21 – 22 September 2006, Kuala Lumpur Globalisation and the experience of proximity banking Dato’ Abdul Azim Mohd Zabidi Chairman, Bank Simpanan Nasional, Malaysia “Savings banks: the retail gateway to a global market. Driving sustainable development”

MALAYSIA ECONOMIC STATISTICS Country’s economy is expected to benefit from global growth GDP is on target to increase by 6%. With the launch of 9 th Malaysia Plan, 2007 GDP is also expected to continue to increase by 6% Growth mainly in services and manufacturing sector. BNM Q Aug report

MALAYSIA ECONOMIC STATISTICS 2005 population is at million of which million is on employment. Unemployment rate is at 3.28%. Projected per capita income at USD11,871 and 2007 at USD12,666 Department of Statistics, Aug 2006

FINANCIAL ENVIRONMENT Retail based financial institutions : 1.Commercial banks 13 locally incorporated foreign banks 10 local banks 2.Islamic banks 8 local Islamic banks 2 foreign Islamic banks 3.Development Financial Institutions (DFIs) 3 that serve retail customers

Bank Negara Malaysia (BNM)’s Financial Master Plan is to evolve the Malaysian financial sector into a world class one; in a way that can best serve the nation. In its final phase, focus is on liberalisation and the following have been done:- 1.Locally incorporated foreign banks are allowed to open 4 more branches in Entry of new players, banks and investment houses. 3.Promotion of technology to increase efficiency and effectiveness. 4.Promotion of sophisticated products. 5.Promotion of Islamic banking. Globalisation & Further Liberalisation of Financial Market in Malaysia

Promotion of Islamic Banking Some key initiatives have been the establishment of : 1.IFSB (Islamic Financial Services Board ) and, 2.INCEIF ( International Centre for Education in Islamic Centre )

Challenges to existing players in the financial market. International players will target the lucrative retail segment of the population. There will be intense competition for this segment. This may prompt commercial banks to move into other areas such as those served by BSN. Globalisation & Further Liberalisation of Financial Market in Malaysia

Gazetted by Parliament in Aug 1974, through the Bank Simpanan Nasional Act, Bank Simpanan Nasional MALAYSIA BSN as a statutory body is regulated under the 1974 Act & reports to the Ministry of Finance (MOF). In 2002, BSN was categorised as a development bank & came under the supervision of Malaysia’s Central Bank, Bank Negara Malaysia.

BSN’s Unique Role Under the 1974 Act To promote & moblise savings, particularly from small savers; To provide means for savings by the general public; To promote the interests of its depositors and other customers To utilize the funds for investments, including financing for the economic development of the nation. All retail deposits placed with BSN are guaranteed by Government of Malaysia.

Our Identity Symbol of a “coin tree” denoting a people’s bank whereby no amount is too small for savings. The coin tree or “pohon pitis” originated from Malaya’s history when in 1903 the State of Kelantan paid tribute to the State of Siam by bearing a coin tree made of tin metal. In the modern interpretation of this logo, there are 13 coins made in gold representing the 13 states of Malaysia & describing a nationwide provision of banking services.

BANK SIMPANAN NASIONAL Network of 382 branches and 621 ATMs nationwide. Joining MEPS ATM network, our customers have more than 1,000 ATMs to use. More than 300 branches and 600 ATMs Network Around Malaysia

Brand Recognition Well known amongst: School children Pensioners Government / semi government employees (e.g. police and army) BANK SIMPANAN NASIONAL

Opportunities for BSN Capitalise on close relationship built over the years with our niche customers (government / semi-government employees, school children, residents in rural areas). Grow Islamic banking offerings & micro financing asset base. Provide more competitive pricing mechanism. Business Focus:-

Opportunities for BSN Significantly increase speed and efficiency of delivery channels to increase customer satisfaction. Capitalise on available technology - establishment of mobile banking or automated banking environment. Organisational focus:-

Opportunities for BSN Elevation of human capital – enhancing education both amongst the public and banking personnel, creation of awareness and increasing level of competency. Greater empowerment – to steer staff towards greater confidence, self reliance and empowerment which are necessary in face of greater competition. People Focus:-

Opportunities for BSN New Business Areas:- Islamic Insurance – Takaful. Partnering with a well known and respected insurance company to form Prudential BSN Takaful Bhd.