This article first appeared in Wealth, The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025

Muzzaffar Othman is an outlier among the top guns in the asset management industry. He was a technology expert, or “tech guy”, before assuming the role of CEO at Amanah Saham Nasional Bhd (ASNB).

He had parked most of his money in savings and current accounts for decades since he started his first job. It was only when he was in his forties that he started dabbling in the capital markets.

At the helm of ASNB, the largest asset management firm in the country, Muzzaffar has digitalised the fund house faster than many of its peers and, in the process, changed the investment behaviour of hundreds of thousands of Malaysians.

As at end-November, ASNB had assets under management (AUM) of about RM270 billion, roughly half the size of the unit trust industry in Malaysia, which stands at RM544.05 billion (as at end-September 2024).

In his interview with Wealth, Muzzaffar admits that it is uncommon for a technology expert to be promoted to CEO in the asset management industry. Such a role is usually given to the chief investment officer or chief operating officer of the firm, owing to their investment and operation capabilities. He joined Permodalan Nasional Bhd (PNB) as its chief technology officer in 2017 and took the helm at ASNB in 2022.

Effective Dec 1, Muzzaffar has been promoted to group chief operating officer at PNB. At press time, the successor for ASNB’s CEO position is yet to be announced.

ASNB is the wholly-owned unit trust management company of PNB.

“It’s quite unheard of based on my understanding. It was the board’s decision. They had the foresight to say, ‘Maybe we need a tech guy to run the business’ two years ago. They saw technology as the driving factor for a lot of investment companies. Having a person who understands technology and engages the masses digitally may give the firm an advantage [in its business],” he explains.

Two years on, the ASNB board of directors seems to have made the right decision. The firm launched the myASNB app in 2019 with the initial intention of encouraging the youth to invest for the future. And in the past two years, it has tied up with TNG Digital Sdn Bhd to distribute its funds to millions of e-wallet users, as well as unveiled RIA, its robo-advisory platform on the myASNB app.

As a result, investors have transacted about RM70 million worth of units in ASNB unit trust funds via the Touch ’n Go (TnG) e-wallet in about 1½ years, says Muzzaffar.

RIA, which was launched in March this year, has garnered over 200,000 users in about seven months, with RM75 million worth of ASNB fund units being transacted. The net inflow is about RM54 million.

“Surprisingly, there are quite a number of non-bumiputera investors who are using TnG to buy our products,” he says.

If one were to include online banking portals and banking apps that distribute ASNB unit trusts, ASNB’s digital channels have gained roughly 3.7 million users and account for about 30% of the firm’s revenue, or about RM12 billion, in the year to Nov 22, according to Muzzaffar.

According to ASNB’s official website, the firm has 18 fixed and variable price funds under its belt, with 15 million accounts.

Another digital initiative ASNB was involved in was micro-investing start-up Raiz, which shuttered its business in the middle of this year.

Raiz was a joint venture (JV) between Jewel Digital Ventures Sdn Bhd, a subsidiary of PNB, and Raiz Invest Australia Ltd, a subsidiary of Australia-based financial technology firm Raiz Invest Ltd.

Muzzaffar says that four years ago, PNB and ASNB were attracted to the idea of micro-investing, which was pioneered by a few fintech start-ups, including a US-based firm known as Acorn.

“We were thinking about how we can encourage people to save and invest more, even with spare change. And we bumped into Raiz, which can provide such a technology to us.

“Raiz had intended to grow its business in Malaysia, Indonesia and Thailand. So, we partnered with it in Malaysia as a minority shareholder. It owned the technology, processes and licence. And we appointed one of our people as the CEO of Raiz.”

Raiz had grown its user base over the years. While it had not been profitable, PNB did not plan to close down the JV entity. It was mostly due to a change in Raiz Invest Ltd’s business strategy, whereby it wanted to exit its business in several Southeast Asian countries.

Why not buy out Raiz Malaysia? Muzzaffar says ASNB has developed its own mobile app, which operates on a different technology than Raiz’s. The integration of the two systems would have been challenging, while ASNB is also occupied with further building its own technology.

Muzzaffar says ASNB is in a sweet spot to launch its digital initiatives by deploying a reasonable amount of funds and yielding good results.

Why? Many asset management firms have been relying on agencies and agents to distribute their products. They have to strike a balance between their online and offline distribution strategies without having one hurt the other.

For ASNB, it distributes its funds mostly through banks, including their physical branches, online banking portals and mobile apps, and agents, but in a smaller scale, he says. “We do not have a large agent [distribution] model. Instead, we rely on the bank model as we lack the capacity to engage our customers via the agent channel, which is expensive,” he explains.

The bank distribution model, to a larger extent, releases the firm from the burden of having to take into account the interests of agents when embarking on its digital initiatives. In other words, it is able to focus on its digitalisation road map without being distracted by other factors.

It is pertinent that ASNB always looks out for innovative ways to lower its operating cost, including distribution cost. This is because the firm, as a wholly-owned unit trust management company of PNB, is mandated by the government to help improve the financial well-being of the average Malaysian. This explains why it charges investors only a small percentage of fee or none at all, says Muzzaffar.

“We are talking about low cost investments for unit holders. And we use technology to allow investors to DIY (do-it-yourself) their investments, anywhere and anytime.”

Equally important is that ASNB has the critical mass required for the firm to embark on its digitalisation journey. When the myASNB app and RIA were launched, they were able to tap into ASNB’s 15 million account holders, a significant difference from robo-advisory platforms that start from scratch.

In comparison, new robo-advisory firms entering the market are likely to spend a significant amount of money on promotions and marketing campaigns to attract new users. Their path to profitability could be a long one because just like ASNB, they charge investors a low fee.

This is partly reflected in the financial performance of most licensed robo-advisory firms in town. Many, if not all, are still in the red after several years in operation.

“We are lucky to have a large user base from the start. I have to put it on record that it is not just my effort that makes this work. It is the result of 40 years of work by my predecessors. I just needed to transform part of our existing customers, and some new customers, into a different channel (digital),” says Muzzaffar.

With a laptop in front of him, Muzzaffar has an overview of how ASNB’s business is performing. He can see which branches, banks and funds are doing well and those that aren’t. He can break down sales figures by date, product type and branch location, among others.

“I have to say that technologically, we are quite sound. We’ve done a whole bunch of analytics. I run my business from the dashboards today. They are all on my iPad,” he says.

From the day he joined ASNB, Muzzaffar has been a man on a mission to digitalise the firm’s operation. He had such an idea when sipping coffee at Starbucks, located on the first floor of Menara Maybank. He was the bank’s digital transformation strategist at the time.

“I was looking out from Starbucks and noticed a long line of people queuing [in front of Maybank’s counters]. It was the second day of January. What is happening? Then I realised people were waiting in line to either check their ASNB balance or withdraw some money. I thought something could be done,” he says.

In 2017, when PNB was hiring, Muzzaffar applied for the post and proposed to the company his plans to digitise ASNB’s business. He took it one step at a time, first by developing a tablet for ASNB investors to perform certain tasks faster and easier, followed by the launch of the myASNB app and RIA in the subsequent years.

However, Muzzaffar and his team have done a lot more on the backend that most people don’t see. For instance, integrating all the data of ASNB’s 19 subsystems into one core system with the use of application programming interfaces (APIs).

An API is a software intermediary that allows two applications to communicate with each other, thus providing both sides an accessible way to extract and share data within and across organisations.

“We’ve got one core system and over 19 subsystems. We built one data warehouse that captures all the data on the 19 subsystems. Today, 70% to 80% of all the data within the firm is integrated into the data warehouse,” says Muzzaffar.

Despite his instrumental role in transforming ASNB’s business and the financial knowledge that he possesses, it was only a few years after he joined the firm that he started putting his money into ASNB funds. It was also when he started investing in the stock and bond markets.

“I only started to consider about investment when I was in PNB because I started building this digital system and saw that the funds generate decent returns consistently. I thought I can invest here and see my money grow,” says Muzzaffar.

The 55-year-old CEO says that investing was not second nature to him as his upbringing, characterised by financial constraints, did not foster a mindset of saving and investing. Born into a poor family in Kampung Pantai Dalam, Kuala Lumpur, he experienced firsthand the challenges of poverty and limited resources.

Despite these challenges, he did well academically and earned a scholarship, which allowed him to pursue higher education in chemistry in the US.

Upon returning to Malaysia, he faced the reality of a limited job market for chemists. Undeterred, he took on various roles, from manufacturing to consulting, eventually landing a position at Citibank Bhd, where he began his career in finance.

It is Muzzaffar’s humble background that has allowed him to understand the financial plight faced by the man in the street. Many are not able to invest when they do not earn and save enough.

Coming from such a background has helped him in his job as the leader of a government-linked company with a mandate to improve the financial well-being of the average person. And he firmly believes that financial literacy can improve the life of the masses, partly by encouraging them to save when they can and start investing. It is better late than never, he stresses.

“People should remember that it’s always good to start investing earlier in life if they can. A lot of this is related to upbringing. If you’re from a family that understands saving and investing, chances are you invest earlier. If you’re from a family struggling to get by day to day, the last thing you would think about is investing, because we always talk about our needs first and savings later, if any,” says Muzzaffar.

“I hope that the government can somehow consider introducing financial management as a subject in primary schools. You teach calculus, mathematics, chemistry and geography but there is no subject on how to manage your money. When young people graduate, they spend with credit cards. Now we have ‘Buy Now, Pay Later’ schemes, which could make the situation worse without financial literacy. It is okay to spend but at the same time we must drive the message for people to continue to save regularly.”

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.