When it comes to expanding financial services, distribution is the name of the game. Particularly if you'd like to reach new consumers such as the UnderBanked - people who have trouble accessing financial services or who do not have bank accounts. According to a BuzzCity survey in 2013, 24 percent of mobile users in Malaysia do not have bank accounts.
To reach these consumers, banks need to look beyond traditional forms of distribution. They need to look beyond building bank branches. They need Branchless Banking - a cost effective distribution strategy used for delivering financial services without relying on bank branches.
Branchless Banking, meanwhile, has actually been around for ages, since the proliferation of ATM machines in the 70's and 80's. But whereas ATMs (and more recently PCs and mobile phones) complemented traditional bank branches, new forms of branchless banking are being used as separate channels altogether. Having a strong distribution network makes it easier for clients to access services like depositing and withdrawing funds.
Building on Branchless Banking is the best way to reach the UnderBanked and provide improved service to mainstream consumers. Here are some examples of how some banks in Malaysia have expanded their networks:
1. Partner with Retail Outlets
Since 2012, Bank Simpanan Nasional (BSN) has provided a solution for all rural areas facing difficulty in reaching their banking services via non-bank retail outlets. The bank appoints agents (Ejen Bank Berdaftar (EBB)) among sundry shop owners to undertake transactions like withdrawal and deposit, payment of bills and sale of premium saving certificates.These transactions are made in real time via Point of Sale Terminals with GPRS or landline connections. BSN targets 19 million transactions this year with 6,000 banking agents this year.
2. Partner with the Post Office
Postal accounts have been around since 1949 with most accounts being run directly by postal systems. Today,banks are starting to make inroads here; again under the ambit of Agent Banking (EBB) scheme governed by the central bank (Bank Negara).
Under the EBB programme Maybank, RHB Bank and RHB Islamic Bank customers can now enjoy more convenient banking services at over 300 POS Malaysia outlets nationwide. The RHB-POS Shared Banking Service allows RHB customers access to their bank accounts and perform transactions in nearby post office locations.
Telecoms and Financial Services
Mobile operators run some of the largest retail distribution networks to support the sale of pre-paid cards. In many countries, banks are partnering with telecoms operators to offer financial services. Banks are not only relying on telecoms' physical distribution but also taking advantage of the consumers' access to mobile technology.
In Malaysia, however, operators (Celcom, Maxis &Digi) have been providing financial services independently of banks for several years now. Typically, a subscriber would register with an approved telecomm dealer to activate an account based on their mobile subscription. Cash added to the account can then be used for money transfers and payments to participating merchants.
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