Alliance Bank Malaysia is investing in virtual cards, ecosystem partnerships, lending transformation and artificial intelligence (AI) capabilities as it seeks to deepen customer engagement and expand its consumer banking business. As Malaysian consumers gain access to a growing range of financial products and services through banks, digital banks, fintech firms and digital platforms, the challenge is increasingly about remaining relevant in customers’ daily lives rather than simply providing banking products. Gan Pai Li, Group Chief Consumer Banking Officer of Alliance Bank Malaysia, believes consumer banking is entering a new phase in which customer expectations, digital ecosystems and technology are reshaping how banks acquire, engage and retain customers. While digital channels have become standard across the industry, she argues that future growth will depend on how effectively banks understand customer needs and embed themselves into customers’ everyday activities. Consumer banking beyond branch and digital channels “We have come a long way from just being branch based,” Gan said when discussing the evolution of consumer banking. Traditional branch networks remain important, but customer expectations have changed significantly as digital channels become increasingly embedded in everyday life. For many years, banks focused on moving customers towards online and mobile banking. While that remains important, Gan believes the industry is now entering another phase in which digital access alone is no longer enough to distinguish one institution from another. She sees a similar trend emerging around AI. “AI, I don’t think, is really much of a differentiator,” she said. “I think over time it’s going to become a commodity, simply because everyone can have access to AI. Any one of us can actually incorporate it into our processes.” Instead, she believes the real differentiator will be how effectively organisations apply AI to enhance customer experience, improve decision-making, strengthen productivity and create meaningful customer value. She noted banks need to become more responsive to customer requirements and increasingly available through digital channels. “We probably need to be more in tune with our customer requirements. We need to be almost online all the time,” she said. This thinking has influenced Alliance Bank’s focus on embedded propositions. While virtual cards represent one example, Gan emphasised that the broader objective is to understand what customers need and design propositions that fit naturally into their daily activities. The bank is also preparing to launch a new mobile application. Gan said the objective is to create more intuitive, secure and personalised experiences with features that support daily banking activities, payments and customer engagement. “We want to become your everyday bank app,” she said, describing the bank’s ambition to play a more active role in customers’ daily financial activities. She believes advances in AI will also support greater personalisation, enabling customers to interact with the bank in a more conversational manner and receive recommendations that are increasingly tailored to their needs. Using virtual cards to create customer engagement Alliance Bank’s virtual card initiative represents one of its more visible consumer banking innovations. The bank introduced virtual cards with dynamic card numbers partly in response to growing customer concerns about fraud and payment security. By allowing customers to create separate card numbers for different merchants and transactions, the proposition provides greater control and flexibility when making digital purchases. “The virtual cards with the dynamic card number was a feature that we thought would resonate well with customers, especially now with all the fraud issues and all the concerns,” Gan said. However, the initiative extends beyond security features. Alliance Bank has deliberately linked its virtual card proposition to customer lifestyles. One example is its involvement in the rapidly growing pickleball community. The bank has supported tournaments and is collaborating with an ecosystem partner to enable easier access to court bookings and reservations. “We didn’t give you a discount on the court. We instead gave you an advance booking on the courts,” Gan explained. Gan also described the virtual card as an environmental, social and governance (ESG) proposition that has resonated with customers. The initiative has attracted more than 90,000 users since launch, with adoption continually growing, primarily driven by e-commerce and digital payment transactions. Yet Gan views customer engagement rather than transaction volume as the more important outcome. She said the objective was to establish the customer relationship first before expanding it across other banking products. Alliance Bank has already seen virtual card customers open deposit accounts and take up other products, reinforcing the role of the proposition as an entry point into broader customer relationships. Building distribution through ecosystem partnerships Alliance Bank’s ecosystem strategy is centred on reaching customers through platforms that already play a role in their daily lives. Partnerships with leading digital platforms are opening a large pool of new customers for the bank, offering engagement channels that complement traditional acquisition channels.The bank said that such partnerships are enabling it to better understand customer needs, preferences and behavioural trends. These insights help it refine risk assessment capabilities, enhance customer segmentation and support broader product development efforts. Alliance Bank has expanded partnerships into areas such as electric vehicle charging ecosystems and payment platforms that customers frequently interact with. The bank evaluates partners based on their digital presence, customer scale and suitability for digital payments. The economics of ecosystem partnerships require patience. “With digital acquisitions, we need to first invest upfront,” Gan acknowledged. While digital channels may eventually lower servicing costs, significant investment is required before meaningful scale can be achieved. The bank noted some initiatives remain in the growth and scaling phase, with benefits expected to materialise over time. Improving lending, payments and customer economics Alongside customer acquisition initiatives, Alliance Bank has modernised parts of its lending infrastructure. The bank implemented a retail loan origination system designed to automate workflows and improve visibility across the lending process. “One key benefit from that really was the workflow audits,” Gan said. The system allows management teams to track application progress, monitor approval decisions and generate reports more efficiently. It also provides a clearer audit trail across the lending process, improving visibility into how decisions are made and where bottlenecks may occur. The platform provides information on customer profiles, approval decisions and workflow activity, enabling management teams to identify trends, monitor approval quality and improve operational oversight. Gan noted that while technology improves efficiency and provides better information, human judgement remains essential. “The AI portion of it can help you segregate the data,” she said. “Making a decision on how to use the data from an analytical point, you still require the human judgement.” The discussion also highlighted how consumer banking economics continue to evolve. Deposits remain central because they fund lending activities. At the same time, competition for deposits remains intense, particularly when customers are able to move funds quickly in response to changing rates and promotions. Gan believes customer engagement plays an important role in maintaining funding relationships. The more customers use the bank’s services, the more likely they are to maintain broader banking relationships. She also pointed to a broader shift in revenue composition. “Payments today actually does not attract much fee income anymore,” she said. As payments become less profitable, banks increasingly need to build deeper relationships across multiple financial needs. “We find that from deposits to loans to wealth investment, they are all interlinked. It can’t do one without the other,” Gan said. For Alliance Bank, customer relationships increasingly extend across deposits, lending, payments and wealth management rather than being defined by any single product. Preparing for an AI-enabled future While AI may eventually become a standard capability across the industry, Gan expects it to play an important role in Alliance Bank’s next phase of development. The bank has already implemented key initiatives, including its loan origination system, wealth management platform and virtual card proposition. The next step is determining how AI can enhance those capabilities and improve internal processes. “We have put in our loan origination system, we’ve put in a wealth management system, and we’ve also launched this virtual credit card with dynamic card number. After this is really, how do we then enhance on those investments,” she said. One challenge is workforce readiness. Gan said the bank is focusing on helping employees become more comfortable with AI while also developing the skills needed to use it effectively. Talent availability remains another consideration as financial institutions compete for AI-related expertise. Gan said AI should augment employees rather than replace them. “We don’t look at it as an opportunity to replace a job or replace a person,” she said. “The human part of banking will always be there.” At the same time, governance remains critical. Gan stressed the importance of establishing guardrails around AI deployment and ensuring that customers are protected from inappropriate recommendations or inaccurate information. Effective implementation requires coordination across risk, compliance, human resources and business teams. For Alliance Bank, the next 12 to 24 months will be focused on building organisational readiness, governance frameworks and workforce capabilities to support wider AI adoption. Competing in a market with more choice Gan believes Malaysia remains an attractive environment for innovation because consumers are generally willing to try new products and services. “I don’t think adoption has ever been an issue,” she said. The bigger challenge is retaining customers after initial adoption. “Many will try, but after that, how many will actually stick on and use it? That, I think, is the harder part.” She expects traditional banks, digital banks and platform-based players to continue coexisting as each searches for a distinctive market position. “I think there will be some coexistence,” she said. Different institutions face different challenges. While digital banks may benefit from lower infrastructure costs, incumbent institutions continue to possess advantages in customer relationships, scale and operating experience. Success will depend on how effectively each player develops propositions that customers find relevant and valuable. Gan’s outlook for consumer banking remains pragmatic. Banks need to remain cautious on lending, continue evolving their payments capabilities and invest in technology and AI as customer expectations evolve. As consumer banking continues to change, Gan believes the challenge is not simply encouraging customers to try new products but ensuring that they continue using them. In a market where consumers have more choices than ever, sustained engagement may prove a more important measure of success than initial adoption.
