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Sustainable Banking Channel- BSN Agent Banking

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Presentation on theme: "Sustainable Banking Channel- BSN Agent Banking"— Presentation transcript:

1 Sustainable Banking Channel- BSN Agent Banking
Azaddin Ngah Tasir Senior Vice President Bank Simpanan Nasional (BSN) Global Sustainable Finance Conference 2013 4 & 5 July 2013 Karlsruhe, Germany

2 Malaysia Factsheet General Capital: Kuala Lumpur Population: 29 mil
Official language: Malay Ethnic groups: Malay 50.4% Chinese 23.7%, Indigenous 11%, Indian 7.1% Others 7.8% Political Government :Federal constitutional elective monarchy and Federal parliamentary democracy Legislature: Parliament Upper house: Dewan Negara Lower house - Dewan Rakyat Economic Real GDP (%): 4.1% (Q1 2013; 5.6% in 2012) Inflation (%): 1.8% (May 2013; 1.2% in Dec 2012) Unemployment: 3.3% (Mar 2013) Total trade Jan 2013: RM110.7 bil (€26.4 bil) Top 5 trading partners: Singapore (16%), China (14%), Japan(10%), EU (9%), US (8%).

3 BSN – National Savings Bank of Malaysia
Established under BSN Act 1974 to take over the functions and responsibilities of the Post Office Savings Bank. >6,600 Employees 398 Branches nationwide of which: 8 full-fledged branches 118 social branches of which 45 operate where no other banks operate 59 Micro Finance Centres 995 ATMs 283 CDMs >700,000 SMS Banking Users >350,000 Internet Banking Users 10 Mobile Banking Units > 8.2 mil customers 3 258 CDMs As at 31 Mar 2013

4 BSN’s Memberships Member of World Savings Bank Institute (“WSBI”) (previously “International Savings Banks Institute”) since Our Chief Executive is serving his 4th term as President of WSBI Asia Pacific. Member of the Association of Development Finance Institutions of Malaysia (“ADFIM”) established in Our Chief Executive is the current Chairman of ADFIM’s Liaison Committee and Treasurer at ADFIM Council. Accepted on 6 Nov 2012 as an Associate Member of Association of Development Financing Institutions in Asia and the Pacific (“ADFIAP”).

5 Mandated Roles & Financial Inclusion
BSN’s Objectives Generate Profits for Sustainability Mandated Roles & Financial Inclusion To continue evolving in order to remain relevant in the industry so as to generate profit to take care of the well-being of the staff and carry out our mandates. Promote savings and financing micro enterprises. Lend support to the Malaysian Government’s Blue Ocean Strategy and the Central Bank’s (BNM) financial inclusion agenda where all Malaysians will have access to banking products & services.

6 BSN’s Financial Inclusion Agenda
Mandate to BSN: Provide financial access A better way… Cheaper cost to serve Scalability Outreach Underserved Communities Non- urban areas Non-economical areas Low population

7 A Better Way…

8 Officially launched on 27 Jan 2012 - initial 200 agents
BSN Agent Banking Officially launched on 27 Jan initial 200 agents

9 BSN Agent Banking Officially launched on 27 Jan initial 200 agents Recruitment of Retail Outlets as Agents

10 Recruitment of Retail Outlets as Agents
Agents’ Criteria Registered Company - min. 12 months in operation GPRS coverage Good Financial Record 5km radius from the nearest BSN Branches. 10km radius from other agents. Suitable building infrastructu re Why Retailers? It has own core business Trusted by the community High foot-traffic Proximity to customers Minimal training required It has own active cash flow

11 BSN Agent Banking Officially launched on 27 Jan initial 200 agents Recruitment of Retail Outlets as Agents 5 Basic Banking Services

12 *NUMBER OF TRANSACTIONS PER DAY (Per transaction Per Day)
Banking Transactions Offered TRANSACTION TYPES TRANSACTION LIMIT AMOUNT *NUMBER OF TRANSACTIONS PER DAY *MAXIMUM (Per transaction Per Day) MINIMUM Deposits RM500 (€120) RM10 (€2.4) 3 Times Withdrawals Bill Payments RM2,000 (€475) No Minimum Unlimited for Different Bills Purchase of BSN’s Savings certificate (eSSP) RM1,000 (€240) Unlimited Cashless Payments * Whichever comes first The account opening function via P.O.S. will be available by end 2013.

13 BSN Agent Banking Officially launched on 27 Jan initial 200 agents Recruitment of Retail Outlets as Agents 5 Basic Banking Services Innovative use of technology

14 P.O.S. for Banking The Point-of-Sales (P.O.S.) terminal is widely used Agent may have experience using it Ability to complete transactions from any geographical location Increased performance with minimized transaction completion time Prints bank-acknowledged receipt at the end of every transaction This palm-sized POS terminal equipped with a Biometric thumbprint reader, coupled with GPRS technology has been the success factor in the roll out of BSN’s agent banking.

15 How does it Work? Transaction Switch / Middleware and BSN Host/System GPRS Network and / or Fixed Line P.O.S Terminal Customer and / or Agent Banking transactions performed via wireless GPRS at P.O.S. terminals provided by BSN to its agents. Customers confirm their Personal Identification Number (PIN) and a biometric verification is done before initiating their transactions. A receipt will be generated upon any successful transaction. Unique features: Transactions made via the POS terminal are online and realtime and not by batch processing. Most other agent banking services are only for collections purposes, not for banking transactions.

16 BSN Agent Banking Officially launched on 27 Jan initial 200 agents Recruitment of Retail Outlets as Agents 5 Basic Banking Services Innovative use of technology Towards Green Banking

17 Customers visit branches
Towards Green Banking Traditional Banking Practice 398 branches Form-based Manual input Fixed line Longer process Customers visit branches Online Real-time Bring the Bank to the Community Formless Automated Wireless GPRS Simplified process New Banking model BSN is able to lower its carbon footprint by reducing the number of brick and mortar branches, printing of forms and confirmation slips (which comes in 2-3 copies)  thus contributing to a sustainable environment.

18 BSN Agent Banking Officially launched on 27 Jan initial 200 agents Recruitment of Retail Outlets as Agents 5 Basic Banking Services Socio-economic impact Innovative use of technology Towards Green Banking

19 Impact to the country: Fulfillment of the Central Bank’s Plan
Impact to the country: Fulfillment of the Central Bank’s Plan* on Financial Inclusion After Agent Banking Before Agent Banking Underserved 184 Served 754 90% 10% Total Sub-District 837 Underserved 449 Served 388 46% 54% Total Sub-District 837 *BNM’s 10-year Financial Sector Master Plan (2011 – 2020)

20 Impact to Agents and Community
Additional foot-traffic Reputation from affiliation Additional revenue Financial Management Synergistic partnership with BSN Access to micro financing for business expansion Community Access to Banking for the underserved Saves travelling time and cost Alternative , convenient access for urbanites No queues, average transaction time = 7 secs Banking + Cashless Purchases Extended banking hours (8.00am-10.00pm, 7 days a week)

21 Impact to BSN Revenue growth
Transaction growth steadily increasing since launch as public awareness and acceptance of agent banking channel increases Increased visibility Widespread locations of agents have increased visibility of the Bank more effectively than having a physical branch. New customer segment With 23% presence in urban areas, BSN agent banking is attracting the urban middle to high income to bank with BSN.

22 % Cost Savings – Agent Banking VS Branches
Impact to BSN Cost effective set up and operations Costs Branches ATM-Off Premise Agent Banking % Cost Savings – Agent Banking VS Branches Set-up Cost (One-off) RM500,00 (€120,000) RM45,000 (€10,700) RM3,000 (€700) 99.4% Yearly Operating Cost RM250,000 (€60,000) RM40,000 (€9,500) RM1 ,000 (€200) 99.6% Jan 2012 200 Agents June 2012 1,500 Agents Dec 2012 3,660 Agents May 2013 4,044 Agents Rapid expansion

23 Overall Performance as at 31st May 2013 Average Amount Per Transaction
Impact to BSN Overall Performance as at 31st May 2013 No. of Agents 4,044 Trx Count 6.3mil Trx Value RM561mil (€134 mil) Average Amount Per Transaction Transaction Types Average Amount Deposits RM150 (€36) Withdrawals RM160 (€38) Bill Payments RM80 (€19)

24 BSN Agent Banking Officially launched on 27 Jan initial 200 agents Recruitment of Retail Outlets as Agents Sustainable development 5 Basic Banking Services Socio-economic impact Innovative use of technology Towards Green Banking

25 BSN Agent Banking & Sustainable Development
The Nation Communities & BSN agents Environment BSN Supports the Government ‘s National Agendas National Blue Ocean Strategy (Cost effectiveness, rapid expansion, high impact) Financial Inclusion Expansion & development of local communities BSN agents are also agents of growth in their communities Knowledge of IT and banking Reduces BSN’s carbon footprint Minimise need for brick-and-mortar branches Promotes formless and cashless banking Perpetual demand for basic banking services sustains the agent banking business model BSN can continue to carry out its mandated roles more extensively

26 Our Implementation Focus
Signage New & Refresher Agent’s Training Public Information & Awareness Road Shows On-Ground Support 24-Hour Customer Service Hotline Promotional Items Agent Knowledge & Support Bulletin Agent Helpdesk – Toll-Free Line Community Events: FOMCA & BNMLINK TV Commercial / Interview Social Media - Facebook

27 To increase number of agents Introduction of New Services
Moving Forward To increase number of agents Introduction of New Services Retention Program

28 TVC

29 …Sustainability for all…


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