KUALA LUMPUR (Dec 2): Malaysian banks currently lose more than 50% of new sales to competitors, and could potentially get worse, according to a survey.

In its recent annual report on consumer banking behaviors, Bain & Company said deposits made up about 55% of purchases from primary banks in Malaysia over the last 12 months, versus just 22% at competing banks.

It said insurance was the most-purchased product at competing banks taking up 36% of purchases, followed by deposits.

“Many banks are missing the giant at their doorstep. It’s easy to say fintechs and technology companies are going after the high-value banking activity, but it’s also the more innovative established players that are winning a disproportionate share,” Chew Seow-Chien Chew, partner and head of Bain’s Financial Services practice in Southeast Asia.

The report said that in Malaysia, about 40% of customers said they would switch their primary bank, if it were easy to do so. 

Chew said there are a lot of customers who consider themselves prisoners in their own banks. 

“They don’t switch their primary bank, because it’s too much hassle to do so. 

“But they’re going to go elsewhere for any new needs, and if someone makes it easy to escape their bank for a better place, they’re going to run right out,” said Chew.

In summing up the report, Bain & Company said as fintechs and technology companies siphon off customers seeking high-value products and services — such as credit cards, loans, insurance and investments, traditional banks run the risk of becoming just another big, regulated utility.

It said hidden defection of consumers — purchasing a new banking product from a competing bank or financial technology firm — runs rampant, especially in developing markets, where fewer consumers have longstanding relationships with a bank.