RHB ranks among the top five banks in Malaysia, supporting its customers via 362 branches across 9 countries: Malaysia, Singapore, Indonesia, Thailand, Vietnam, Brunei, Lao PDR, Cambodia, and Myanmar.
Operational efficiency at RHB
RHB’s operating revenue and CIR (cost-to-income) ratio have improved, indicating its optimised operational efficiency. Despite its decline in recent years, the bank’s LDR (loan-to-deposit ratio) is almost within the ideal range of 80%-90% (Figure 1).
The ROE (return on equity) decrease of 25.24% may have halted RHB’s positive growth in FY2020, but it has shown signs of recovery, with the bank reporting an ROE increase of 8.6% in FY2021. Meanwhile, the bank’s NIM (net interest margin) reported an increase of 3.88% from FY2020 to FY2021.
RHB’s investments in ICT steadily grew between FY2017-2020, stabilising in FY2021. The bank’s percentage of ICT spend to revenue is on par with banks from neighbouring countries (e.g., OCBC).
RHB’s strategic focus areas
- #1 Win targeted customer segments
RHB aims to grow its Affluent and Wealth customer base while leveraging its SME customer base. In 2021, Premier customers grew by 80% due to RHB’s holistic suite of financing solutions aimed at Singaporean customers. Meanwhile, the bank continued to support SME customers through various programs (e.g., Targeted Relief and Recovery Facility), which saw SME loans and deposits grow by 37.7% and 47.2% against 2019 baseline values, respectively.
- #2 Advance the ESG journey
Through several initiatives, RHB has worked conscientiously to embed ESG practices across its business strategies and decision-making processes. The RHB X-Cel Academic Excellence Program in 2021 has helped provide financial and educational support for students from the B40 segment. RHB also reduced GHG emissions per employee by 41% and encouraged the donation and exchange of pre-loved good through its ‘Beli Nothing Project’.
Additionally, the bank is on track to replace all traditional lighting in its main buildings with LED lighting by 2023, successfully swapping 80% of all lights in 2021.
- #3 Become a regional digital banking leader
Digital customer journeys, customer engagement and acquisition, digital payments, and digital expansion into overseas markets – are the 4 key areas RHB is highly focused on to improve the digital banking landscape. Furthermore, RHB’s push for digital banking resulted in a 56% YoY increase in signups for RHB’s mobile banking platform.
The shift from perimeter-based security to cloud computing and data-centric security marks RHB’s aspirations to be digital-first and establish proper governance for cloud deployment. RHB also partnered with Axiata to explore collaboration opportunities and apply for a joint digital bank license.
- #4 Build a winning operating model
RHB prides itself on its Agile way of working, regarding it as the backbone of its success. Established in 2017, the Agile Way aims to deliver higher productivity, faster speed-to-market, a high-performance culture, and superior customer journeys by breaking down siloes and encouraging the collaboration of employees in new teams.
Over 80% of RHB’s employees have been working the Agile Way, with the bank setting its sights on migrating its entire workforce to the Agile Way by the end of 2023. The Agile Way’s success has culminated in over 190 Minimum Value Products being launched in 2021, while productivity improved by 36%.
- #5 Employee experience
In line with fostering cross-departmental collaboration, RHB seeks to empower its employees and invest in their growth. The bank has accomplished this by supporting employees’ personal growth.
RHB has invested almost USD 6 million in upskilling and reskilling initiatives in 2021, emphasising digital, IT, and analytics skills. RHB established the Workforce of the Future program to complement this further, preparing employees for digital and customer-centric roles.
RHB’s digital strategy
RHB plans to deliver its digital strategy through the following (Figure 4).
RHB’s technology innovation
- #1 SME Smart Interview
In 2021, RHB launched the SME Smart Interview feature as part of its Financing (SME) mobile app, allowing customers to complete their online financing applications remotely. SME Smart Interview also minimises the number of supporting documents needed during the application process.
- #2 Revamped internet banking platform
RHB revamped its internet banking platform to empower the customer journey through digitalisation. The bank did this to reduce the need for customers to physically visit branches, better facilitate digital transactions (i.e., term deposit placements, multi-currency accounts), and provide a seamless mobile-to-desktop experience.
- #3 DuitNow QR via QPI
RHB was the first Malaysian bank to integrate DuitNow via API connectivity. This feature enables customers to pay for products via a QR code, and it is a convenient option for merchants since it universally accepts all participating banks and e-wallets.
- #4 ‘Get Your Hack On’ hackathon
The 2021 iteration of RHB’s ‘Get Your Hack On’ was the bank’s first virtual hackathon. Collaborating with Amazon Web Services and Malaysia Digital Economy Corporation to host the hackathon, RHB focused on formulating customer-centric solutions by leveraging data analytics. The hackathon was well-received, attracting 85 teams that comprised over 180 innovators from various backgrounds.
Growth opportunities for RHB today
- #1 Customer experience
Looking to improve its customer experience, RHB focused on enhancing the capabilities of its SME financing mobile app. Its user-friendly internet and mobile banking platforms were key to customers’ migration to digital-only banking. RHB has one key motto: simplify customer communication through simpler language.
The next steps for the bank can be to:
- Gamify customer touchpoints by incorporating missions, challenges, and rewards to provide an immersive and engaging customer experience.
- Introduce virtual chatbots that can respond to customers’ needs 24/7 in real time.
- Integrate ML in RHB’s apps and platforms to provide personalised budgeting/spending insights.
- #2 Branch transformation
In 2021, RHB spent approximately USD 31 million on branch operation and maintenance costs across its 362 branches. The bank has also begun to roll out branch transformation initiatives across Singapore, Cambodia, and Thailand. RHB now provides a real-time digital queue system for branches so that customers can book their appointments ahead of time via the bank’s mobile app.
The bank can further focus on reimagining its current branch strategy to better meet the needs of its younger customers. Additionally, the bank can launch cardless ATM cash withdrawals to increase branch efficiency while reducing physical contact.
- #3 Supplier satisfaction
Since 2014, RHB has been working hard to digitalise its e-procurement system fully. Today, it comprises vendor registration, vendor management assessment (Group Procurement Unit), and vendor approval. In addition, vendors can submit their proposals digitally to ensure confidentiality and transparency. RHB has also spent over USD 182 million on suppliers to procure goods and services, of which the bank spent USD 165 million (~90%) on 523 local suppliers.
The bank can also advance its supplier satisfaction journey by:
- Developing relationships with disability enterprises, women-owned businesses, and B corporations.
- Establishing a vendor code of conduct to ensure compliance with business and ethical practices, as well as vendors’ responsibility towards their stakeholders.
- #4 Embedded finance
Under RHB’s Digital Transformation Program, the bank aims to achieve 15% revenue from ecosystem partnerships (embedded finance) by 2026. To reach this goal, RHB partnered with Axiata and its subsidiary, Boost, to increase financial inclusion and accelerate the development of digital journeys and products to wider demographics (i.e., MSMEs). RHB also supported SMEs by promoting their products on its JomSapot program.
RHB can inch closer to its 2026 goal by repositioning the JomSapot campaign as an online marketplace. This would allow customers to support local merchants more meaningfully through direct purchases. RHB should also consider integrating the online marketplace into its mobile banking app.
Conclusion
RHB is making commendable progress in its digitalisation efforts, as seen in its technological innovations. While the bank prioritises customer experience, digital banking, and advancing its Agile working model, it also has opportunities to flourish in several areas, such as embedded finance and supplier satisfaction, to drive growth and profit.