AlwaysWoW! For a Great Great WoW in Life

Thoughts from me about things that are cool, that are WoW, that blow me away. Observations about businesses and people from a wide variety of life. Daily encounters - and thoughts outside the box, inside the box and without any box. New thinking, and challenging old thinking. Passionate about life, about respect, and about integrity.

Saturday, December 04, 2004

Some thoughts about online banking and Maybank's charges

Online banking is cheap for banks. There are numbers floating around that put the cost per transaction at very low levels:

A banking transaction involving a teller averages US$1.07.
A telephone transaction costs US 54¢.
A transaction made through an ATM costs US 27¢.
Banking with a PC software program costs US 1.5¢.
An Internet-based transaction only costs one cent.

Online banking does not replace normal banking service, but changes normal banking service by forcing those employees to provide higher value It allows the remaining employees in a bank to focus on what they should be doing anyway - customer service. Servicing those that enter their premises in a way that allows them to charge more money.

Online banking also allows a bank to enter and concentrate on business segments where the margins are higher, such as private banking, investment banking and so on.

With online banking, a bank would still be able to focus on its traditional clientel, the smaller guys on the road - those that have a savings account, and are happy to conduct online .

But online banking also requires a different mindset in a bank. It allows a bank to still serve customers that it cannot reach with a branch alone. It is available 24 hours, 7 days a week. I once read an article where someone was quoted as proposing to run an online bank from 8 AM to 5 PM - normal business hours. This was a story from the the beginning of the discussions about online banking. the grand-daddy of online banking, Egg in the UK, recognised the challenges. Set up by Prudential, its early CEO perceived customer service as the differentiating factor between the online bank and the traditional bank. And he said that good customer service is something like a dance between its customers and the bank. To instill this discipline into its employees, he brought in dance instructors to train the sales team. Someone who wanted to be hired had to do a dance during the interview - imagine the kind of mindset you get.

Online banking is a challenge for a bank - a Malaysian bank competes with a bank in the US with a bank in Korea with a bank in Australia - how many customers are served in Malaysia that origin overseas? E-banking and great service with their ATM machines is one of the reasons why the foreign banks in Malaysia can compete so nicely - they have a wider influence that exceed the branches - they can serve customers in Johor, Kuching, wherever. All because of online banking. You can actually ask the question how many customers did we serve in the US- take this as a measurement.

Failure is not possible - how damaging would it be if the servers are down and someone from the US cannot log in. Online banking thus requires high security and stability.

Malaysia is competing to become an islamic finance center - Islamic banking currently accounts for 10% of the financial system and is forecast to achieve at least 20% market share by 2010. There is a lot of money floating around in the Middle East that is a bit reluctant to invest in the US due to the current situation. If a bank is able to tap this growth it will clearly become the market leader.

Mobile banking will become the norm - in Korea, the number of banking transactions conducted via mobile phones rose 100.9 percent from the second to the third quarter 2004 - 8 million transactions were made!

Maybank is going to impose charges on those that use online banking. I am not sure about their intention, but I believe that someone looked at the potential growth, took a calculator and said, WoW, if we can tap this growth and this potential, we will have very, very happy shareholders and stakeholders!

It is difficult or, better, troublesome for a customer to change all the banking details once you have established an identity. That is one of the reasons why it is so easy to impose charges. It is inconvenient to tell all those that transfer money to an account that you are going to change your account. Or to change all those nitty-griddy details - the charges for your mobile phone, fixed line, electricity etc. - that is why companies like to give you the 30-days free trial. Once you tried something, it is more difficult to change, again. Maybank had its free internet accounts for even a longer time, so more customers are locked in.

Is this customer friendly? Nope - not a single minute. There are surely better ways to support a balance sheet! If you are interested, sign the online petition against the imposed charges by Maybank.

Will they read it? I don't think so - I think Maybank doesn't understand the online world too much and I doubt that they are interested in changing their position.


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