INVESTMENT HIGHLIGHTS

• The Group have been introducing a slew of products to enhance customer experience

• Same offerings to SMEs and fast approvals seen as key to winning more businesses

• Critical point will be customer acquisition

• Increasing productivity

• No change to forecast

• Maintain BUY with unchanged TP of RM6.10

Briefing on digital offering. We attended a briefing held by the Group yesterday. The aim of the briefing was to demonstrate the Group’s digital offering and its FIT22 transformation.

Diverse range of products. The Group briefed us on the number of supporting products that it has launched such as its mobile banking application and mobile mortgage application. It demonstrated on the functionality of the app, and the ease of usage.

All aim to enhance customer experience. All the new products are aimed at enhancing the customer experience due to its ease of use. For example, an account holder’s phone will be uniquely linked to the person’s account, where accessing banking information can be done via biometrics (i.e. thumbprint). However, the biometrics log in cannot be done on other devices. The advantage of this is that transactions could be done without a One-Time Pin code. Another offering is the mobile mortgage application where approval-in-principle could be sourced in real time.

Same offering to SMEs. Similar with digital offerings in the retail segment, the SME segment have also been targeted. The Group believes that its online application process and fast approval will be a key competitive advantage in the crowding SME lending space. It had launched an online SME financing platform where approval could be expected in 2 days and disbursement in 5 days. Technology is again being used as an enabler with photos of documents being use and companies’ directors’ approval can be sourced electronically. However, at this juncture, we could not yet gauge on the effectiveness of the platform but it has potential to accelerate the booking of SME loans.

Customer acquisition will be key. While we opine that the digital products offered by the Group are excellent, we believe that customer acquisition will be a critical success factor. For the moment, the Group are on boarding its existing customers to the digital platform. However, we believe the Group needs to acquire more customers. It remains to be seen if the new digital offerings could have the desired enticing effect.

Source: MIDF Research - 26 Apr 2019