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The Marketing Implication Of The Online Banking In Malaysia

3386 words - 14 pages

IntroductionMalaysians are beginning to realize the convenience of online banking and investing, despite the fact that online banking trends in Malaysia are still at its infancy stage and most revenues come from corporate banking clients. With the increase in awareness and education of the general public, banks are beginning to view the online channel as a positive step to decrease costs and increase revenue by reducing staff and branch networks.The four states, which have the most internet bank account holders, were from Selangor, Wilayah Perseketuan, Penang and Perak. People in the major states tend to be more receptive of the internet since they have greater exposure on the usage of emerging technologies. Out of the 56 licensed banking institutions including foreign ones in Malaysia, about 11 currently offers online banking services. The main reason for not conducting online banking was due to the fact that the users felt no need for such a service. Other reasons include the lack of knowledge on internet banking, lack of interest in such services and the fear of online fraudulence.Recent efforts by banks show they are willing to invest heavily in online banking initiatives even without seeing the returns on investment yet (IDC, Malaysia Press Releases 2002).Although the number of Malaysians going online is considerably small as compared to other nations across the globe, banks in Malaysia should not lag behind the changes of technology especially since the Malaysian financial industry is poised to open its doors to foreign banks by 2005. To face the competition from globalization, local domestic banks must fully utilize the internet to improve their efficiency and profitability.Online Banking in MalaysiaOnline banking was introduced as a new alternative delivery channel for products and services provided by banks. Online banking virtually established bank branches at the customer's premises via the usage of Intranet proprietary desktop electronic package and allowed the customer to perform account receivables, account payables and cash management at his/her convenience. Online banking was popular among corporate customers as it offered advantages such as cost saving, increased speed and improved flexibility of business transactions (Shanmugam et al., 2000).With the advent of internet , it has become affordable even for retail customers to setup a virtual branch in their home. Internet banking is not only part of the evolution of the Malaysian financial industry but the whole global banking landscape, as it not only provides an alternative to the conventional distribution channel for banks, but also has a more economical transaction cost. It is estimated that transaction through the Internet costs only $0.01, compared to $0.27 per ATM transaction, telephone banking costs about $0.55 per transaction and branch banking transaction costs about $1.07 (Booz et al 1997 as cited in Stijn et al 2000).Internet banking is also expected to increase...

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