Malaysia Home Banking Consumers to Reach 1M

[January 31] A report from IDC Market Research Sdn Bhd shows that more than one million Malaysians will do their banking from home within four years.

The U.S.-based research house expects local users of online banking will reach 1.1 million by 2004 with the total number of online banking accounts reaching 1.6 million, or 23 percent of all Malaysian Internet users that year.

According to IDC Malaysia research manager Linus Lai, more banks will provide online banking due to the proliferation of PCs. Subsequently, this will result in an increase of online buyers, i.e. companies and individuals buying goods and services over the Net.

Malaysian banks currently providing online banking are Malayan Banking (Maybank), Hong Leong Bank, RHB Bank, Public Bank, Arab Malaysian Merchant Bank, Bumiputra Commerce Bank, Southern Bank and Multipurpose Bank.

Services available through their online banking are online bill payment, fund transfer, checkbook application, and downloading of current and loan account information into personal financial applications such as Microsoft Money or Quicken.

The majority of local online banking users are young, Internet-savvy professionals, a demographic expected to grow over time, added Lai.

IDC also learned that 80 percent of Malaysians online consumers are aged 19 to 35 years.

Lai urged local banks to start positioning themselves as intermediaries, providing end-to-end delivery and fulfillment of B2B and B2C services before foreign banks are allowed to provide online banking at the end of this year.

“Foreign banks are preparing themselves to go online but mergers of the local banking industry has delayed our online plan,” said Lai.

According to Lai, foreign banks will pose a formidable threat to local banks when they start rolling out their online services, partly due to their brand name.

Fortunately for local banks, these foreign banks have a limited number of local branches, thus making it inconvenient to have the face-to-face banking interactions that will still be necessary, added Lai.

“By understanding online buying patterns of their customers, banks will be able to better choose their online merchant partners and target top quality online brand names in Malaysia.”

Particularly, the banks’ credit card business will benefit from the new trend towards online banking and buying since in 1999, 87 percent of online payments were made through credit cards.

“Banks should thus build up online communities for online shopping and services with discounts offered through credit cards purchases,” said Lai.

Other key advantages for the banks are the abilities to cross-sell other services such as insurance, build customer loyalty, and create value-added services at lower operational costs.

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