optimising positioning and business models.
To ensure long-term success and sustainability, he suggested that banks need to adopt a structured and holistic transformation framework. “The main area to be considered is the best location for branch placement to maximise customer service and revenue generation,” Philippe said.
He continued, “Banks need to increase branch productivity to maximise profits, enrich the customer experience to improve service levels to compete with more innovative banks and change mindsets, besides instilling new technologies in the organisation. Banks must be prepared to rethink their branch network radically for the next 10 years.”