Insights
Learn, ideate and collaborate on the biggest innovation opportunities

CIMB: Transforming banking journey, one click at a time

@ Varnika Goel

Company Insights

twimbit Purpose Index

Purpose score – * Poor ** Satisfactory *** Good **** Excellent ***** Outstanding
Source: Refer to the methodology in Appendix A below

CIMB (Group financials) – An overview as of 31st December 2020

Bank name Commerce International Merchant Bankers Berhad (CIMB)
Headquarters Kuala Lumpur, Malaysia
Operating income (31st December 2020) USD 4.2 billion
Profit after tax (31st December 2020)USD 381.9 million
Total Assets USD 148.7 billion
Number of employees 35,000
Country of operation 15
Number of branches 702 (retail branches)
Information and communication technology (ICT) spend (31st December 2020)USD 494 million
Bank ranking in the particular country 2nd in Malaysia
Number of customers 15 million
Market capitalisation (31st December 2020)USD 12.6 billion
Operating Revenue CAGR growth (2016-2020) 1.36%
Note: The above financials are as per the accounting year 1st January- 31st December 2020.
The conversion rate used 31 December 2020, 1 RM = 0.24689 USD

Shareholder value(31st December 2020)

Return on Equity (31st December 2020)2.1%
Total Shareholder Return (1-Year) 3.3
Net Income Ratio 6.9%
Common Equity Tier 1 Ratio 13.3%
Price Earnings Ratio (31st December 2020)35.4

Awards

2020-Best Bank for Investment Solutions – Malaysia by The Asset Triple A Private Capital Awards
-Top 3 Most Preferred in Banking by Graduates’ Choice Awards
-Best Corporate & Investment Bank by Asiamoney Best Bank Awards for Malaysia
2019 -Best IBFT bank by Malaysia e-Payments Excellence Awards (MEEA)
-Best E-payment bank in Malaysia, by Malaysia e-Payments Excellence Awards (MEEA)
-Best Equity House in Malaysia by Alpha SEA Best Financial Institution Awards

CIMB and its strategic focus areas

Forward23+ is a five-year (2019-2025) strategic roadmap built by the CIMB group centred on the following strategic focus areas:

  • Deliver sustainable financial returns

CIMB aims to achieve sustainable returns by reshaping the portfolio, driving cost efficiency, digitising for value and undertaking focused investments.
Reshaping its portfolio will involve the following:

  1. Accelerating growth in focus areas: CASA (Current Account Savings Account) Growth, NOII Growth (Non-Interest Income), and selected Asset Growth and T&M (Treasury & Markets)
  2. Focused investments in growth areas: Intra-ASEAN wholesale, transaction banking, and preferred customers/wealth
  3. Improving segments that require fixing: COBA (Corporate Banking) and COMBA (Commercial Banking) in Malaysia, and become a focused player in Singapore and Thailand

Initiatives taken by CIMB to deliver sustainable returns to its shareholders are:

  1. CIMB deployed targeted strategies in bigger markets such as Indonesia and Malaysia to grow its deposit base. In smaller markets such as Thailand and Singapore, they introduced competitive tiered-rates CASA, with fee privileges. The strategies resulted in a 10% Y-o-Y increase in CASA balances.
  2. The bank targeted new segments and strategised to deepen the wallet share for the government and state-owned sectors, thus improving SME penetration. This move resulted in a 3% growth from the SME sector.
  • Customer centricity

CIMB plans to deliver relevant and personalised products and services through the Transforming Customer Journeys (TCJ) department using agile design and delivery ecosystems and practising fair banking. Moreover, there will be a special focus on enhancing the core resiliency of the bank’s IT structure and the development of innovative new products and solutions. The aim is to attract millennials and Gen Y by leveraging the digital sphere.

Initiatives taken by CIMB to enhance customer centricity include:

  1. Setting up a Transforming Customer Journeys (TCJ) department in 2019 to take a fresh approach towards designing the end-to-end journey for customers within an agile design and delivery ecosystem.
  2. Launching the Clicks One App, the only app in Malaysia offering personalised offers and an “always-on” home screen. It enables a click fund transfer of up to USD 60 (RM250).
  • Transform fundamentals

CIMB aims to strengthen fundamentals for its overall operational efficiency to support growth by focusing on the following areas:

  1. Risk management
  2. Capital optimisation
  3. Finance & Compliance

Initiatives taken by CIMB to strengthen fundamentals are:

  1. CIMB employs a Group Enterprise-Wide Risk Management (EWRM) framework to anticipate and manage both the existing and potential risks. It takes into consideration changing risk profiles as dictated by shifts in business strategies, as well as the external and regulatory environments.
  • Disciplined execution
  1. An important tenet of disciplined execution is to place accountability and transparency across all levels within the group.
  2. The group aims to transform and upgrade its existing performance management processes, enhance efficiency and productivity, and improve operational processes and effectiveness of product deliveries.
  3. CIMB also aims to improve the returns across business units by enhancing risk-weighted asset allocation (RWA) and risk-adjusted return on capital (RAROC).

Initiative taken by CIMB to solidify disciplined execution is to:

  1. Mitigate the pandemic impact on profitability by introducing an aggressive 5% cost reduction target for 2021.
  • Purpose-driven organisation & employee development

The bank intends to create a positive and sustainable environment for the best talents to work in CIMB by embedding the right values and culture that is respectful, empathetic and empowering for the employees. Its focus areas to create a purpose-driven organisation for 2020 are:

  1. Health and safety of workforce:
    1. Welfare and wellbeing benefits
    2. Safe workplace measures
  2. Upskilling and reskilling initiatives:
    1. Viable Remote Working Infrastructure
    2. Listening Posts and Pulse Surveys & Engagement
    3. Employee Communications and Motivation
  3. Adapting to the new normal:
    1. Programmes to drive Digital Transformation
    2. Technology infrastructure/Digital enablement for a Digital Workforce (Knowledge Acquisition)
  4. New ‘People Strategy’ to support Forward 23+:
    1. High-Performance & Purpose-driven Culture
    2. Digital and Tech Talent, in addition to Talent from outside Financial Services or Non-Business Disciplines
    3. New Rewards and Recognition through ABC Culture-Building Initiatives

Initiatives taken for employees to create a more purpose-driven work culture:

  1. Flexible work arrangements:
    1. Staff Rejuvenation Programme
    2. Telecommuting
    3. Reduced Workweek
    4. One-month Paternity Leave
    5. Flex4CSR / Flex4Sustainability Flex4ALL
    6. Flex4Moms (Parents of Children with Special Needs)
    7. Flex4SmartWear
  2. Women empowerment:
    1. Designated Car Parks
    2. On-site Childcare
    3. Six-month Maternity Leave for First Time Mothers
    4. Enhanced Maternity Leave for Subsequent Children
    5. Flex4Moms
  3. Health programs:
    1. Health Talks and Fairs
    2. Face-to-face and Online Exercise Programmes
    3. On-site Dentist and Clinic
    4. Honour-based Medical Leave
  4. Financial wellbeing:
    1. Scholarships Sponsorships
    2. Employee Loans/ Facilities
    3. Interest/Profit-free Home Loans/Financing
    4. Financial Support for Single Parents
    5. Financial Support for Parents of Children with Special Needs
  5. Introduced the Future of Work Centre (FOWC) to strengthen employees’ employability by upskilling and reskilling. The said introductions particularly relate to digital, data and design (3D) skills.
  6. CIMB launched the Library of Things (LOT). This digital platform allows its employees to borrow donated items without placing the burden of ownership on them and preventing usable items from going to waste.
  7. CIMB has a policy of non-discrimination, which ensures that employees are filtered, trained, promoted and rewarded on pure merit and can equally access all opportunities within the company.
  8. Follows a group Occupational Safety and Health (OSH) management system to provide a safe and healthy work environment.
  • Society and planet impact

To mitigate the environmental and the social impact arising from activities through the group’s sustainability due diligence process, CIMB had taken several initiatives that facilitate sustainable development in 2019. The initiatives taken are as follows:

  1. CIMB printed using eco ink made from a higher percentage of vegetable oil to reduce the emission of volatile organic compounds (VOCs).
  2. There is an approximate 25% reduction in paper used. CIMB prints documents with carbon-neutral press machines and eco-materials. The company’s printing is managed under and certified with the ISO14001:2015 environmental management system to minimise the environmental impact.
  3. The company sources paper from responsibly managed forests that provide environmental benefits. It recycles and up-cycles any waste generated to reduce the burden on landfills.
  4. CIMB embeds economic, environmental and social (EES) considerations into its operations and lending policies. The company has made global commitments and delivered sustainable product solutions locally.
  5. Monitored external developments and formulated strategies based upon the geopolitical atmosphere.

Digital Strategy

  1. Build a ‘beyond banking’ proposition for future value capture to the group by being both a participant and/or owner of Ecosystems
  2. Strengthen the resiliency of the technological systems
  3. Increase productivity via technology modernisation and automation efforts
  4. Strengthen data analytics and capabilities to be a data-first organisation
  5. Apply comprehensive data governance, including data origination, access, use, security and privacy

Initiatives taken by CIMB to strengthen its digital strategy are:

  1. Be$MART: A financial literacy programme entered its third year with a mobile app launch, allowing users to plan their finances more effectively.
  2. Clicks One App: The only app in Malaysia offering personalised offers and an “always-on” home screen. It enables clicks fund transfer of up to USD 60 (RM250).
  3. EzForm and Cashplus: Launched Ezform for credit cards and CashPlus loans in Malaysia to empower staff referrals or submissions via mobile phones.
  4. Gametize: A 3D education series that is accessible via a mobile platform to liberalise learning and make it accessible to all employees anytime, anywhere.
  5. Y.O.D.A. (Your Own Digital Assistant): A mobile-enabled cloud-based Human Resource Information System (HRIS) empowers employees and allows them to take charge of their careers through several features.
  6. Partnered with Lazada and Shopee in Malaysia to build new revenue through products such as merchant financing.
  7. Partnered with Axiata Digital Capital to strengthen its digital proposition and extend financial services to SMEs in Malaysia and Indonesia.
  8. Collaborated with Shopmatic, an e-commerce provider, to help Malaysian SMEs build and scale up their businesses in the e-commerce space.

IT Strategy

To keep pace with today’s rapidly digitalising business landscape, financial institutions must invest in technology – Tengku Dato’ Sri Zafrul Tengku Abdul Aziz, Ex Group CEO CIMB

In 2019, CIMB Group began to focus on enhancing the core resiliency of its technological systems by:

  1. Baselining and executing digital strategies
  2. Completing bolster activities to improve resiliency
  3. Developing technology blueprint for advanced capabilities

CIMB and its ICT contracts

Through its digital ventures, CIMB aims to build new tech, data, and analytics capabilities to deliver differentiated products, offerings, and customer experience that are accretive to the Group. In this regard, CIMB undertook the following ICT partnerships:

  1. Partnered with Jumio for digital onboarding with AI-powered identity verification tech.
  2. Worked with MoneyThor and Active.Ai to further develop CIMB Enhanced Virtual Assistant (EVA) to include a Spend Analyser and natural language conversational capabilities.
  3. Signed an agreement with Ripple to facilitate instant blockchain-based cross-border payments across CIMB’s markets.
  4. Collaborated with AdsDax to successfully run live blockchain-tracked advertising campaigns.

8 Growth and Innovation Opportunities

  • #1 Cost to serve
  1. CIMB attributes its reduction in cost to income ratio towards the bank’s conscious effort towards lower its operating expenditure. It has managed to reduce this expenditure by 5.5%, compared to the previous year. However, the bank’s lowered operating expenditure netted out via its continued investment in technology infrastructure.
  2. The bank’s net operating interest income and operational income from commercial banking in 2020 fell by 13.7% and 3.7%, respectively. The income fall from the two sources, coupled with a significant ECL (estimated credit losses) rise from increased impairment charges, led to the further determent of the bank’s operational efficiency. With skimmed net interest margins and a low-interest rate economic environment (especially in Malaysia and Indonesia), CIMB must monitor its contribution to operational profitability from non-interest fees and income from other sources closely.
  3. Personnel cost in CIMB is at is USD 1,270 million, which accounts for nearly 30% of its total revenue. The bank has significant scope to cut down its staff costs by:
    1. Shifting employees’ efforts towards analytics-driven activities to build operational inefficiencies and eliminate manual work objectively
    2. Actively incorporating CPA (Cognitive process automation) in its operational model to make iterative back-end jobs more efficient
    3. Extend the usage of its newly developed electronic virtual assistant across all of its geographies to optimise front end customer engagement, hence reducing reliance on branch employees.
  • #2 Transformation of the branch and its branch networks
  1. CIMB has over 1000 branches and 3000 ATMs. Its physical infrastructure cost accounts for 23% of its total operating costs.
  2. Looking at model bank’s such as UOB and OCBC, who have transformed their branches with immersive experiences through an aggressive digital transformation strategy, it becomes imperative for CIMB to revisit its branch transformation strategy.
  3. To optimise its infrastructure costs, the bank should consider incorporating the following strategies:
    1. Adopting a hybrid omnichannel operational model to reduce dependence on physical branches.
    2. Introducing self-service kiosks and standalone desk zones to reduce customer wait time and ensure an overall hassle-free customer experience.
    3. Redesigning the entire branch outlook and make it more community-centric like cafes or community centres. Customers can therefore easily identify various customer touchpoints and freely socialise with other customers within the branch.
  • #3 Customer experience
  1. CIMB should focus on redesigning its digital interface to build an end-to-end journey with personalised features, thereby aiming to increase revenues from the consumer segment by at least 40% in 2021. By doing so, the bank can also achieve its first objective of becoming a customer-centric organisation under its Forward23+ initiatives.
  2. CIMB is finally moving towards adopting big data and data analytics into its product offerings. Still, to match its competitors, the bank needs to focus on the following areas for superior customer experience:
    1. Giving customers personalised insights into their spending and saving patterns with specific recommendations to help them meet their financial goals.
    2. Employing predictive analytics and algorithms to show customers relevant products based on their preferences and saving or investing habits.
    3. Gamifying its user interface to make the user experience more interactive and less monotonous.
  • #4 Employee experience and productivity
  1. CIMB recognises the employee as an important stakeholder and has recently initiated a human capital development framework. Its focus is on four core themes- Organisation Design, Revised Performance Framework and Rewards, Values and Culture, and HR Blueprint. The bank can further incorporate the following initiatives in its development framework:
    1. Incubating in-house talent and synergies by allowing its employees to work on cross-departmental tasks as well as individual purpose-driven projects, therefore giving them sufficient autonomy and mobility within the company.
    2. Integrating data analytics and AI (Artificial Intelligence) into its training and development delivery channels to get personal insights about each employee’s learning capabilities.
    3. Adopting a modular approach for its training content and rolling out specific training courses based on employees’ current knowledge, experience, and future career aspirations.
  2. CIMB should move from providing basic financial aid like benefits in kind, allowances, medical benefits, employee loans, etc. to a more holistic employee satisfaction framework:
    1. Actively sponsoring employees’ volunteering programs in fields like education, health and well-being to further develop employee empathy.
    2. Providing a clear career growth trajectory as a part of its purpose-driven human capital development strategy.
    3. Integrating an AI-enabled transparent compensation mechanism to ensure fair and equitable distribution of promotions and fringe benefits.
    4. Have a liaison for mental health and meditative programs.
  • #5 Migration of workload to the cloud
  1. CIMB must migrate its data centres to a dedicated cloud storage platform for systematic and scalable data management processes, ultimately bringing a substantial change in the bank’s business operations.
  2. To have higher control over its data silos, the bank should begin with a private cloud strategy and incrementally move towards a hybrid cloud platform with a substantial workload on the public hosting infrastructure. CIMB can forge sustainable partnerships with cloud partners for a cost-effective cloud strategy.
  3. The bank can integrate its cloud infrastructure by extending data storage and data-driven activities across security, regulatory compliance, auditing and pan-organisation communication pipelines to transform its overall operational model.
  • #6 Neo banking

CIMB’s current digital banking app- the CIMB Bank PH app, was a huge success in the Philippines. The bank’s current digital strategy covers basic digital initiatives like instant account opening and simplified personal loan application, both available 24/7.The bank needs a transformational neo banking strategy to keep pace with the rising neobanks in the region. CIMB can focus on creating a separate neo banking brand name to optimally position itself in the millennial and Gen Z customer segment:

  1. Recreating the design outlook of existing products by introducing things like trendy ATM card designs, virtual cards, and an animated banking app interface
  2. Introducing byte-sized loan and investment products which gives the customers increased flexibility to navigate through different product options
  3. Innovating product delivery channels by combining multiple product offerings as per customers’ preferences
  4. Gamify various customer touchpoints, like awarding badges with increased use of products, giving discount coupons to its loyal customers, leaderboard between friends and colleagues based on product purchases, and highlighting trending products
  • #7 Artificial Intelligence (AI) in everything

According to the CIMB Forward 23+ strategic themes, its current AI approach revolves around digitalising product application and approval processes. The bank has vast potential in terms of the integration of AI into its business activities. CIMB can expand its AI deployment in the following spheres:

  1. Automating labour-intensive back-end and iterative daily tasks like customer on-boarding, document collation, book-keeping, sales recording, etc. This automation reduces labour redundancy and increases overall operational efficiency.
  2. Using AI and machine learning (ML) at various customer touchpoints, starting from digital biometric customer verification for customer profiling to acquisition strategies
  3. Leveraging its data analytics capabilities to seek contextualised hyper-personal data insights that the bank can use to innovate its product offerings and delivery channels.
  • #8 Cybersecurity

CIMB has a Board Risk and Compliance Committee (BRCC) that governs the bank’s overall risk appetite, risk governance and risk management practices and policies. To make its security framework holistic and nimble, the bank should focus on the following areas:

  1. Testing its internal security framework by exposing it to regular stress tests. These tests will give CIMB a better understanding of its security crisis readiness and objectively locate loopholes in its security strategy.
  2. Automating regular security functions threat monitoring, identity access management, controlling and reporting mechanisms to make the overall security framework more transparent and smoother.
  3. CIMB can use predictive analytics and machine learning in its existing security frameworks to identify risk trends and optimise the operational model to pre-empt future risks.
  4. Integrating Cognitive process automation (CPA) to develop and test new security strategies. In turn, the CPA will help determine appropriate response mechanisms to account for the dynamic and varied nature of security threats.

Organisation structure: Leadership

Executive Profile

Datuk Mohd Nasir Ahmad
Chairman

Datuk Mohd Nasir Ahmad has served as the Chairman of the CIMB bank since 20th October 2018. Ahmad has vast experience in leadership, management, finance and accounting, which spans over 40 years.
As the chairman, Datuk Mohd Nasir wants to implement the five-year strategic roadmap, Forward23, which includes the transition to an environment of data analytics and advanced technologies. The digital environment would enable the bank towards cutting-edge customer solutions.

Quotes

  • Future of banking, Annual report 2019

Banking sector will evolve. The operating landscape will present huge opportunities, but not without new risks. Responsible banking practices may seem to be a tall order but will become a norm. The future of banking will take a new form and shape, with fast-changing demographics, high expectations of stakeholders, cautious investor sentiments, and extraneous factors such as climate emergency and socio-economic and political uncertainties. CIMB is well-positioned in the region with its Forward23 strategic roadmap and will demonstrate resiliency and leadership for delivering positive performance year on year.

  • Sustainability for growth, Annual report 2019

We have not only made global commitments to scale-up finance for sustainable development but have pledged to leverage on our influence and the impact of our networks to promote sustainable business practices. We have launched Sustainable Development Goals (SDG) Bonds, Sustainability-Linked Loans and SME Renewable Energy Financing – all in our efforts to create a better future, and a better planet.

  • People as champions, Annual report 2019

At CIMB, it is our utmost priority to keep our people engaged and motivated at all times. I strongly believe that our people are our partners in growth. We encourage them to participate in our journey, co-opt and co-create ideas, programs, and solutions, which will give us not just a competitive advantage but a differentiated positioning in the eyes of our stakeholders.

Dato’ Abdul Rahman Ahmad
Chief Executive Officer

Dato’ Abdul Rahman has served as the CEO of CIMB bank since 10 June 2020.

He was the President and the Group Chief Executive Officer of Permodalan Nasional Berhad (PNB), Malaysia’s leading asset management company, from 2016 to 2019. He was also the Non-Executive Non-Independent Chairman on Sime Darby Berhad and Velesto Energy Berhad till 9 June 2020.

Dato’ Abdul Rahman specialises in Leadership, Asset Management, Private Equity, Corporate Advisory, and Accounting.

Quote

  • Technology and data, Annual report 2019

To keep pace with today’s rapidly digitalising business landscape, financial institutions must invest in technology. In 2019, the Group focused on enhancing the core resiliency of our systems as well as to develop innovative new products and solutions to future proof ourselves.

Khairul Rifaie
Chief Financial Officer

Khairul Rifaie serves as the Chief Financial Officer of CIMB bank. Prior to his role as the CFO of CIMB bank, Khairul held the position of CFO, Malaysia and Regional Head, Financial Control. He oversees tax, regulatory reporting, financial accounting, management reporting, business finance advisory, product control and financial planning.

Quotes

  • Customer centricity, Annual report 2019

With Customer Experience (CX) now entrenched as a core CIMB culture, the wider more-expansive Customer Centricity pillar was added as a Forward23 focus. This pillar focuses on enhancing the customer journey to remove any existing or potential roadblocks, simplifying processes from onboarding to completion, and providing a differentiated customer proposition.

  • Sustainability, Annual report 2019

During the year, the Group became a founding member of the United Nations’ Environment Program Finance Initiative Principles for Responsible Banking (UNEP-FI). We also launched the Group Sustainability Policy and Group Sustainable Financing Policy in 2019 and will continue to expand its scope going forward.

  • Going forward, Annual report 2019

We completed the first year of our 5-year Forward23 strategic plan in good stead, with numerous projects in various states of progress and showing significant promise to spearhead the Group towards achieving its financial targets in 2023.

Appendix A

  • twimbit Purpose Index

We evaluate Asia Pacific’s top banks to understand whether their strategic objectives, market positioning, and operational efficiency align with continued sustainability and profitability. In evaluating the respective bank’s focus areas and performance, we base our analysis on five purpose pillars and score each bank on them.

Endnotes

Commerce International Merchant Bankers. (31st December,2019). Financial Statements 2019.
https://www.cimb.com/content/dam/cimb/group/documents/investor-relations/annual-reports/2019/cimb-2019-financial-statements.pdf

Commerce International Merchant Bankers.(31st December,2020). Analyst Presentations 2020.
https://www.cimb.com/content/dam/cimb/group/documents/investor-relations/financial-information/cimb-group/2020/31-dec-2020/4q20-cimb-group-analyst-presentation.pdf

CIMB to spend RM2bil on IT infrastructure. (2019, June 19). The Star.
https://www.thestar.com.my/business/business-news/2019/06/19/cimb-to-spend-rm2bil-on-it-infrastructure

Akshita Maruthavanan and Vinayak Gandhi, Research Intern, contributed to the research in conducting preliminary literature review and conceptualising the article.

BankofTomorrow BranchTransformation EmbeddedFinance ESG
Subscribe