Since December 2016, CIMB Bank’s customers have been able to check their account balances, pay their bills and reload their pre-paid mobile phones with the help of chat bot EVA. Instead of scrolling through menu tabs and functions, customers simply send a chat message to the secure AI-powered chat bot, using natural language.
Over at Telekom Malaysia, meanwhile, digital transformation has delivered more agile customer-facing applications at the front-end and more stable core systems at the back-end, while at Sime Darby, hand-held GPS-enabled devices have removed top-down communication barriers, and sped up decision-making.
Across industries, Malaysia’s leading companies are pushing ahead with digital innovation to capitalise on opportunities in ASEAN’s rapidly-growing digital economy which is projected to add an estimated US$1 trillion to the region’s GDP over the next decade.
But, while Malaysia’s leaders are exploiting the potential of digital, many more remain in the early stages of their digital transformation journeys.
Accenture’s most recent digital market survey found that while almost half of the Malaysian companies surveyed have digital growth strategies in place, significantly fewer have the dedicated leadership or budgets to effectively execute these strategies.
If Malaysia is to meet its goal of growing its digital economy to 20 per cent of national GDP by 2020, Malaysia’s companies will need to follow the example set by digital leaders and push further, faster.
Lagging behind global leaders
Conducted between April and June this year, our digital market survey evaluated 28 Malaysian companies across multiple industries including communications, media, banking, insurance, energy, and natural resources. Accenture’s Digital Performance Index (DPI) was used to measure their performance over four key business dimensions:
PLAN—Planning and execution of digital strategies;
MAKE—Creation of digital products and services, and usage of digital across the supply chain;
SELL—The use of digital in marketing, sales and customer service; and
MANAGE—Fostering a digital innovation culture within its organisation
There is no doubt that there is growing recognition among Malaysian companies of the importance of incorporating digital into their growth strategies—almost half (44 per cent) of the companies evaluated have digital plans in place. However, only 7 per cent have announced dedicated budgets to implement these strategies. And while 37 per cent of companies sold products and services through mobile-configured channels, just 15 per cent provided their customers access to delivery and services—click & collect or track & trace, for example—via digital means. Furthermore, only 11 per cent of companies regularly reviewed the effectiveness of their digital investments.
Malaysia’s Digital Performance
Based on the average scored for each of the four business dimensions, Malaysian companies achieved an average score of 1.7, compared to 2.5 in the US.
While it is clear Malaysian companies have started to innovate, there are a number of gaps in implementation across all four business dimensions. Fortunately, Malaysia has inherent strengths which could work in its favour when it comes to digital transformation.
The country has a relatively young, digitally savvy workforce, and strong commitment at government level. This puts Malaysia in an excellent position to become a strong player in the digital economy. Furthermore, the government’s mobilisation of agencies such as the Ministry of Science, Technology and Innovation and the Malaysian Digital Economy Corporation (MDEC), for example, has spurred digital adoption through initiatives like the creation of the world’s first Digital Free Trade Zone (DFTZ).
How can Malaysia’s companies capitalise on these inherent advantages?
Accenture has identified five imperatives that can help accelerate the digital journey.
It begins with putting digital at the core of your business strategy. It is critical that C-level leadership is involved in defining digital strategies, supports these strategies with a dedicated budget and leadership, and cultivates an employee culture that supports the transformation journey. Telekom Malaysia’s digital transformation journey, for example, started at the top, and ensured that everyone from the CEO down bought into the transformation efforts.
Secondly, companies need to drive fast, iterative innovation to become digital leaders. This means leveraging analytics to inform decision-making, and also building in permission to fail, learn and refine. Start-up KFit exemplified this when its initial strategy of providing unlimited use of its gyms for a fixed fee turned out to be unsustainable. It rapidly pivoted to a new strategy of offering 10 sessions for a fixed price, with the option of buying extra sessions as required. This kept the majority of its customers happy, and was more sustainable and cost effective for the company.
The third imperative is to be hyper-relevant to the customer, an area in which Malaysian banks have achieved significant success. CIMB Group’s Chief Executive, Tengku Dato’ Sri Zafrul Aziz, recently pointed out that “to thrive in today’s competitive banking environment, we have been putting ourselves in our customers’ shoes to provide solutions that will not only facilitate their efficiency, but also help them plan their finances better.” Maybank’s mobile wallet service, MaybankPay is another example, allowing customers the convenience of paying using their smart phones.
Flexible structures that cut across silos, meanwhile, offer companies more agility than traditional structures while encouraging greater collaboration and the kind of risk taking that drives innovation. Sime Darby Digital Supervision devices, which are hand-held and GPS-enabled, allow for real-time and online reporting across estate managers, assistants and supervisors. The result: better and faster decisions.
Finally, Malaysian companies need to leverage the innovation ecosystem and collaborate on open innovation platforms with universities, start-up accelerators and other solution providers. This brings quick access to new capabilities—which can help companies innovate and scale faster—without the need for expensive up-front investments. Maybank’s fintech Sandbox, for example, brings together regional developers, businesses, academia and other start-ups to help accelerate and exponentially grow regional fintechs.
Become digital leaders
The opportunities offered by digital transformation in the region—and globally—are immense and there is no question that companies need to step up their pace.
To thrive in the digital era, not just today, but in the decades to come, Malaysia’s companies must push further. Those companies that move quickly and decisively now will be the digital leaders of tomorrow.