20201127 A friend asks…..

Friday, 27 November, 2020 – 03:43

It sounds like a letter on an agony aunt page, doesn’t it? But no, it’s actually a series of sensible questions from someone who is bamboozled by the jargon in the financial sector. Here it is, with my replies.

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Q: Do you have any links to articles on how COVID-19 has affected digitisation of banking in branches?

Also on how the new Movement Control Orders and Standard Operating Procedures have affected banking operations and branches?

Are fintech and bigtech having better luck at entering the banking sector in Malaysia and worldwide? I know there was some resistance to change in Malaysia prior to COVID-19.

A: I don’t have empirical data but there is so much produced by fintech evangelists that it has drowned out all reason.

If you use LinkedIn, it’s absolutely awash with Fintech and Regtech companies touting their solutions and claiming successes.

There are almost no counter-voices.

But there are some. There is an increasing body of opinion that the move to cancel cash is going to turn into, effectively, a tax on the poor (tech, service charges, the need to maintain balances in multiple “wallets”). Also, there are lingering security concerns that the evangelists simply ignore.

There is no doubt that e-payments of one kind or another have dramatically increased in many countries. In Malaysia that, in part, was driven by the inaccessibility of ATMs during the original Movement Control Order. Bank Negara has made a deliberate push to accelerate the growth of e-payments.

But it’s not only cash: for example, South Africa will cease the use of cheques after 31 December. They have long been out of favour in the UK where many shops have declined to accept them. Is that a drive towards epayments? No, it’s encouraged online banking with instant payments – as we have seen developed in many countries.

China has seen the near-abolition of cash – and even card payments – in cities and has demonstrated the problem with such a process: if you can’t recharge your e.g. WeChat account, you can’t even buy a cup of coffee. The situation is worsened by the fact that foreign cards are almost unusable and that very few ATMs are connected to the foreign card networks. This is something that none of the evangelists want to admit.