A recent World Bank Report has shown that Malaysia's path to becoming a high-income nation involves economic reform focusing on enhancing productivity, improving governance, and fostering innovation.
According to an article from the Malaysian Investment Development Authority, the deputy president of the Malaysian Economic Association, Dr Yeah Kim Leng, believes that to drive economic growth, Malaysia should "expand the infusion of technology across all sectors and raise investment in R&D and innovations."
In a recent discussion arranged by Cxociety with industry partners SAP, IBM, and AWS, financial leaders in Malaysia discussed the implications of future-ready strategies to drive the country's transformation in the financial services sector.
Financial transformation
Jessica Low, SAP Malaysia's chief financial officer, highlighted that SAP underwent stages of transformation, beginning with local finance departments and moving to shared services in 2003.
“In 2003, we continued our transformation leveraging advanced and predictive analytics, and business towards process excellence and efficiency,” Low said, sharing their journey towards a holistic transformation focused on technology, people, process, and organisational change.
The company currently focuses on global process standardisation and AI adoption.
Low emphasised: “Transformation involves not just technology… Technology is an enabler, but you need other aspects to ensure successful change.”
Transformational leadership
Low underscored the importance of leadership in financial transformation efforts, citing Dominik Asam, SAP's Global CFO, who championed efficiency and standardised global processes.
“Asam is convinced that our company have to be a highly efficient cloud provider demonstrating our own productivity in comparison to our competitors,” shared Low.
She shared that the company maintains consistency and discipline during contract negotiations by not compromising global standards.
Low shared that Asam is also a strong advocate of leveraging technology to reach the next level of growth.
Reaping the benefits
SAP has achieved significant cost savings by transforming its finance processes while increasing revenue.
“Since the start of our transformation in 2012, we have achieved a cost ratio reduction of 25% by end of 2020... even though revenue has doubled," the SAP Malaysia executive shared.
Moreover, they have experienced a 6.2% rise in engagement (86%), reflecting the transformation's positive impact on workforce morale.
AI in Finance
Low shared that AI and analytics have become vital to their business, significantly improving cash collection and operational workflows.
"We saw 300 hours of savings and an improvement of 30 days to our cash collection," she shared, encouraging finance leaders to embrace modern tools and automation.
Low said reinventing user experience with Joule (SAP’s AI copilot) embedded in all S/4HANA Cloud, SAP’s current enterprise application suite, simplifies the process and makes it feel "like you are chatting with humans."
Expounding on the advantages of SAP S/4HANA, Devabalan Theyventheran, the managing partner of IBM Consulting Malaysia, said that organisations consider regulatory and operational perspectives before adopting the solution. Before considering S/4HANA, organisations must weigh the benefits of moving from existing systems and evaluate when to transition.
"Different aspects come into play, but ultimately, the key benefit of moving to SAP HANA is gaining more capabilities to do more. It's quite a challenge, though. Boards often tend to focus on historical numbers, which can be helpful, but the real question is, "What can we do in the future?" and "How can we think forward?"' he said.
Despite AI's wide possibilities in finance, Low emphasises the need for human-machine collaboration. In reimagining finance roles, she believes the finance workforce should evolve alongside technology.
"In finance, we want to reimagine how the process can be improved and strengthened. Finance can be a partner to drive growth," she said.
By adopting a holistic view, Low emphasises prioritising stakeholders and employees so that they can better perform finance functions.
"How do we engage the workforce, get these people to remain with the company, and still do the work for finance? Finance is the backbone, and we need to capture all transactions. We need a solid workforce," she explained.
Low stresses the importance of balancing the role of humans and machines in finance. She emphasised the irreplaceable value of human reasoning, strategy, and creativity, which makes the workforce vital to the transformation process.
"Tools are shifting human roles and responsibilities but not replacing them," she said. In assessing where AI can enter operations, Low suggests organisations focus on where they can maximise its benefits.
"Even as finance professionals, we must embrace technology, but evaluating which ones are appropriate for your organisation is important. When you do this transformation journey, your finance operating model has to change along with it," she concluded.
Transformation and modernisation
While Low highlights SAP's success in its financial transformation efforts, Azizan Abd Aziz, group chief financial officer (GCFO) of Bank Islam Malaysia Berhad, underscores the importance of aligning finance operations with customer insights to stay competitive.
Azizan observed initial challenges in data utilisation when he joined the company four years ago, with the company struggling to share or effectively use data to drive decisions.
"We didn't fully understand how to share or harness data effectively," he admitted, saying the company realised a gap in understanding customer behaviour, leading to insufficient credit and preference data.
To address the gap, Azizan focused his efforts as the company's GCFO on aligning data strategies with both immediate and long-term goals, breaking down silos, and aligning financial insights with product and service design.
The company shifted to a holistic and interconnected perspective, underscoring that engaging customers require understanding credit, managing capital, and liquidity.
"Traditional finance teams focused on numbers and profit but didn't explore the behaviours driving those numbers…Breaking down silos and integrating data into behaviour management has been key," he explained.
Despite having no formal IT background, Azizan embraced technological tools to modernise Bank Islam's operations. He worked to coordinate across territories and align financial reports with strategic decisions.
Following Bank Islam's example, the executive explained that integrating advanced tools and aligning processes can help companies ensure holistic decision-making and better team alignment.
Moving to the cloud
As part of his company’s modernisation efforts, Fabian Lim, MCIS Insurance Berhad's financial controller, highlighted the importance of leveraging cloud technology. He said investing in new systems typically has long time horizons, making it vital to account for long-term functionality and adaptability.
"When we build or choose a system—specifically, a core system—we must evaluate our options carefully. When we want to make changes, we thoroughly look for something suitable, as the investment can span five to seven years," Lim explained.
Derek Ewell, AWS technical leader for SAP partners in ASEAN, outlined the benefits of moving to the cloud: "Based on a study done by The Hackett Group, “The Business Value of Migration to Amazon Web Services”, we see that by moving from an on-premises environment to the cloud, you can save up to 47% on your regular operational costs, and also increase your productivity."
He underscored the importance of migrating to AWS to improve security and reliability. AWS customers shared that this reduces the downtime of their business-critical workloads by 69%, which leads to improved trust with their own customers, and retains the strength of their brand in the market.
Financial transformation
"Over the past 50 years, Malaysia has successfully reduced extreme poverty and promoted shared prosperity. Its goal is to attain high-income and developed nation status while ensuring that shared prosperity is sustainable," the World Bank states.
By embracing innovation and strategic transformation, Malaysia's financial institutions can set a new global standard, driving growth and achieving economic progress.
