Improving Access to Finance for SMEs : Banking Beyond Branches
National Savings Bank of Malaysia (BSN)
Improving Access to Finance for SMEs : Banking Beyond Branches BNM-AFI Capacity Building Programme (14 – 17 October 2014)
AGENDA
1
Overview of BSN
2
BNM’s Financial Sector Blueprint 2011 – 2020
3
BSN Agent Banking (EBB)
4
Micro Finance
5
Financial Inclusion
Overview of BSN Established under the Act of Parliament 146 - Laws of Malaysia 1974.
Deposits
Transactional Banking
ATM
Loans / Financing
PERSONAL LOANS
FIXED DEPOSITS
DEBIT & CREDIT CARDS
Wealth Management
CDM
SAVINGS ACCOUNTS
PREMIUM SAVINGS CERTIFICATE
Objectives: • Promote and mobilize savings, particularly from small savers • Inculcate the habit of thrift and savings • Provide an avenue to save by the general public • Utilize excess funds of the Bank to help finance the economic development of the nation
INSURANCE/TAKAFUL MORTAGE
SMS BANKING
HIRE PURCHASE
INTERNET BANKING
MICRO FINANCE AGENT BANKING
UNIT TRUST
3
BSN Today – Our channels & touch points
6,748 Employees
5,161 agents
402 Branches 100% nationwide coverage
59 Micro Finance Centres
85 Islamic branches
885 ATMs
10 Mobile Banking Units
> 8.5 mil customers > 0.7 mil SMS Banking Users > 0.35 mil Internet Banking Users
357 CDMs 4
BNM Financial Sector Blueprint 2011-2020 4 Key recommendations on Financial Inclusion:
Innovative & cost efficient channels to reach community
Expand range of products that meet citizens financial needs
Strengthen the financial services infrastructure to effectively provide services to all citizens
Enhance the knowledge and capacity of the underserved to utilize financial services responsibly
Agent Banking Mobile Banking Unit Online Banking Self-service Terminals SMS Banking Savings Micro Finance Loans/Financing Remittance Insurance / Takaful
Social Branches to mobilize savings Financial Inclusion ; Micro Finance / Agent Banking Financial Education & Awareness program Financial Advisory Services to Micro Finance borrowers BSN Mobile Counters
5
Financial Inclusion
• Mandated to BSN; Providing Financial Access
• Under-served communities • Non- urban areas • Non-economical areas • Low population
Reach Scalability Cheaper cost to serve
A better way…
6
Banking Beyond Branches – 3B’s Pioneer for Agent Banking in Malaysia BSN Agent Banking: Our Journey
Dec 2013 5,014 Agents
NOW 5,161 Agents
Dec 2012 3,660 Agents Jan 2012 200 Agents
• As mandated by our Prime Minister in his budget speech in Oct 2012, BSN will have 5,000 agents by 2015. • Within 2 years, we have successfully recruited 5,000 agents. 7
Agent Banks Coverage More than 90% unserved areas are now served Before BSN Agent Banking
Served 388
43%
d
After BSN Agent Banking
Total
Total
Sub-District 895
Sub-District 895
Unserved 507
57%
Served 388+449
94%
Unserved 58
6%
8
BSN Agent Banking : An Innovation Using simple technology & process for customers convenience
Normal Practice
Form-based Manual input Fixed line Longer process Less Coverage
Customers visiting branches
• Online • Real-time
Bring BSN to the Community
Formless Automated Wireless GPRS Simplified process Increased coverage
Innovative Idea
9
How it Works?
Customer and / or Agent
P.O.S Terminal
GPRS Network and / or Fixed Line
Transaction Switch / Middleware and BSN Host/System
• Banking transaction is performed via wireless GPRS using Point-of-Sale (POS) terminals provided by BSN to its agents. • Customers are required to confirm their Personal Identification Number (PIN) and biometric verification before initiating their transactions. • A receipt will be generated upon each successful transaction. 10
Agent Bank Profiling More than 70% agents are in sub urban & rural areas Agent Profiling by Nature of Business Peninsular M’sia VS East M’sia Business Category
Grocery Shop
Phone Shop
Others
Peninsular M’sia
No. of Agent
2,963
831
1,367
4,233 Agents
%
57%
16%
27%
Overall
Agent Profiling by Geographical Area
5,161 agents East M’sia
SubUrban/Rural
• 4,030 (78%)
928 Agents Urban
• 1,131 (22%) 11
Agent Bank Performance Overall Performance as at 30th September 2014 No. of Agents 5,161 % No. of Transaction
Trx Count 26.1mil Trx Value MYR2.18bil (USD859mil)
Cashless Payment Prepaid eSSP 0.8% Reloads 0.3% 8.1% Withdrawal 6.1% Deposit 7.6%
Average Amount Per Transaction Trx Types
Average Amount
Deposit
RM150 (USD46)
Withdrawal
RM152 (USD47)
Bill Payment
RM80 (USD25)
Bill Payment 77.1%
12
Opportunities to offer many banking services through Agent Banks
MEPS Transactionsc
Prepaid Reload* Deposits IPT PIN Purchase
Bill Payments
Cashless Payments
Sijil Simpanan Premium (SSP) Account Opening
Existing services Future services
Credit Card Payment
Loan Repayment
IB Registration
Withdrawals
Remittance
13
Agent Bank Transaction Limit TRANSACTION LIMIT AMOUNT TRX TYPES MINIMUM (Each Transaction)
MAXIMUM (Per Day)
MYR10 (USD3.07) MYR10 (USD3.07)
MAXIMUM NUMBER OF TRANSACTIONS PER DAY
eSSP
MYR10 (USD3.07)
*MYR500 (USD153) *MYR500 (USD153) MYR2,000 (USD613) MYR1,000 (USD307)
Cashless Payment
MYR10 (USD3.07)
MYR500 (USD153)
Unlimited
Mobile Prepaid Reload
MYR5 (USD1.53)
MYR500 (USD153)
Unlimited
Deposit Withdrawal Bill Payment
No Minimum
*3 Times *3 Times
Unlimited for Different Bills Unlimited
* Whichever comes first 14
Agent Bank Incentive Schemes Incentive to Agents in the form of Monthly Commission Payout NO.
TRANSACTION TYPES
1.
Cash Deposit
2.
Cash Withdrawal
3.
Utilities Bill Payment
4.
eSSP Purchase
5.
Mobile Phone Prepaid Reloads
6.
Cashless Payment
COMMISSION PER TRANSACTION
Fixed Fee per transaction
% of the Reload Sales Value
NIL
Note : 1.
NO COMMISSION will be paid to the agents for Utilities Bill Payment below RM10.
2.
Agents will also stand chance to win attractive rewards in the form of Cash Rewards & Holiday Packages through the yearly EBB Award giving ceremony.
15
Cost Effectiveness Lower set up & operating costs with agent banks
Branches Costs
ATM-Off Premise
Agent Banking
% Cost Savings – Agent Banking VS Branches
MYR / USD Set-up Cost (One-off)
MYR500,000 (USD153,000)
MYR45,000 (USD13,800)
MYR5,000 (USD1,530)
99%
Yearly Operating Cost
MYR250,000 (USD76,700)
MYR40,000 (USD12,300)
MYR2,000 (USD613)
99%
16
BSN Awards & Appreciation
The Karlsruhe Sustainable Finance Award 2013 in Germany:
Malaysia Public Sector Innovation Award 2013 (AISA) :
BSN EBB Awarded with “The Certificate of Merit” for “Best Innovation in Financial Services” on 4th July 2013.
BSN EBB certified as Top 5 Finalists for ICT Innovation Award Category on 12 September 2013.
The Malaysia Book of Records: BSN EBB certified as the “LARGEST NETWORK OF BANKING AGENTS” in Malaysia for 2013 on 30th September 2013.
Malaysia GreenTech Awards 2013”: BSN EBB awarded with the “Best Green Practice” for “GreenTech Financial Institution Award” on 12th October 2013. 17
Key Challenges for Agent Banking
Public Acceptance
Close monitoring on operations
Key Challenges
Ground support “hand-holding”
Communication
18
Moving Forward
Introduction of New Services Agent Retention Program
To increase number of agents
19
Micro Finance Scheme by BSN to support SMEs
The National SME Development Council (NSDC) mandated BSN to be a specialized Micro Finance (MF) institution in 2006.
BSN launched its MF Program on March 15, 2007, to provide financing facilities to viable micro enterprises. 20 *source: BNM
Micro Finance products There are 3 products under MF scheme : • TemaNiaga : Conventional MF loan product • TemaNiaga – i : Shariah compliant financing product; and • TemanMesra : Conventional loan product funded by BNM’s Micro Enterprise Fund 21
Key Features of BSN MF Scheme Financing Amount From RM5,000 to RM50,000 • Financing to Micro Enterprises / Self-employed Individuals
• No Collateral • Minimum Documentation • Simple Financing Procedures
Small Financing Amount
Funding for Business Purposes
• Widely Accessible • 59 Dedicated MFC • 402 Branches
Easy
• •
Convenient
Fast
Approval - 6 Working Days Disbursement - 4 Working Days
22
BSN Micro Finance Scheme Today BSN MARKET SHARE OF MF INDUSTRY (by RM in millions) BSN RM387M
RM473M @55% 10 Banks
@ 45%
As at to date BSN deployed:• 59 Dedicated MF Centers • 120 Specialized officers to market and process loans; • Existing 402 Bank Branches –accept applications from potential customers
Total Industry: RM860M As at 31st July 2014*
BSN is The Market Leader among banks that provide micro financing. BSN has approved more than RM800 Million worth of loans to 40,000 customers since 2007 23 Source BNM
Advisory Services under BSN’s Micro Finance
• Capacity Building Programs • Instilling Financial Discipline • Counseling • Credit Clinics • Customer Training Program
24
Strong synergy between Agent Banking & Micro Finance in supporting financial inclusion agenda
Agent Banking (EBB)
Micro Finance (MF)
Existing MF customers to become EBB Providing MF to the appointed EBB for business expansion
Synergy 25
Current Status
MF
EBB
• 59 dedicated MF Centers • Over RM800 Million worth of loans disbursed to 40,000 customers • RM387 mil loans outstanding balance @ 45% of M’sia MF market share
• 5,161 active agents • Over 26.1 mil transaction count • More than RM2.1 bil transaction amount.
1,876 MF Customers/EBB (36%)
26
Strategic Collaboration - Moving Forward Agent Banks as “one stop centre” for Micro Finance needs in future
EBB Access Points for MF Loan Application
Cross Sell other MF Customers Products MF Loan Collection Distribution Centers for MF Customers
MF 27
THANK YOU
Dato’ Mearia Hamzah Senior Vice President / Head Community Banking Business Bank Simpanan Nasional [email protected]
28
Improving Access to Finance for SMEs : Banking Beyond Branches BNM-AFI Capacity Building Programme (14 – 17 October 2014)
AGENDA
1
Overview of BSN
2
BNM’s Financial Sector Blueprint 2011 – 2020
3
BSN Agent Banking (EBB)
4
Micro Finance
5
Financial Inclusion
Overview of BSN Established under the Act of Parliament 146 - Laws of Malaysia 1974.
Deposits
Transactional Banking
ATM
Loans / Financing
PERSONAL LOANS
FIXED DEPOSITS
DEBIT & CREDIT CARDS
Wealth Management
CDM
SAVINGS ACCOUNTS
PREMIUM SAVINGS CERTIFICATE
Objectives: • Promote and mobilize savings, particularly from small savers • Inculcate the habit of thrift and savings • Provide an avenue to save by the general public • Utilize excess funds of the Bank to help finance the economic development of the nation
INSURANCE/TAKAFUL MORTAGE
SMS BANKING
HIRE PURCHASE
INTERNET BANKING
MICRO FINANCE AGENT BANKING
UNIT TRUST
3
BSN Today – Our channels & touch points
6,748 Employees
5,161 agents
402 Branches 100% nationwide coverage
59 Micro Finance Centres
85 Islamic branches
885 ATMs
10 Mobile Banking Units
> 8.5 mil customers > 0.7 mil SMS Banking Users > 0.35 mil Internet Banking Users
357 CDMs 4
BNM Financial Sector Blueprint 2011-2020 4 Key recommendations on Financial Inclusion:
Innovative & cost efficient channels to reach community
Expand range of products that meet citizens financial needs
Strengthen the financial services infrastructure to effectively provide services to all citizens
Enhance the knowledge and capacity of the underserved to utilize financial services responsibly
Agent Banking Mobile Banking Unit Online Banking Self-service Terminals SMS Banking Savings Micro Finance Loans/Financing Remittance Insurance / Takaful
Social Branches to mobilize savings Financial Inclusion ; Micro Finance / Agent Banking Financial Education & Awareness program Financial Advisory Services to Micro Finance borrowers BSN Mobile Counters
5
Financial Inclusion
• Mandated to BSN; Providing Financial Access
• Under-served communities • Non- urban areas • Non-economical areas • Low population
Reach Scalability Cheaper cost to serve
A better way…
6
Banking Beyond Branches – 3B’s Pioneer for Agent Banking in Malaysia BSN Agent Banking: Our Journey
Dec 2013 5,014 Agents
NOW 5,161 Agents
Dec 2012 3,660 Agents Jan 2012 200 Agents
• As mandated by our Prime Minister in his budget speech in Oct 2012, BSN will have 5,000 agents by 2015. • Within 2 years, we have successfully recruited 5,000 agents. 7
Agent Banks Coverage More than 90% unserved areas are now served Before BSN Agent Banking
Served 388
43%
d
After BSN Agent Banking
Total
Total
Sub-District 895
Sub-District 895
Unserved 507
57%
Served 388+449
94%
Unserved 58
6%
8
BSN Agent Banking : An Innovation Using simple technology & process for customers convenience
Normal Practice
Form-based Manual input Fixed line Longer process Less Coverage
Customers visiting branches
• Online • Real-time
Bring BSN to the Community
Formless Automated Wireless GPRS Simplified process Increased coverage
Innovative Idea
9
How it Works?
Customer and / or Agent
P.O.S Terminal
GPRS Network and / or Fixed Line
Transaction Switch / Middleware and BSN Host/System
• Banking transaction is performed via wireless GPRS using Point-of-Sale (POS) terminals provided by BSN to its agents. • Customers are required to confirm their Personal Identification Number (PIN) and biometric verification before initiating their transactions. • A receipt will be generated upon each successful transaction. 10
Agent Bank Profiling More than 70% agents are in sub urban & rural areas Agent Profiling by Nature of Business Peninsular M’sia VS East M’sia Business Category
Grocery Shop
Phone Shop
Others
Peninsular M’sia
No. of Agent
2,963
831
1,367
4,233 Agents
%
57%
16%
27%
Overall
Agent Profiling by Geographical Area
5,161 agents East M’sia
SubUrban/Rural
• 4,030 (78%)
928 Agents Urban
• 1,131 (22%) 11
Agent Bank Performance Overall Performance as at 30th September 2014 No. of Agents 5,161 % No. of Transaction
Trx Count 26.1mil Trx Value MYR2.18bil (USD859mil)
Cashless Payment Prepaid eSSP 0.8% Reloads 0.3% 8.1% Withdrawal 6.1% Deposit 7.6%
Average Amount Per Transaction Trx Types
Average Amount
Deposit
RM150 (USD46)
Withdrawal
RM152 (USD47)
Bill Payment
RM80 (USD25)
Bill Payment 77.1%
12
Opportunities to offer many banking services through Agent Banks
MEPS Transactionsc
Prepaid Reload* Deposits IPT PIN Purchase
Bill Payments
Cashless Payments
Sijil Simpanan Premium (SSP) Account Opening
Existing services Future services
Credit Card Payment
Loan Repayment
IB Registration
Withdrawals
Remittance
13
Agent Bank Transaction Limit TRANSACTION LIMIT AMOUNT TRX TYPES MINIMUM (Each Transaction)
MAXIMUM (Per Day)
MYR10 (USD3.07) MYR10 (USD3.07)
MAXIMUM NUMBER OF TRANSACTIONS PER DAY
eSSP
MYR10 (USD3.07)
*MYR500 (USD153) *MYR500 (USD153) MYR2,000 (USD613) MYR1,000 (USD307)
Cashless Payment
MYR10 (USD3.07)
MYR500 (USD153)
Unlimited
Mobile Prepaid Reload
MYR5 (USD1.53)
MYR500 (USD153)
Unlimited
Deposit Withdrawal Bill Payment
No Minimum
*3 Times *3 Times
Unlimited for Different Bills Unlimited
* Whichever comes first 14
Agent Bank Incentive Schemes Incentive to Agents in the form of Monthly Commission Payout NO.
TRANSACTION TYPES
1.
Cash Deposit
2.
Cash Withdrawal
3.
Utilities Bill Payment
4.
eSSP Purchase
5.
Mobile Phone Prepaid Reloads
6.
Cashless Payment
COMMISSION PER TRANSACTION
Fixed Fee per transaction
% of the Reload Sales Value
NIL
Note : 1.
NO COMMISSION will be paid to the agents for Utilities Bill Payment below RM10.
2.
Agents will also stand chance to win attractive rewards in the form of Cash Rewards & Holiday Packages through the yearly EBB Award giving ceremony.
15
Cost Effectiveness Lower set up & operating costs with agent banks
Branches Costs
ATM-Off Premise
Agent Banking
% Cost Savings – Agent Banking VS Branches
MYR / USD Set-up Cost (One-off)
MYR500,000 (USD153,000)
MYR45,000 (USD13,800)
MYR5,000 (USD1,530)
99%
Yearly Operating Cost
MYR250,000 (USD76,700)
MYR40,000 (USD12,300)
MYR2,000 (USD613)
99%
16
BSN Awards & Appreciation
The Karlsruhe Sustainable Finance Award 2013 in Germany:
Malaysia Public Sector Innovation Award 2013 (AISA) :
BSN EBB Awarded with “The Certificate of Merit” for “Best Innovation in Financial Services” on 4th July 2013.
BSN EBB certified as Top 5 Finalists for ICT Innovation Award Category on 12 September 2013.
The Malaysia Book of Records: BSN EBB certified as the “LARGEST NETWORK OF BANKING AGENTS” in Malaysia for 2013 on 30th September 2013.
Malaysia GreenTech Awards 2013”: BSN EBB awarded with the “Best Green Practice” for “GreenTech Financial Institution Award” on 12th October 2013. 17
Key Challenges for Agent Banking
Public Acceptance
Close monitoring on operations
Key Challenges
Ground support “hand-holding”
Communication
18
Moving Forward
Introduction of New Services Agent Retention Program
To increase number of agents
19
Micro Finance Scheme by BSN to support SMEs
The National SME Development Council (NSDC) mandated BSN to be a specialized Micro Finance (MF) institution in 2006.
BSN launched its MF Program on March 15, 2007, to provide financing facilities to viable micro enterprises. 20 *source: BNM
Micro Finance products There are 3 products under MF scheme : • TemaNiaga : Conventional MF loan product • TemaNiaga – i : Shariah compliant financing product; and • TemanMesra : Conventional loan product funded by BNM’s Micro Enterprise Fund 21
Key Features of BSN MF Scheme Financing Amount From RM5,000 to RM50,000 • Financing to Micro Enterprises / Self-employed Individuals
• No Collateral • Minimum Documentation • Simple Financing Procedures
Small Financing Amount
Funding for Business Purposes
• Widely Accessible • 59 Dedicated MFC • 402 Branches
Easy
• •
Convenient
Fast
Approval - 6 Working Days Disbursement - 4 Working Days
22
BSN Micro Finance Scheme Today BSN MARKET SHARE OF MF INDUSTRY (by RM in millions) BSN RM387M
RM473M @55% 10 Banks
@ 45%
As at to date BSN deployed:• 59 Dedicated MF Centers • 120 Specialized officers to market and process loans; • Existing 402 Bank Branches –accept applications from potential customers
Total Industry: RM860M As at 31st July 2014*
BSN is The Market Leader among banks that provide micro financing. BSN has approved more than RM800 Million worth of loans to 40,000 customers since 2007 23 Source BNM
Advisory Services under BSN’s Micro Finance
• Capacity Building Programs • Instilling Financial Discipline • Counseling • Credit Clinics • Customer Training Program
24
Strong synergy between Agent Banking & Micro Finance in supporting financial inclusion agenda
Agent Banking (EBB)
Micro Finance (MF)
Existing MF customers to become EBB Providing MF to the appointed EBB for business expansion
Synergy 25
Current Status
MF
EBB
• 59 dedicated MF Centers • Over RM800 Million worth of loans disbursed to 40,000 customers • RM387 mil loans outstanding balance @ 45% of M’sia MF market share
• 5,161 active agents • Over 26.1 mil transaction count • More than RM2.1 bil transaction amount.
1,876 MF Customers/EBB (36%)
26
Strategic Collaboration - Moving Forward Agent Banks as “one stop centre” for Micro Finance needs in future
EBB Access Points for MF Loan Application
Cross Sell other MF Customers Products MF Loan Collection Distribution Centers for MF Customers
MF 27
THANK YOU
Dato’ Mearia Hamzah Senior Vice President / Head Community Banking Business Bank Simpanan Nasional [email protected]
28
