FOR a bank that was incorporated in 1974, Bank Simpanan Nasional’s (BSN) evolution through the decades has been steady while sustaining its prime position as the financier with a sizeably advantageous reach in sub-urban areas and in smaller towns.
BSN chief executive Datuk Yunos Abd Ghani helms the financial institution and speaks at length to The Star about BSN’s mandated role and its evolution from Post Office to a Development Financial Institution.
“We have to be more sustainable and self-financing, ” he intones, after elaborating that the mandate to serve the un-served and under-served segments of Malaysian society through the 70s till the present day had originally been aligned with national and public sector development.
“The starting point for us, in terms of financing that generates income was when we got ourselves involved in home financing and we later evolved to micro-financing and individual consumption – personal and car financing.”
It was from that point BSN began to build its assets and adopt a more aggressive approach, he continues, but as the nation’s population grows, so does the demand for services and the bank needs to ensure continuous banking access to the entire nation.
“We have the mandate to serve, ” he reiterates, “and so, we cannot cite costliness as an excuse to not provide banking access and services, so as the demand for services grows, ” he states, “we have to be innovative in order to serve.”
That focus on innovation has resulted in, among others, BSN holding the market leadership position for the reach and breadth of its agent banking network; from its starting position of 200 agent banks in 2012 when the initiative was first launched, to a massive network encompassing 4,276 agent banks as at October 2019.
“By having these agent banks, ” says Yunos, “we are serving the community to their doors – they don’t have to go to the nearest town centre, and our agent banks go beyond basic banking service provision, beyond mere money deposit services.”
BSN agent banks are the only facilities at which the public can open an account at an agent bank in paperless fashion using just the MyKad.
“This is the beauty of agent banking, ” affirms Yunos, underlining the convenience for the under-served communities in less urban areas.
But the bank’s bedrock of sustainability is in its flagship product, the Sijil Simpanan Premium (SSP), which began in 1978, four years after the bank’s incorporation, where each certificate issued (now the bank only generates a number for the BSN SSP) to each holder under this savings scheme is entered into a monthly draw that has prizes ranging from RM1 million cash to a brand new BMW.
“We have total prizes amounting to RM23 million worth, money that changes people’s lives, ” he relates, “but because of all these deposits from the savings in the SSP – an accumulated total savings of RM3.4 billion (as at November 2019), we are able to provide financing – not only for personal consumption – but also for business development, ” he declares.
The provision of micro-financing for business development is aligned with another of the bank’s mandates, he reiterates, thanks to the bank’s flagship product SSP, which allows the institution to wholeheartedly serve the expansion plans for micro-entrepreneurs.
“We are the market leader for micro-finance, ” says the chief executive, “contributing 41% to the market share in this sector.”
Apart from this being a point of corporate pride, the growth of its microfinance service has bred dozens of success stories across the nation focusing on the retail, manufacturing and services sectors. “Our customer, for example, runs a car spare parts and accessories business by delivering sales via van and keeping all stocks at home. After two years of operations, the customer applied for a BSN Micro/i loan/financing. The business grew successfully, and the owner proudly owns a car accessories and spare parts shop with sustainability of income.”
Another success story is that of the bank’s borrower, a bridal boutique owner, who started as a part-timer at a bridal boutique and had subsequently decided to open her own boutique. The customer then applied for BSN Micro/i facility from BSN and has since increased the business assets and revenue consistently on a monthly basis.
And there is also a customer who is a successful grocery store owner.
The desire to be an independent business owner and not a wage-earner has spurred the customer to start his own business. Now, the entrepreneur not only owns a store but is able to expand the business to another two stores.
These instances are just a few of the many who have reaped the benefits of micro-financing, says Yunos, who iterates the bank’s conditions for eligibility for this facility as the micro-business having been operational for at least two years and the capacity of the borrower to repay (amongst other eligibility criteria) the financing which can start at RM5,000 and go up to RM50,000.
“We finance the expansion of business, ” he states, adding that the bank looks thoroughly at factors such as the viability and authenticity of the business, but the advantage of BSN’s micro-finance facility, he adds, is the flexibility of the no-collateral-needed clause.
“So even though we have moved to a commercial transaction, we’ll never move away from our mandated role, ” he asserts, “and that is the spirit we have until today.”
Beyond the concrete support that micro-finance provides to micro-entrepreneurs in the expansion of the business is a nobler, more intangible longer-term benefit, he points out.
“We are helping small businesses build themselves up to the stage when they are ready to evolve into a medium-sized business, and perhaps to the point where they will deal with a commercial bank in going beyond micro-financing.”
When customers perform well in their existing credit line with BSN, he adds, they will be ready to interact with larger FIs.
Yunos is also insistent that support from BSN to micro-entrepreneurs comes in the form of advisory services, such as the importance of basic accounting and financial management, and in this respect, the bank collaborates with UiTM students from the accounting faculty to partner them with business owners.
The benefit is two-pronged, says Yunos: students get hands-on experience with micro-entrepreneurship and soft skills exposure, and business owners learn the fundamentals of accounting and cash flow management.
Looking at the evolution of BSN in the past 45 years to the present day, it is evident that the mandate to serve communities continues, much to the benefit of the nation.