THAT which does not kill you, only makes you stronger. This was very much the sentiment of Malaysian banks, following an extensive review of the reputation of financial services firms in the country and how they are perceived.
The inaugural Financial Services Reputation Index for Malaysia, released by MHP Communications earlier this year, yields a number of surprises. For one, despite the conventional wisdom, a large majority of Malaysians (83 per cent of those surveyed) believe financial services companies have become more trustworthy in the past decade.
The 1997 Asian financial crisis, 2008 global financial crisis and Malaysia’s struggles with the 1Malaysia Development Bhd (1MDB) scandal may have ushered in much uncertainty in the eyes of global investors, but the sector’s reputation remains surprisingly resilient.
For banking specifically, almost nine out of 10 Malaysians view their banks positively, with six out of 10 ranking bankers as being the most trustworthy profession in the country.
The honours for most trusted financial services brands in Malaysia were also all claimed by Malaysian banks (the top five being Maybank, CIMB, Public Bank, RHB and Hong Leong).
Indeed, the outlook for the future is fairly positive. Moody’s believes that the banking system in Malaysia will be stable over the next 12 to 18 months, against the backdrop of robust macro-economic conditions and improving capitalisation.
However, these findings highlight a growing gulf in trust between foreign-based financial services companies and Malay-sian ones, perhaps in relation to the actions of global banks, such as Goldman Sachs and Deutsche Bank, over 1MDB.
High levels of positivity towards the financial sector are seen in Asia, with 90 per cent of consumers in Singapore and India having a positive perception of the industry, while China and Hong Kong are at 84 per cent and 82 per cent, respectively.
These findings are in marked contrast with global sentiments, where results in the United Kingdom, for instance, show that just slightly more than half of respondents are as positive about the financial sector.
So, what is next for financial services in Malaysia?
For one, a new wave of digitalisation is sweeping the world.
It is imperative for the financial services sector to stay atop these changes and adapt to new disruptive technologies.
Industry players must learn how to contend with these technologies, which have slashed margins in core markets and transactions, and how to embrace digital solutions to provide better experiences for customers.
Malaysian banks also find themselves in an opportune position to capitalise on the growth in Islamic finance.
Islam is the most prevalent religion in Southeast Asia, with some 240 million adherents.
Bank Negara has long set out the country’s ambitions to become the de facto hub for Islamic finance in the region, introducing new measures of government support and creating a regulatory environment that fosters innovation and technology.
It is now up to Malaysian banks to cement themselves in the eyes of global investors as the go-to destination for Islamic capital, investments and products.
In the wake of Malaysia’s political upheaval last year and the promises of reform, reputation has now become a priority for corporate and political agendas.
Increased regulation, heightened competition and investments in innovation have meant that Malaysia’s financial services companies may have been down, but were never out, performing resiliently in the face of reputational adversity.
As Finance Minister Lim Guan Eng puts it, it is always darkest before dawn.
Perhaps in Malaysia’s new dawn, it is time for financial services to go on a charm offensive and restore their reputation.
Chief executive officer, MHP Communications Asia-Pacific