Online banking in Malaysia

In 2013, 14.3 million people already use online banking (49.1%) and 0.3 million of them are corporate users. This online banking initiate merge of 51 banks institution and 10 banking groups. The mergers, which involved the consolidation of 96% of the total assets of the banking institutions was achieved with minimum disruption and dislocation to the system. This has been a major accomplishment by the domestic banking industry. This merge also make domestic bank earn more and this is a great benefit for national economy.

Under the Bank Negara Malaysia guidelines, all licensed banking institutions in Malaysia are allowed to establish informational Web sites. For more advanced Internet banking services, only domestic banking institutions are allowed to establish communicative or transactional Web sites with effect from June 1 2000. Locally incorporated foreign banks, however, are only allowed to incorporate communicative Web sites from Jan 1 2001 and transactional Web sites from Jan 1 2002 (Low, 2000). Only banking institutions licensed under the Banking and Financial Institutions Act 1989 and the Islamic Banking Act 1983 are allowed to offer Internet Banking services in Malaysia (BankInfo, 2005).

The Internet wave has caught on in Malaysia, especially through the MSC initiatives undertaken. In the first wave of the Internet, it is extensively being used for communications, messaging and the posting of static information. Businesses use it as a form of online brochure, publicising their corporations.

Rapid advances in ICT has also significantly revolutionized the banking business, transforming processes as well as the strategic focus of banking institutions. It has fully opened the doors for new business opportunities as well as offering new methods of delivery of banking products and services, such as through the Internet. Under the new environment, competitiveness will not depend only on physical presence as in traditional markets, but rather on the ability to capitalize the technology strategies so as to deliver efficient and effective services. Successful banking institutions will be the ones that are able to leverage most from the ICT revolution as greater recognition is accorded to ICT as a driver of change. This approach emphasizes on high standards of corporate governance, transparency and accountability. In adapting, banking institutions would need to reassess their internal practices as well as the overall corporate culture to be consistent with the new rules and regulation (Bank Negara Malaysia, 2001a).

Customer satisfaction may increase based on the want and need, times, power of buying, and status. Today’s companies have moved from a product and sales philosophy to a new marketing philosophy. Customer-centered companies have emphasized a better understanding of customers’ needs and wants and then translated them into the capability to give customers what they really need and want. The technology of E-Commerce determines what can be offered to customers, but only customers determine which of those technologies will be accepted. The key to success for E-Commerce lies in knowing customers.