BSN Agent Banking

Sustainable Banking ChannelBSN Agent Banking

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

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

Economic

• Government :Federal constitutional elective monarchy and Federal parliamentary democracy

• Real GDP (%): 4.1% (Q1 2013; 5.6% in 2012)

• Legislature: Parliament • Upper house: Dewan Negara • Lower house - Dewan Rakyat

• Unemployment: 3.3% (Mar 2013)

• Inflation (%): 1.8% (May 2013; 1.2% in Dec 2012)

• Total trade Jan 2013: RM110.7 bil (€26.4 bil) • Top 5 trading partners: Singapore (16%), China (14%), Japan(10%), EU (9%), US (8%). 2

BSN – National Savings Bank of Malaysia Established under BSN Act 1974 to take over the functions and responsibilities of the Post Office Savings Bank. 398 Branches nationwide of which: 8 full-fledged branches 118 social branches of which 45 operate where no other banks operate

10 Mobile Banking Units

> 8.2 mil customers

>6,600 Employees

59 Micro Finance Centres

995 ATMs 283 CDMs >700,000 SMS Banking Users >350,000 Internet Banking Users

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BSN’s Memberships Member of World Savings Bank Institute (“WSBI”) (previously “International Savings Banks Institute”) since 1977. 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 1981. 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”).

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BSN’s Objectives

Generate Profits for Sustainability

To continue evolving in order to remain relevant in the industry so as to generate profit to take care of the wellbeing of the staff and carry out our mandates.

Mandated Roles & Financial Inclusion

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.

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BSN’s Financial Inclusion Agenda

Mandate to BSN: Provide financial access

Outreach Scalability

Underserved Communities Non- urban areas Non-economical areas Low population

Cheaper cost to serve

A better way…

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A Better Way…

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

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

Recruitment of Retail Outlets as Agents

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Recruitment of Retail Outlets as Agents Agents’ Criteria It has own core business It has own active cash flow

Registered Company - min. 12 months in operation Trusted by the community

Why Retailers? Minimal training required

GPRS coverage

Good Financial Record

High foottraffic

5km radius from the nearest BSN Branches. 10km radius from other agents.

Proximity to customers

Suitable building infrastructure 10

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

Recruitment of Retail Outlets as Agents

5 Basic Banking Services

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Banking Transactions Offered TRANSACTION LIMIT TRANSACTION TYPES

AMOUNT

*NUMBER OF TRANSACTIONS PER DAY

*MAXIMUM (Per transaction Per Day)

MINIMUM (Per transaction Per Day)

Deposits

RM500 (€120)

RM10 (€2.4)

3 Times

Withdrawals

RM500 (€120)

RM10 (€2.4)

3 Times

Bill Payments

RM2,000 (€475)

No Minimum

Unlimited for Different Bills

Purchase of BSN’s Savings certificate (eSSP)

RM1,000 (€240)

RM10 (€2.4)

Unlimited

RM500 (€120)

RM10 (€2.4)

Unlimited

Cashless Payments

* Whichever comes first

The account opening function via P.O.S. will be available by end 2013.

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

Recruitment of Retail Outlets as Agents

5 Basic Banking Services

Innovative use of technology

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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

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How does it Work?

Customer and / or Agent

P.O.S Terminal

GPRS Network and / or Fixed Line

Transaction Switch / Middleware and BSN Host/System

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. 15

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

Recruitment of Retail Outlets as Agents

5 Basic Banking Services

Towards Green Banking

Innovative use of technology

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Towards Green Banking Traditional Banking Practice

398 branches

   

Form-based Manual input Fixed line Longer process

Customers visit branches

• Online • Real-time

New Banking model

Bring the Bank to the Community

 Formless  Automated  Wireless GPRS  Simplified process

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

Recruitment of Retail Outlets as Agents

5 Basic Banking Services

Socioeconomic impact

Towards Green Banking

Innovative use of technology

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Impact to the country: Fulfillment of the Central Bank’s Plan* on Financial Inclusion After Before Agent Agent Banking Banking Total

Sub-District 837

Served 388 754

46% 90%

Underserved 449 184

54% 10%

*BNM’s 10-year Financial Sector Master Plan (2011 – 2020)

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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

• 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 (8.00am10.00pm, 7 days a week)

Agents

Community 20

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. 21

Impact to BSN Cost effective set up and operations Costs Set-up Cost (One-off)

Yearly Operating Cost

Branches

ATM-Off Premise

Agent Banking

% Cost Savings – Agent Banking VS Branches

RM500,00 (€120,000)

RM45,000 (€10,700)

RM3,000 (€700)

99.4%

RM250,000 (€60,000)

RM40,000 (€9,500)

RM1 ,000 (€200)

99.6%

Rapid expansion

Jan 2012 200 Agents

June 2012 1,500 Agents

Dec 2012 3,660 Agents

May 2013 4,044 Agents

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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) 23

BSN Agent Banking

Sustainable development

Officially launched on 27 Jan 2012 initial 200 agents

Recruitment of Retail Outlets as Agents

5 Basic Banking Services

Socioeconomic impact

Towards Green Banking

Innovative use of technology

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BSN Agent Banking & Sustainable Development The Nation

Communities & BSN agents

Supports the Government ‘s National Agendas

Expansion & development of local communities

• National Blue Ocean Strategy (Cost effectiveness, rapid expansion, high impact) • Financial Inclusion

• BSN agents are also agents of growth in their communities • Knowledge of IT and banking

Environment

Reduces BSN’s carbon footprint • Minimise need for brick-and-mortar branches • Promotes formless and cashless banking

BSN

Perpetual demand for basic banking services sustains the agent banking business model • BSN can continue to carry out its mandated roles more extensively

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Our Implementation Focus New & Refresher Agent’s Training

Signage

24-Hour Customer Service Hotline

Promotional Items

OnGround Support

Road Shows

Public Information & Awareness

Agent Knowledge & Support Agent Helpdesk – Toll-Free Line

Bulletin Community Events: FOMCA & BNMLINK

TV Commercial / Interview

Social Media Facebook

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Moving Forward

To increase number of agents

Introduction of New Services

Retention Program

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TVC

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