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The country's cloud computing industry is projected to grow to $3.7 billion by 2024, and the financial services industry is expected to be a major driver of this growth.

The use of cloud technology in financial services is becoming increasingly popular for a number of reasons. Firstly, and often thought of as most importantly, cloud technology can help financial institutions reduce costs, as when data and applications are moved onto the cloud, users can avoid the high costs (and significant resource effort) that result from maintaining their own data centres and IT infrastructure. And these costs are not insignificant; our customer insights highlight that a tier-2 bank in Malaysia expected to see a reduction of up to 60 per cent in core banking infrastructure resource costs by using Mambu.

Another benefit of adopting cloud technologies is that it can help financial institutions improve their agility and flexibility. By using cloud-native, next-generation technology, financial institutions can quickly and easily scale their operations up or down as needed, which is essential in an industry that is constantly changing and evolving. Our research suggests that neobanks using Mambu’s platform have seen 26 per cent higher revenues over a 3-year period when compared to customers using other solutions in the market.

Cloud can also help financial institutions improve their security, with cloud providers offering a wide range of security features that can help financial institutions to protect their data and applications. The implications also extend beyond data security here; the optimisations offered by a cloud-native solution mean operations become smoother, and unplanned downtimes across cloud-hosted applications are down by up to 70 per cent.

In addition to the benefits mentioned above, cloud technology can also help financial institutions to:

  • Improve customer service by providing 24/7 access to banking services
  • Launch new products and services more quickly
  • Expand into new markets
  • Reduce their environmental impact

Navigating challenges

Despite the many benefits of cloud technologies, there are still some challenges that financial institutions need to overcome before they can fully adopt this approach, with one such challenge being Malaysia’s strict regulatory requirements. However, the potential benefits of cloud are significant, and financial institutions that are able to navigate these challenges will be well-positioned to succeed in the future.

The five new Malaysian digital bank licence winners are likely to drive adoption of cloud in Malaysia in the short term, with at least two of the five winners deploying core banking on cloud (using Mambu). With these new banks being digitally-focused, we expect others are likely to utilise cloud as well. These banks will act as critical ‘experiments’ for next-gen tech and cloud, and they may push incumbents to innovate at pace, with cloud becoming an essential component of any digital transformation strategy.

Bank Islam’s Be U is a response to the new digital banks coming to market, and a lot of traditional banks will likely look to revitalise digital services in a similar way, or extend their business models through other offerings such as banking-as-a-service (BaaS) and/or embedded finance, which will also require the agility that cloud provides.

Banks that are lagging behind in terms of digital transformation must ensure they have a solid plan in place to transition to next-gen cloud technologies, or risk losing market share as the new generation of digital banks gains greater consumer confidence. Consumers in Malaysia today increasingly expect to be able to manage all aspects of their lives with a few clicks on their phones, so financial institutions need to ensure they’re meeting customers’ expectations if they don’t want to be left behind by the new breed of banks.

Mambu is joining forces with AWS at the upcoming Finance Malaysia 2023, by The Asian Banker, to be held in Kuala Lumpur on 7 September 2023.

To learn how Malaysia’s financial services landscape is rapidly evolving thanks to the impact of next-gen technologies, register for your conference pass here and remember to visit the Mambu & AWS booth for a chat!

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Rohan Tripathi
Regional Director, Customer Value, Mambu APAC
Rohan Tripathi