Monday, 28 November 2022

Hong Leong’s Fuda: “Digital has forever transformed the business model”

5 min read

By Foo Boon Ping

In this Leadership Perspective series, Domenic Fuda, group managing director and CEO at Hong Leong Bank (HLB), discussed the bank’s digital transformation amid the pandemic, and how it has allowed it to innovate products and improve financial performance

Domenic Fuda, group managing director and CEO at Hong Leong Bank (HLB) is set on executing the bank's strategic direction and priorities with laser-sharp focus. He is leading the transformation of its traditional businesses to better capture future opportunities.

As the CEO for the last five years, Fuda realised his vision of delivering a digital-first offering to consumers. HLB accelerated the digital innovations to bring business efficiency and cost optimisation and contribute towards building a cashless society.

Fuda said, “We help Malaysians bank safely amid the ongoing pandemic, and we are doing our part in pushing for greater digital innovation in the financial sector, which would further stimulate the growth of the country’s digital economy”.  The bank made efforts to meet the needs and expectations of an increasingly digital and mobile-first generation of consumers.

Under his leadership, the bank’s net profit after tax increased by 12.8% year-on-year (YoY) to MYR 2.17 billion ($518 million) for the nine months ending March 2021, driven by solid top line growth and lower operating expenses.

The bank’s gross loans, advances and financing grew by 7.3% YoY to MYR 152.8 billion ($36.4 billion), boosted by the expansion in key segments of mortgages, small and medium-sized enterprise (SME) and commercial banking.

The bank’s strong financial performance was also attributed to its prudent cost management, disciplined loan/financing growth and proactive management of clients that are facing cashflow or income disruption because of the pandemic.

HLB has over 110 years of deeply rooted history in Malaysia, truly embracing the value of serving for the long term. It maintains a long-term mindset from innovating banking products to talent management, creating and sustaining a vibrant ecosystem of communities and the environment.

Fuda further sharpened his management leadership as he held various responsibilities as a member of the executive committee and credit supervisory committee, a director of Hong Leong Islamic Bank and Hong Leong Bank (Cambodia), as well as council member of Hong Leong Bank (Vietnam).

Prior to his position at HLB, he spent almost six years at DBS Bank. He was responsible for the formulation and execution of a multi-year growth strategy for the six Asian markets. He held various senior management roles at Citigroup for 16 years and helped drive the implementation of Citi’s strategy across ten countries. He managed the banking operations during the 2008/2009 financial crises.

The following key points were discussed:

  • The bank’s “Digital at the Core” strategy facilitated business efficiency and continuity
  • The bank seeks to instil financial discipline in digital native customers through its digital banking platform
  • The bank’s strong financial performance and digital and physical capabilities provide business support to clients

The following is the transcript of the interview:

Foo Boon Ping (FBP): What is the one key opportunity and challenge that your bank faces in this age of digital innovation and disruption?

Domenic Fuda (DF): The key opportunity is to reinvent the business model where products and services are delivered via omnichannel experiences that delight clients, expand service delivery round-the-clock, and remove the traditional limitations of branches and offices’ working hours.

The collection of various data points also enables a better understanding of our client’s life journeys, enhancing our ability to deliver timely contextual offers that are aligned to financial needs.

Digitally enabled innovation is also transforming the way we work, where the way work is done and the collaboration with partners would otherwise have been quite difficult to do.

The challenge now is keeping abreast of the pace of change, which is disrupting all facets of business and individual lives. Organisation structures often inhibit rapid change given the hierarchical decision-making structure. Organisational agility and risk-taking when it comes to innovation are not natural to traditional financial institutions, which require a significant cultural shift to inculcate an innovation mindset in employees at every level of the organisation. Change has to come from within, with employees being the very agents of change. The unrelenting focus on customers can provide the catalyst to agility and innovation.

FBP:How has transformation strengthened your organisation and operations during COVID-19? What are your views on digital transformation driving organisational and operational resilience during COVID-19? How has COVID-19 catalysed opportunities for digital transformation and how has it impacted your institution?

The bank’s “Digital at the Core” strategy facilitated business efficiency and continuity

DF: From Hong Leong Bank’s perspective, our strategic focus of “Digital at the Core” over the past five years certainly proved extremely valuable when we had to immediately switch the way we worked and how we connected with customers. We were able to seamlessly move to work remotely (home or alternative sites) and provide customer service, as remote connectivity enabled bank employees to continue to engage with clients and one another. We provided the same level of service that customers are used to, which was the case across all products and services.

The pandemic wasn’t a catalyst for us, but instead, it was an affirmation and an unmistakable proof-point that digital has forever transformed the business model.

Having built extensive digital capabilities over the past few years, the pandemic did not prevent us from continuing to expand our digital offerings, innovating and redefining the customer journey based on what we were seeing and experiencing during these unprecedented times. 

As an example, we were the first bank in Malaysia to successfully launch a fully digital account onboarding through ‘Apply@HLB’ that leverages eKYC technology post the central bank relaxation of prior requirements in June 2020. We launched our official store on an e-commerce platform, Shopee Malaysia, in 2020 where customers could conveniently “purchase” a bank account. These two solutions allow us to bring further banking services to potential customers digitally anytime and anywhere, without them having to visit a physical branch.

For micro, small and medium enterprises, we introduced the ‘Hong Leong Bank Tap on Phone’, a new mobile-based contactless payment solution to accept card payments. Essentially, it seamlessly turns an Android mobile device into a payment acceptance terminal, minimising touch and hence improving COVID-19 safety.

Our HLB Connect mobile banking platform, fully designed and developed in-house, introduced various product enhancements such as cardless ATM withdrawals, an 11 multi-currency account and in-app ‘App Authorise’ transaction to improve security and peace of mind when conducting banking online. It is also the first multilingual mobile banking app in Malaysia offering three language selections (English, Malay and Mandarin) to ensure that customers are able to transact their banking in the language of their choice.

The bank seeks to instil financial discipline in digital native customers through its digital banking platform

DF:We’ve also introduced HLB Pocket Connect, the first in-market interactive digital banking platform, developed in-house, especially for young digital natives to learn the value of “earn, save and spend”. The HLB Pocket Connect is an extension of our HLB Connect ecosystem and that it syncs with the parents’ mobile banking app, which allows them to manage and monitor their children’s money usage at all times.

Corporate clients have been able to do much more online with the added capabilities we rolled out over the past 18 months. Hong Leong ConnectFirst mobile banking app, which brings traditional internet banking functionalities to the mobile phone, makes us one of the first Malaysian banks to enable mobile banking for business customers with everyday functionalities.

Other capabilities expansion had to be put on hold during the pandemic, but will undoubtedly return with valuable additions to our ability to engage with partners and the community once movement restrictions are lifted. Towards the end of 2019, we launched the Jumpstart@65 hub, which comprised of a co-working space, three customer usability labs and a community centre to further emphasise the need for collaborative problem-solving. Jumpstart@65 is intended to be a space where employees or fintech start-ups are able to come together to co-create, and is equipped with state-of-the-art tools like eye-tracking technology and 3D printing. We’ve also leveraged space for customer immersion sessions like focus groups, ethnographic studies, as well as first-hand experiences on how customers behave and react to new products and services during usability testing sessions. This hub will be valuable in creating human-centred product and services that are built around our customers’ needs.

We are one of the first banks in Malaysia to fully deploy Google Workspace bank-wide, which harnesses the power of working on cloud and utilising virtual meeting capabilities not only among employees but also with customers and business partners. The digital capabilities built over the years have laid the foundations for seamless business operations during the pandemic and will drive further transformation of our operations and engagements with clients in the years ahead.

FBP: With so much uncertainty in 2021, how will your bank remain resilient? How do you plan to support your customers, employees, and the community to be resilient?

DF: We pride ourselves as a community bank and we understand we have an important role in building resilience in customers, employees and the community.

We moved and mobilised as early as February 2020 before the enactment of the full Movement Control Order, by putting in place payment relief assistance plans that allowed affected small and medium-sized enterprises (SMEs) and individual customers to restructure or reschedule their loans and financing repayments. It helped ease their cash-flow burden of maintaining regular payments, considering the business challenges that were beginning to be apparent. With the six-month industry-wide loan moratorium, we worked closely with clients to understand their financial position on the expiry of the moratorium, offering further targeted assistance to those that needed it. 

Our digital capabilities allowed us to assist customers at this critical time via online simplified application processes for the special relief facilities provided by the central bank for SMEs. Applications could be done online or via email/WhatsApp and completed through digital consent. It enabled us to fast-track the approval processes, ensuring SMEs receive the necessary financial relief and support in a timely manner. Other assistance programmes have similarly been digitised, where online applications and acceptance processes have been the norm since April 2020.

We implement work-from-home plans, alternative sites, increased space between workstations, temperature-taking facilities, regular COVID-19 testing, sanitisation and in more recent times get vaccination to help and protect employees from the risks associated with COVID-19.

We have tied-up with an online health service provider to ensure employees can receive appropriate general health and mental health support as needed, anonymously, as the circumstances of the past 18 months have had an impact on well-being.

We also moved to elevate the increasingly critical role that environmental, social and governance principles play in a sustainable society and have introduced a variety of initiatives to drive this agenda further across all our business operations.

The pandemic has not altered our social enterprises’ initiatives, as we continued to work with our partners to maintain the positive impact on marginalised segments of the community. We have onboarded two additional social enterprises over the past year – The Asli Co., and Benak Raya enterprises through HLB Jumpstart, our corporate social responsibility (CSR) platform. Both have social missions that strive to provide income opportunities and sustainable living for indigenous communities in Malaysia. These are communities that typically do not get access to formal jobs and financial services.

We launched a financial literacy initiative for the visually impaired people in communities under our ‘HLB DuitSmart’ CSR platform to promote economic and financial inclusion for all communities. We worked with several associations for the blind in Malaysia to develop multilingual financial literacy content in audio format and in Braille.

While we have had to alter the way we work and engage, COVID-19 has not damped our desire and drive to help clients, employees, and communities adapt and change so that together we build resiliency and will be able to recover and weather the challenges.

FBP: In the space of a year, the competitive landscape in banking has changed. Several confident challengers have struggled or been acquired last year. What insights into resilience for banks and banking can we gain from this?

The bank’s strong financial performance and digital and physical capabilities provide business support to clients

DF: Incumbents bring years of business experience, resources and know-how in risk management that has enabled the fast adaptation to new norms. Resources such as strong capital and liquidity buffers have allowed us to extend help to all clients, employees and communities. It has proven to be a challenge for newer businesses that for the first time are experiencing significant business disruptions. The ability to combine digital and physical capabilities by the incumbents has also proved valuable as clients have sought assurance from their relationship managers, when it comes to their SME/corporate banking facilities or wealth management.

While we have been championing a digital banking experience, the pandemic has also shown that empathy and a human touch when delivering banking services in unprecedented times can go a long way to building trust and peace of mind.

FBP: What does resilience mean to your management team and the bank? How does the bank, its leaders and staff become resilient?

DF: Resilience to us has been the ability to operate in a rapidly changing environment, where uncertainty prevails. It requires agility in thinking and operations, simultaneously supported by scenario planning – all things we have been cultivating for some time. Change and innovation must be embraced and not feared as these lead to opportunities beyond the business as usual.

A culture of experimentation and collaboration that brings outside-in views to challenge the “way we are”, has also proved a valuable checkpoint to maintain a different level of perspective that encapsulates what non-traditional competitors are doing, pushing the organisation to expect change from a multitude of sources.

Keywords: Hong Leong Bank, Google
Institution: ServiceNow
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