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CO-WRITTEN / PARTNER | editor, Malaysia

BDO's Pam Lee takes a hard look at Malaysia's financial and business landscape

The executive director in advisory with BDO in Malaysia will be one of the judges at this year's Malaysia International Business Awards and Malaysia National Business Awards.

Pam Lee is an executive director in advisory at BDO in Malaysia, one of the Big 5 professional services firms in Malaysia. With a Capital Market Services Representative’s License for Advising on Corporate Finance under her belt, she works on corporate finance engagements, including due diligence, corporate valuations, IPOs, mergers and acquisitions, and independent advice for related party transactions and takeovers.

Her previous experience with the firm includes managing external audits of listed and non-listed clients, financial due diligence assignments, agreed-upon procedures, overseas special audit assignments and GST advisory in Malaysia.

In an interview with Singapore Business Review, the mom, wife and active Toastmasters public speaker shares some of her insights about financial trends, business strategies and financial restructuring during the pandemic.

Which trends do you think will define the financial services industry in the years to come?

In my opinion, some of the trends include:

Improving customer experience

Customer experience is evolving rapidly. A few decades ago, the idea of having a good “customer experience” may mean having a pleasant experience at a physical bank. Today, it may include anything from being able to access an account from multiple channels to getting a question immediately answered by a chatbot or robo advisor, to receiving automated real-time notifications. And yet, these are antiquated measures. Customers will expect increasingly personalised financial services solutions in the future. They will want to manage all their finances—not just one component—in one place, on the devices convenient to them. They will expect nothing less than real-time engagement when they need it. They will value simplicity, efficiency, and transparency. And they will not tolerate even the slightest possibility of a data breach.

Digital banking

The announcement by Bank Negara Malaysia that it is issuing up to five digital banking licenses in Malaysia by 2022 is paving the way for leading financial technology, telecommunication, and internet giants to become operational banks in Malaysia. The effort of Bank Negara Malaysia to issue digital-only banking licence is to keep pace with the fast-growing advancements in digital banking in countries in Asia such as China, South Korea, Hong Kong, Taiwan, Singapore, etc.

Two key technologies will have a significant impact on the financial industry. The first is Internet of Things (IoT). And whilst IoT devices are often more commonly associated with consumer products, the benefits of having real-time data about clients’ physical assets are invaluable to financial services companies looking to improve their current products and services, capitalise on customer purchasing behaviour, and create more personalised user experiences.

The second one is Artificial intelligence (AI). Advancements in AI have transformed every aspect of the financial services industry. Companies, by using AI to identify transaction anomalies, can better mitigate fraud and money laundering risk. Capital market firms can make faster, smarter trade decisions based on sophisticated analyses of past market performance data. Organisations can conduct customer sentiment analysis and personalise customer experiences based on individual customer profiles—such as suggesting customised portfolio solutions based on each individual’s risk appetite.

The financial industry has certainly been active since the offset of the pandemic, particularly with stimulus packages, rate cuts and other tools being implemented to help the economy stay afloat. What do banks need to consider to drive growth into the economy?

Banks play an important role in not only providing lines of credit and funding but also providing other support to the businesses to protect jobs and markets.

Examples of such support include an initiative by a leading local bank to create an online marketplace platform to help local micro businesses and small and medium enterprises (SMEs), reach more Malaysians via their online banking, and another bank that has a partnership with a telco to offer one-stop financing and digital solutions for SMEs that leverage the potential of e-commerce.

Some say that banks lend during good times and shy away or drawback during bad times. I can understand banks have their loan loss provisions to manage. I think the banks are trying their best to work with borrowers struggling in this economic environment.

The global financial crisis has pushed many businesses into a state of instability, with some businesses filing for bankruptcy. Many, however, are exploring strategies to address their sustainability through financial restructuring and borrowing. What would be your advice on how to recover from the crisis?

Different sectors and companies are impacted on different scales in the pandemic. It is inevitable that some companies face cash flow constraints and will consider undertaking a restructuring plan to save the companies/businesses (if not in entirety then at least the sustainable portions of the businesses), making them viable and putting them on a stronger footing for future growth.

The solution for each company will depend on many factors e.g. the company’s stage of the business life cycle and the company and industry-specific challenges.

What is crucial is that companies must be prepared to confront these difficulties and engage with the stakeholders for a resolution.

For local micro businesses and SMEs that are facing challenges and want to get bank financing, relationships are important. When you are thinking of the bank, sit down with someone who understands how bank financing works. In an ideal world, everybody is perfect and you don’t need an intermediary. We are not in an ideal world, and you don’t want to chase something that is not going to work.

Sit down with your preferred accounting firm (e.g. BDO) as well and go through your accounts or explore possible options. Do this in a proper process. If you can’t go to your existing banker for a loan, then start thinking and building new relationships with other banks. References are important too. Do you have that supplier or customer who has a bank loan that can refer you to their banker?

Also, the government is trying to help. Find out and utilise the many government incentives, the latest one being the People and Economic Strategic Empowerment Programme (Pemerkasa) announced by the Government of Malaysia on 17 March 2021.

Lastly, things are getting better and the pandemic is going to go by the end of this year hopefully. There is a lot of pent-up demand. So hang in there until then.

At the end of the day, the only person who knows the business best is yourself. What is the more profitable and sustainable way to do this business? If Plan A doesn’t work, come out with Plan B. 

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