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Financial inclusion in Malaysia

Financial inclusion in Malaysia
​​Six questions on financial inclusion ​with Datuk Yunos Abd Ghani, chief executive of WSBI member BSN Malaysia. 


BRUSSELS, 10 December 2018

Q1: How has BSN help bridge the financial inclusion gap in Malaysia? 

Having been in the banking industry for more than 40 years, BSN embarked on major initiatives through a series of transformation processes that focused on retaining its competitiveness and further improving its competitive edge. Inculcating savings has always been close to our heart; a mandate that we have championed since the bank’s inception in 1974.  BSN carries a dual social role that establishes the importance of savings while striving towards providing prudent banking accessibility. This mandated role is evident through the existence of social branches in rural and remote areas in serving the underserved community. In BSN, one of our main objectives is to balance the social obligations/ interest of the community and the profitability.  

Financial inclusion is the corner stone towards elevating the standard of living and eradicating poverty. It ensures accessibility to banking services at reasonable cost to all segments of the society. Agent banking (EB BSN) is one of the key initiatives on financial inclusion under the Financial Sector Blueprint 2011-2020. The introduction of agent banking by BSN in 2012 has contributed to the financial inclusion agenda by enhancing accessibility to quality and affordable financial services, particularly in the underserved and remote areas. Agent banking is the provision of banking services by a licensed financial institution to customers through a third-party agent, such as retail outlets. By substantially lowering the cost of providing banking services, and making it easier for individuals to access banking facilities in an environment they are familiar with, agent banking channels are able to bridge commercial and inclusion imperatives, especially for high-volume, low-value accounts 

Through the implementation of the BSN Agent Bank, BSN’s social mandate to provide banking accessibility to communities from all walks of life has been fulfilled. It is an innovative channel to increase reach and provide easy access to banking services for every level of society, especially those within the lower income group or living in rural areas.     

Q2: What makes BSN special as a retail bank in Malaysia? Close-to-customer approach? Commitment to making sure every Malaysian has access to and use basic banking services?

Over the years, history has shown and reinforced the view that development financial institutions have an important role to play in a country’s socio-economic development. These include projects which involve high potential risk or long maturation period, but have significant long-term benefits to the overall economic development of a country. BSN in particular, has been servicing market segments currently underserved by the banking system. For example, unlike our commercial counterparts, our primary focus is on extending retail banking facilities to the population in rural areas, that is, segments of the community who would not otherwise have access to these facilities.  

Examples include the operation of a large network of branches and ATMs which penetrate even the most remote and least developed parts of the country. Very often, BSN is the first financial institution to operate a branch in a rural community. Our ATM facilities particularly accommodate customers in remote areas, where Internet and broadband facilities have yet to become the most preferred channel of communication. Our ATMs offer a unique range of services designed specifically to fit our market segments. For example, bill issued by more than 100 utility providers can be paid at BSN’s ATMs. Even savings through premium certificates can be done at BSN’s ATMs to encourage thrift and the habit of savings in the community.  

At BSN, we also offer a wide range of retail banking products and services that cater for the daily living requirements of our customers. In our micro-financing scheme, we offer loans without the need for collateral and processing fees. In this manner, we often take risks which other banks are not willing to take without jeopardizing their credit worthiness, but our development role ensures that this becomes a win-win situation for all concerned: the normal credit evaluation is undertaken to ensure that the bank is giving  financial facilities only to those with a good credit standing; small borrowers have a chance to own their own homes or expand their business; and the government meets its economic growth and nation building objectives.       

Q3: What role does innovation and digitisation play in helping BSN become even closer to the customer? What breakthrough products such as phone apps have BSN launched recently? Have they been successful, and if so, in what way?  

The bank acknowledges the importance of innovation and digitization in the modern banking landscape. As customers are getting more advance with technology, they demand for more intuitive banking products and services. And this will influence how we offer our banking services. Anywhere, anytime is a must. For this, BSN has just completed a very fundamental project in order to drive the digital transformation agenda with the successful migration to a new core banking platform. This serves as the bedrock for us to deliver more engaging banking services. Subsequent to our new core banking platform, we will be introducing a new mobile banking app, a new internet banking platform, a new corporate desktop banking, as well as a new updated agent banking platform. All these new platforms will enable the bank to offer better services with the aim to improve customer experience, customer engagement, efficiency and customer loyalty. 

 Q4: What does the future look like for BSN, especially as rural areas become less populated and other demographic shifts take hold? 

In terms of customers, BSN serves Malaysians from all walks of life in all parts of the country.  I believe that our customers will continue to stay with us regardless of any demographic shifts; as we have built that long-term relationship and trust with them.  As we acknowledge the migration of more people to the cities and the rapid development in digitalization of financial services, we have implemented our new core banking system to increase the robustness and speed of delivering new products and services to meet the people’s needs. 

In terms of outreach, our network as of September 2018 of 392 branches and 49,641 appointed banking agents cover all areas of Malaysia – be it in the urban or rural/suburban areas. The areas where the branches were closed and merged are now being served by our agents, without sacrificing service to our customers.      

Q5: What role will locally focused savings and retail banks play to prepare local economies for a globalized world? 

BSN will continue to play its role in educating customers on the importance of savings, innovating savings products and services to encourage savings goals, increasing outreach to customers via digitalised channels as well as over-the-counter services, innovate advisory and support to our Micro Finance (MF) customers, including journeying with them from micro to SME levels.  

Q6: What one thing would you like WSBI members and stakeholders to know and always remember about BSN? 

Our contribution to Malaysia’s financial inclusion agenda, where we have the largest agent banking network to ensure that communities in unserved sub-districts of the country have access to basic financial services whereby our coverage of the sub-districts has reached 96.7% as of September 2018. 

Financial inclusion