AFTER 37 years of maintaining its social mandate of inculcating savings and providing banking accessibility to all community segments in the country, Bank Simpanan Nasional (BSN) is now reaching out to the mass affluent and high net worth segments.
In general, mass affluent is a marketing term used to refer to the high-end mass market while a high net worth individual is a person typically defined as having investable assets in excess of US$1mil but the amount varies accordingly.
According to its head of corporate services Joannita Zaleha Yusof, while BSN takes its mandated roles seriously, it is also aware of the need to remain competitive and relevant in the current banking industry.
“BSN, as a retail savings bank, remains relevant by being sustainable and profitable as well as constantly looking into innovative opportunities to expand our business.
“We have moved from brick and mortar' to click and mortar' strategies when enhancing our service deliverables and banking channels.
“As a retail bank, we offer total banking products and services to our customers who are predominantly those who might not necessarily have the opportunity to bank with the usual banks.
“On the same token, we are expanding our reach to mass affluent and high net worth segments while we make efforts to strengthen customer retention,” she told StarBiz recently.
Joannita said BSN aimed to increase its market penetration - eyeing 25% share of the government sector for personal loans while it explored other segments.
She added that BSN would soon launch its branchless banking services - a new banking strategy to increase customer outreach to financial services at “un-banked” areas.
“It's a new banking service that involves increasing customer outreach and access to financial services without setting up the physical branch infrastructure.
“BSN also offers competitive rates and now has an internet banking facility to remain current and relevant,” she said.
BSN was incorporated in 1974 under the Finance Ministry where BSN took over all the duties and responsibilities of a post office savings bank.
Prior to BSN's incorporation, savings with the post office savings bank had grown steadily where in 1949 it had 229,652 depositors with a credit balance of RM47.2mil. At the time of the launching of BSN, it had more than 2.5 million depositors.
For the financial year ended Dec 31, 2010, BSN's group net profit year-on-year grew by 3.4% to RM372.8mil on the back of a revenue of RM1.5bil, a 7.1% increase from 2009. In 2010, BSN chalked up a total of RM3.75bil in loans business where personal loans constituted 88.2%, mortgage loans at 10.7% and hire-purchase made up the balance.
To be more flexible, BSN has also adopted risk-based pricing as one of its key strategies that will enable it to react effectively to market changes while its campaign launches and other activities are expected to amplify customer awareness and generate excitement in the market.
Risk-based pricing charges different interest rates on the same loan to different people, depending on their credit score and other factors.
Another area of growth for BSN is Islamic banking. In 2010, its Islamic banking assets grew 9.2% from 2009, contributing to an increase in reserves to RM489mil. Currently, BSN has 45 Islamic banking branches nationwide.
Going forward, Joannita said the bank planned to introduce more Islamic banking products such as home financing based on a floating rate.
BSN banking facilities are extended to under-served communities throughout the country as part of its social mandate.
“To date BSN is the only bank with)branches in Tioman, Song and Belaga (remote towns in Sarawak),” Joannita noted.
BSN is one of the financial institutions with the largest network of branches nationwide.
BSN has 385 branches, 896 auto teller machines and 166 units of cash deposit machines, apart from mobile bank units that also do its rounds of banking services in Kelantan, Terengganu, Sabah and Sarawak.
BSN's mandate is not only confined to under-served communities as it also assists in the development of the small businesses via microfinance facility.
“The National Small and Medium Enterprise Development Council in 2006 mandated BSN to be a specialised microfinance facilities provider.
“There has been positive response from the public as we have received more than 56,000 applications since we launched our micro financing scheme in 2007,” she said.
It was initially very challenging for BSN to operate by focusing on its social mandate alone.
However, BSN has been able to successfully strike a balance between social dividends while remaining financially independent and strong.
“We realise that our consumers are increasing from day to day and are becoming more discerning and demanding. To satisfy these expectations, BSN must bridge the gap between operating as a savings bank and focus its efforts on value-added services and provide more choices for the customers,” she said.