Business

Monday October 8, 2012

More banks planning to provide agent banking services

By DALJIT DHESI
daljit@thestar.com.my


PETALING JAYA: As bank margins continue to come under pressure, more financial institution (FIs) are aggressively mapping out strategies to provide agent banking services to boost income and lower operating costs.

At the moment there are only three FIs that offers these services and more are in the pipeline. They are Malayan Banking Bhd (Maybank), RHB Bank Bhd and Bank Simpanan Nasional.

Since introducing these services, the three have also reported savings of up to 99% for set-up costs compared to bank branches. An industry observer said he was confident the number would rise as there were some FIs planning to launch them soon. However, due to confidentiality, he could not disclose their names.

He expected some form of competition in this area although not in the short term now that the guidelines for agent banking are out. Agent banking is the usage of non-bank retail outlets such as post offices, grocery shops, petrol stations and telecom agents to deliver financial banking services on behalf of FIs to the underserved market.

The guidelines list the requirements to be observed by FIs in the areas of governance and oversight, management of agents, customer protection, awareness and education.

Bank Negara, in responding to queries from StarBiz, said it was closely monitoring the expansion plans of the FIs providing agent banking services and would continue to encourage more to implement agent banking.

The central bank is also in continuous engagements with the banking industry to encourage them to provide this service as an alternative channel to reach out to the underserved and rural areas.

It said the response from the FIs on agent banking was encouraging and a number of them had indicated interest to implement the service given the potential cost savings that this new channel could offer.

Maybank community financial services head Lim Hong Tat said it was projecting this channel (agent banking) to contribute RM12mil in revenue for the bank next year.

“Our main objective to offer this service is to help bring banking services to areas which were currently underserved, particularly in the rural areas. At the same time, it serves our strategic intent of expanding the bank’s reach at lower cost,” he said.

Agent banking, he said, could also be a good driver for low-cost deposits as well as fee-based income for the bank with more people having access to these services.

Maybank introduced the service in November 2010 with Pos Malaysia as its agent. “The number of commissioned Pos Malaysia outlets are 350 inclusive of 51 in Sabah and Sarawak. Our intention in the medium and long term is to partner with other corporations to serve more customers in areas where there is a need for banking services,” he said.

The existing services offered by the bank via Pos Malaysia were cash deposits (savings and current), cash withdrawals (savings) and cash payments (credit card, hire purchase and loan repayments), he said, adding that it planned to expand these services by introducing the opening of accounts, remittances and marketing of financial products such as loan referrals and general insurance.

Meanwhile, RHB Bank managing director Johari Abdul Muid said its “easy” products were offered in 50 Pos Malaysia outlets besides offering basic banking services.

Over the medium term, he said, the bank would continue to work closely with Pos Malaysia to offer its banking services in more Pos outlets. “At present, RHB basic banking services are offered at 318 Pos Malaysia outlets including in Sabah and Sarawak. Our investments in these outlets include system development and other related IT costs as well as investing in training Pos Malaysia staff in handling the various services,’’ Johari added.

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