Understanding the needs of the banked and the underbanked in the finance sector

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Mambu reveals the necessary steps financial providers need to take to bring more people into the formal economy

Are you happy with your bank? Do you feel that it has done enough to provide you with the necessary access to financial services? Well, according to software as a service (SaaS) cloud banking platform Mambu's Global Financial Accessibility Survey, about 56% of banked customers feel that they are currently underserved. The survey also reveals that 1.7 billion adults are considered unbanked, meaning they do not have access to formal financial services.  

Mambu's managing director APAC, Myles Bertrand, says the company's latest global research was targeted at raising financial awareness and accessibility around the world. "Of the individuals surveyed that were unbanked, more than one quarter believed that financial institutions could help them to get a bank account by providing more personalised financial advisory services," he explains. 

"Globally, there is also a huge population who do not have access to formal financial services," adds Bertrand. "But when we consider that even people who are banked are not satisfied with their level of access to financial services, that equates to a huge proportion of the global population who either can't access the financial services that want, or who don't have enough awareness of financial services available to them to improve their own financial situations."

The need for personalisation and access

Based on the findings of Mambu's Global Financial Accessibility Survey, there is a disparity in the accessibility of critical financial services and products to many people across the globe. "This enforces the fact that banks and financial institutions have a responsibility to improve access to financial services for their customers. 

"Currently, many financial institutions are simply not focusing enough on what their customers really want and need," adds Bertrand. As revealed by Mambu's research, 25% of banked customers were not happy with their current level of understanding about their finances and the options available to them.

Most respondents felt that their situation would be better if they knew more or were better informed about how their finances worked. A clear-cut example would be to look at how fintechs and neobanks are currently utilising technology to win over the market with personalised service and customer-centric propositions to help customers better understand how their finances work.

"What we're seeing around the world is that many banks are being sidelined by new fintechs and financial service providers that are focusing on giving consumers what they want - which is personalisation," adds Bertrand. 

"As such, Malaysian banks and traditional financial institutions need to ensure that they are focusing on the right services and leveraging the amazing new digital banking technologies that are available now to improve access and awareness of financial services."

Keeping up with the times

Bertrand opines that cloud-native, application programming interface (API)-driven, SaaS banking and financial services are the way of the future. Banks that do not successfully transition to the new digital era will risk being left behind. With new technologies now being adopted, along with a greater acceptance of the emerging fintech ecosystem, Bertrand stresses that customer expectations on banking and financial services are continuing to evolve as well. 

"Technology will no doubt drive change and financial inclusion, making it more accessible. That will primarily be one of the key drivers, especially in markets like Malaysia, Indonesia, Vietnam and the Philippines," he elaborates. "Everyone is connected these days, which forces the need for banks to be built for change in order to adapt quickly."

Bertrand points out that the financial services sector is already being transformed to cope with the demand. "There will be new players coming in that are going to change that whole dynamic. If you look at the new digital licences that Bank Negara are going to issue, I think we are potentially going to see those being awarded to the new players instead of the established banks."

The new players, according to Bertrand, are not hampered by the legacy mindset, allowing them to quickly utilise and leverage next-generation platforms. "As such, they can address their clients' needs quickly and efficiently in a highly flexible way," he adds. "The market is continuing to move faster than ever before, so there is a need for the large central banks to start thinking differently. They simply cannot afford to operate the same way. They need to respond swiftly, and they need to keep up." 

Bertrand points out that the sector has already seen the rise of Islamic banking and Syariah banking across the world. "We have been working with Bank Islam on building their digital bank, which aims to improve access to financial services for targeted segments that are often excluded or underserved, such as gig workers. Like Mambu, Bank Islam is very focused on enhancing financial inclusion."

How can Malaysia benefit from financial inclusion? 

Mambu's report is unique in the way it looks at access to and the awareness of financial services, rather than simply looking at whether someone has a bank account or not. Malaysia, despite having a very high rate of financial inclusion, still has significant gaps in access to appropriate financial services. Bertrand explains that today, it is not enough for consumers to simply hold a bank account.

"They need to be able to access the services that they want, be that a credit card or mobile payment facility, a mortgage for a home or perhaps a small business loan." Based on Mambu's research, it is evident that there is a need for better awareness and education around financial services. And it needs to be the banks that step into this role for their customers. 

Bertrand adds that Mambu's survey found that 57% of banked consumers rely on the internet and online searches, rather than their banks, to find out more financial information. "This seems like a wasted opportunity for banks, to be honest. They really need to step up and educate and better serve their customers."

Additionally, the survey also revealed the impact of Covid-19 on the sector. "The pandemic had a profound impact on the way people think about their finances," elaborates Bertrand. "In many ways, it raised awareness and the importance of access to financial services. In fact, 77% of respondents to the survey stated that the pandemic exacerbated the need to understand and access a wide range of financial services. However, according to consumers surveyed, financial institutions are not taking the necessary steps to boost access to services." 

Bertrand cites how the health crisis has changed the landscape, especially within the retail sector. "From what we have seen, cash is no longer necessarily king. Agile and flexible new technologies, particularly in terms of mobile payments, have greatly improved access to the economy for millions of people previously excluded. Now it's time for the traditional banks to step in to fill those gaps in accessibility and awareness identified by the Mambu research."

Download the full report on Mambu's Global Financial Accessibility Survey.

As an open API SaaS platform, Mambu is uniquely positioned to support your bespoke banking ambitions. If you can dream it, we can help you build it. Get in touch today. [email protected]