BANK Negara Malaysia (BNM) finally issued its long-awaited digital banking licences in April. Whether this is a turning point in the Malaysian online banking era remains to be seen.
One thing is certain, as intended by BNM, the five licence holders will have to provide digital financial solutions to the unserved and underserved segments of the population, including the elderly in a rapidly ageing Malaysia.
To call Malaysia a rapidly ageing country is not an exaggeration.
In 2020, Malaysia was already an "ageing society" with more than seven per cent of the population aged 65 plus. It is on its way to becoming an "aged society" by 2044 and "super-aged society" by 2056, with 14 and 20 per cent of the population aged 65 plus, respectively.
From the vantage point of digital banking, the ever-increasing number of older people is a business. Income earners aged 50 to 54 and 55 to 59 are in the top two positions in terms of monthly earnings.
The findings of a survey by PwC showed that people aged 55 and above are twice as interested to become virtual bank customers.
But it is one thing to be interested, quite another to do so, especially when seniors are generally not tech-savvy.
It's true that the pandemic has transformed the lifestyle of consumers into a digital mode. A survey by Oppotus found that the adoption of e-wallets among Malaysians increased from 12 per cent in mid-2018 to a phenomenal 66 per cent in mid-2021.
But senior citizens or middle-aged users have yet to really catch up. With only about 20 per cent e-wallet users in last two years, users aged 45 and older are the least familiar with the e-wallet system.
If e-wallet adoption among older people is at best at a snail's pace after years of targeted promotion, it is simply a "mission impossible" to attract them to more advanced services such as digital assets, digital currencies, digital credit cards, security token offerings, etc.
Based on lessons abroad, digital bank operators should adopt some strategies to address the specific needs of seniors in using digital financial services.
FIRST, digital banking apps need to be senior-friendly.
A good example is South Korea. Earlier this year, the Financial Supervisory Services and the Financial Services Commission of Korea introduced new rules to improve accessibility and usability of online banking for seniors.
Korean banks were asked to provide "senior-friendly" banking apps to accelerate overall digital adoption in the country.
SECOND, digital banking services among the operators should be made interoperable as soon as possible.
Interoperability between multiple cashless payment channels is nothing new. In 2017, Thailand launched QR PromptPay, which synchronises multiple payment channels with a standardised QR code payment.
A year later, Singapore became the second country in Asean region to introduce a standardised code (SGQR) covering 27 e-wallet payment channels.
In mid-2019, Bank Indonesia introduced the national standard code QR, the Quick Response Code Indonesian Standard (QRIS), to universalise digital payment for goods and services transactions within and outside the country.
In Malaysia, under the BNM Interoperable Remittance Credit Transfer Framework, there is now DuitNow QR with more than 30 participating banks and e-wallet providers to unify all forms of cashless payments.
But interoperability is also about the transfer of funds and ownership of assets, risk management and so on.
While choice means competition, which is certainly crucial for growing market dynamics, segmentation means a ceiling on scalability and cost-inefficiencies for operators, which will,
by and large, be a burden on users.
More importantly, older people having to juggle between different digital banking apps is simply Greek to them, denying them participation, thus defeating the goal of financial inclusion.
THIRD, providing a "live" system to assist seniors with digital banking.
Although digital banks aim to be "100 per cent online" with online "branches" and artificial intelligence-powered customer service "agents" at a later stage, "live" support for seniors is crucial, especially in terms of their readiness to fully adopt digital banking.
Experiences in Spain and Luxembourg have shown that community-based digital finance "clinics" can be set up to provide not only digital financial literacy education programmes, but also technical support for older people related to digital banking.
In short, the functions must be simple, the platforms must be interoperable and the support must be timely. This time, we need to make this a "mission possible".
The writer is research fellow at the Malaysian Institute of Economic Research