Malaysia will be almost cashless by 2025, predicts CIMB Group Chairman Nazir Razak in an article he wrote titled “Thriving in a Disrupted World”.

If his predictions comes true, Nazir said bank branches will become a rare sight and automated teller machine (ATM) will seem as retro as phone booths are today. 

“Robotics and artificial intelligence will have displaced a large percentage of asset managers and credit analysts, and maybe even investment bankers. 

“Peer-to-peer interactions between customers themselves will have disintermediated banks in more and more ways,” he said in the statement. 

Similarly, he added, blockchain and its automated ledger functions, as well as cryptocurrencies, will have proliferated new methods of trade finance and money transfers that bypass banks altogether. 

Nazir explained that these are predictions based on technologies everyone already know about and there will definitely be others with equally profound consequences on banking as we know it.

“The biggest threats to banks are coming from giant platform companies.

“Digital technology has brought the marginal cost of new customers for Apple, Google and the likes to zero. China’s two largest platforms, Alibaba and Tencent, have taken the lead with payments, and then built on their customer base and data to challenge in other areas of banking. 

“They have both set up licensed banks to provide consumer loans with near-instant credit decision-making by analysing the massive accumulated customer behavioural data in their possession,” he said. 

Beyond platform companies, he added,  ecosystem players and fintechs are not to be taken for granted. 

“Grab, AirAsia and almost every telco company are strong brands with large proprietary customer bases that are moving into payments and will want to venture into other financial products. 

“Fintechs, on the other hand, are entrepreneurial companies sprouting everyday all over the world, trying to find the next banking product or service that can be made cheaper or more efficient. Lest we forget, Alipay was a little fintech not long ago at all,” Nazir said. 

By 2025, Nazir predicts that quite a number of today’s banking brands in Malaysia and ASEAN will be barely visible. 

The most important historical lesson from past industrial revolutions, he said, is that businesses that do not respond to the disruptive challenges, or get the answers horribly wrong, would not survive. 

“It is game on and banks must respond. It is already late, but better late than too late.

“Banks that will thrive are those that are able to hang on to their customers. It is not easy, and it starts with a better understanding of banks’ value proposition vis-à-vis customers’ needs today and tomorrow.

“Banks must make banking fun again,” Nazir concluded. 

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