Hong Leong Bank reimagines branches for digital era

The lender sees itself as a digital bank with a physical presence.

Hong Leong Bank Bhd is revamping its branches all over Malaysia as part of a digitalisation push under its branch transformation program, according to its top official.

“Not all branches will be the same in the future,” Kevin Lam, group managing director and CEO at Hong Leong Bank, told Asian Banking & Finance in an interview. “We’re in the process of rolling this out in our branch transformation program.”
Some branches of Malaysia’s sixth-biggest bank by assets will offer services across retail and investment banking, as well as wealth management, while others will be strategically located inside the buildings of partner companies in the car and property sectors, he said.

A key part of this revamp is their pivot to automation using artificial intelligence (AI). In March 2024, Hong Leong Bank started using an AI bot that managed to make 300,000 calls to customers who were late on payments. 

“We collaborated with a Chinese AI company to bring over 300,000 calls to customers, and the success rate was just as good as what a human could do,” Lam said. “By doing that, we're able to save about 20 headcounts in this particular area of function by the end of this financial year.” 

Here’s the excerpt from the interview.

What do you think will be the future of branch banking?
Branches will naturally transform into a place where it’s about solving problems that you cannot do virtually, and also about providing advice and engagement and building relationships, rather than just the normal transactions.

The way Hong Leong Bank is looking at it, not all branches will be the same in the future. We’re actually in the process of rolling this out in our branch transformation program, where there are five categories. Category one is what we call iconic branches, where it’s going to be full-scale and full-service, where you have everything — from corporate banking, investment banking, to wealth management.

Then there’s category two which we call a flagship branch, with a lot of services particularly focused on wealth management. Category three is a call-servicing branch and under category four, we have kiosks with virtual interactions and self-service kiosks. 
Category five are actually partnership models, where we partner with automotive dealers, property developers, even cinemas, to have some sort of presence in some locations. 

Why is AI crucial for the future of banking?
AI is important in our generation because, I think for the first time in the human race, we have a tool that can actually think on behalf of humans. It’s not just banking; every industry is looking at how to capture the opportunities that AI is giving us in the coming years.

At Hong Leong Bank, we have a top-down and bottom-down approach to AI. By top-down, I mean that myself, as a group CEO, am personally driving the AI strategy. I make it a point to be really updated with the latest happenings in AI, not just in financial services. 

At the same time, we have a bottoms-up approach. What we’ve done at Hong Leong Bank is to encourage what we call AI champions across all functions.

Recently, we did an AI ignite challenge within the company, and we got about 40 different colleagues representing many divisions of the bank to put forth AI ideas and pitch these ideas to senior management. From there, we picked the top 10, and finally the top three.

The prizes to those individuals for coming up with those ideas is that basically they would win management time and resources to translate those ideas that they have into AI initiatives within their own lines of businesses. The winning one was in the retail credit area. There were a lot of ideas about AI opportunities in the area of applying artificial intelligence in credit management.

How do you balance legacy and digitalisation?
At Hong Leong Bank, we see it as a one-bank approach. It’s not so much about striking a balance that ‘this is more traditional, and this more digital.’ Over a number of years, Hong Leong Bank has embarked on a strategy of being digital at the core. A lot of our customer transactions and engagements are done with a digital end-to-end mindset in place now. 

Obviously, there are still legacy parts of the bank that we have to transform. But increasingly, I would say that now we see ourselves as a digital bank first, and then we have a physical presence.

We have a whole transformation mindset — that we have to do everything from a digital-first, customer point of view, and have a straight-through process as much as possible. And real-time data drive the relationship with the customers. Then we look at the processes that are still not yet there, and we look at every opportunity to improve.