Case Study: Co-creating Value

with Online Banking Services: The Case

of Maybank

. . .Our customers have been the Group’s most important

asset, standing by us through the Maybank Group’s journey.
We have achieved the market positioning that we have today
due to their continued support and belief in us (Maybank
2014a)
—Datuk Farid Alias
—Maybank Group President & CEO

The Malaysian Banking Industry

Background

The financial services industry in Malaysia has achieved significant milestones

since the country gained Independence in 1957. In tandem with positive economic
transitions from a modest rural economy to one that is developing, the Malaysian
banking system under the supervision of the Central Bank has also transformed
remarkably. Once dominated by few foreign banks, the banking industry today
consists of 27 commercial banks, of which 8 are locally owned banks and the
remaining are locally incorporated foreign banks (Bank Negara Malaysia 2013).
The banking sector is the largest component of the Malaysian financial system,
accounting for about 67 % of total assets in the system (KPMG Publication n.d.).
 The Central Bank of Malaysia, Bank Negara Malaysia (BNM), regulates the
financial services industry with the aim of fostering monetary stability and ensuring
a stable financial structure within the system. Towards this end, BNM plays a vital
role in the development of comprehensive and sound strategies that would support
national efforts to become a high income nation by 2020. One of the measures
undertaken by BNM is the implementation of the Financial Sector Blueprint
2011–2020, which is the offspring of the first Financial Sector Masterplan launched
in 2001. According to Bank Negara Malaysia (Bank Negara Malaysia 2010), the ten
year Blueprint is “a strategic plan that charts the future direction of the financial
system as Malaysia transitions towards becoming a high value-added, high-income
economy” (Bank Negara Malaysia 2010).
One of the objectives set out in the first Financial Sector Master Plan
(2001–2010) is to nurture the financial system to become one that is more competi-
tive and resilient, with reforms that entail greater use of technology so that financial
products and services are delivered to consumers more efficiently and effectively.
The second phase of the blueprint builds upon the achievements attained from the
first phase to heighten effectiveness and rigour of the financial sector. In line with
these objectives, the banking sector has introduced new delivery channels including
those offered through online services to conveniently reach out to a wider span of
customers and businesses.

Consumer Trends

The initiatives taken by BNM and financial services providers to promote technol-
ogy in services are viewed as timely and necessary to meet the demands of
sophisticated Malaysians who have become more technology-savvy than ever
before. Reports have indicated that Malaysians are among the most smartphone
savvy in emerging Asia and constantly use their smartphones to access a wide range
of functions (Digital News Asia 2013). A study conducted by Telenor Group
revealed that young Malaysians use their smartphones for numerous connectivity
needs, surpassing their counterparts in Scandinavia, specifically those in Sweden
and Norway (Kumar 2014). Furthermore, the study reported that more than 50 % of
Malaysian mobile customers used their smartphones to conduct online banking
transactions, signalling tremendous opportunity and growth for online banking and
financial services.
The positive outlook for online banking is also expressed by the leader of
financial services in Price Waterhouse Coopers who commented that digital bank-
ing is seen to advance rapidly in Malaysia due to the strong usage of smartphones,
tablets and the internet (Raj 2014). These transformations suggest a remarkable
progression of digital banking in Malaysia across all demographic groups.
According to a report by BNM, the number of internet banking subscribers have
increased tremendously over the past 10 years. As illustrated in Table 1, the
penetration of internet banking subscribers to total population increased from
9.8 % in 2005 to 60 % in 2015 (Q1). In absolute terms, the number of subscribers
Table 1 Internet banking subscribers (end of period) (Bank Negara Malaysia 2015)
Number of subscribers (in millions)
Year Total Individual Corporate Penetration to population (%)
2005 2.6 2.5 0.1 9.8
2006 3.2 3.2 0.0 12.0
2007 4.6 4.5 0.1 16.9
2008 6.2 6.1 0.1 22.5
2009 8.1 8.0 0.2 28.9
2010 9.8 9.6 0.2 34.4
2011 11.9 11.6 0.2 40.9
2012 13.7 13.4 0.2 46.4
2013 15.5 15.2 0.3 51.9
2014 17.6 17.3 0.3 58.2
March 2015 18.2 17.8 0.3 60.0

shows significant expansion, from 2.6 million to 18.2 million subscribers, reflecting
a sevenfold increase. These figures exemplify that Malaysians prefer to use and are
becoming more reliant on internet banking due to the numerous benefits and values
it creates for them.
The use of mobile banking made viable through applications on smartphones
and tablets is also gaining popularity in Malaysia. As can be noted from Table 2, the
penetration rate of mobile banking subscribers to the population grew from 0.5 % in
2005 to 20.4 % in 2015 (Q1). In absolute numbers, the total number of mobile
banking subscribers escalated from 127,000 in 2005 to 6,158,600 in March 2015.
The penetration rate of total subscribers of mobile banking to total mobile
subscribers increased from 0.7 % in 2005 to 14.1 % in 2015 (Q1), reflecting an
outstanding 20-fold increase. These statistics support the findings of Telenor Group
and the industry outlook by experts that mobile banking is seen to gain popularity
among an increasingly modernised Malaysian society.
In line with BNM’s call to promote the use of technology in banking services
and to meet the demands of a more sophisticated society, the leading bank in
Malaysia, Malayan Banking Berhad (hereinafter, Maybank), has pioneered numer-
ous efforts to promote self-service technology to customers over the past few
decades. These measures have allowed individuals as well as corporate customers
to conduct their banking services conveniently via virtual digital platforms.

Maybank

Background

Maybank was incorporated in 1960 and began its first operations in the capital of
Malaysia, Kuala Lumpur. The same year did not only mark the birth of Malayan
Finance Corporation (later known as Mayban Finance), the first wholly bank-
Table 2 Mobile banking subscribers (end of period) (Bank Negara Malaysia 2015)

Number of subscribers Penetration rate (%)

Year (in thousands) To population To mobile subscribers
2005 127.6 0.5 0.7
2006 246.7 0.9 1.3
2007 367.6 1.4 1.6
2008 574.6 2.1 2.1
2009 675.0 2.4 2.2
2010 898.5 3.1 2.6
2011 1560.3 5.3 4.3
2012 2446.2 8.2 5.9
2013 4378.8 14.6 10.2
2014 5639.2 18.6 12.9
March 2015 6158.6 20.4 14.1

owned finance company, but also the opening of Maybank’s first overseas branches
in neighbouring Brunei Darussalam and Singapore. Two years later, Maybank
spread its wings to Hong Kong and London and much later to New York, Bahrain,
Saudi Arabia, Uzbekistan, Pakistan, India, China, Philippines, Papua New Guinea
and other countries in Southeast Asia. Maybank’s home markets—Malaysia,
Indonesia and Singapore contribute the largest proportion of Profit Before Tax
(PBT) in 2014 amounting to 88.6 % of the total group’s profits while the remaining
percentage is derived from Maybank’s overseas markets in London, Saudi Arabia,
Uzbekistan, Bahrain and New York (Maybank 2014a).
Besides consumer banking, Maybank also provides commercial, corporate, and
private banking services. Maybank offers an array of products and services such as
investment banking, Islamic banking, commercial trade facilities, insurance, off-
shore banking, hire purchase and lease, asset management, trustee services, stock
broking, factoring, nominee services, venture capital and Internet banking. As the
leading banking group in Malaysia, Maybank has 402 branch offices and more than
2600 automated teller machines (ATM) in the country to date. Serving over
22 million customers in 20 countries with 2400 operating offices manned by
more than 47,000 employees and a total asset worth RM640 billion (USD180
billion), Maybank is by far the largest bank in Malaysia (Maybank 2014a).
With a vision to be the financial services leader in the region, ‘Humanising
Financial Services’ is chosen as Maybank’s corporate brand slogan. This theme is
well manifested in Maybank’s operations that focuses on customers and the com-
munity as their source of long term shareholder value creation. Because customers
are their key assets, Maybank is committed to its core values—Teamwork, Integ-
rity, Growth, Excellence and efficient and Relationship building (TIGER)—which
is a perfect reflection of Maybank’s corporate logo of a Malayan Tiger. Humanising
financial services is translated into a corporate strength by “making the unbankables
bankable”. For instance, Maybank provides financing accessibility to customers
and enables those with poor credit background to secure financing provided that
they have strong evidence to improve their situation. Maybank’s intentions are
clear, that is to help boost socioeconomic conditions of the society through wealth
creation (Top 10 of Malaysia 2013).
In line with its core values, Maybank establishes six substantive value
propositions: Go ahead (to develop Maybank’s financial strength further while
keeping promises intact and even exceeding customer expectations), Grow
(to develop its employees through investment in learning and development), Fly
(promoting regional and international prospects to its employees), Lead (to achieve
excellence and maintain its leadership position), Create (to encourage creativity in
serving all its local and international customers), and lastly, Brand (to create strong
brand presence and to be continuously committed to achieving leadership positions
that align its customers to the talents within the bank) (Malayan Banking Berhad
2001).
Maybank’s continuous efforts in creating value for its customers are evident in
the awards and accolades that it has attained. Besides being the recipient of
Malaysia’s Most Valuable Brand in 2007, 2008 and 2012, Maybank is ranked as
one of the Top 3 companies in Malaysia and Top 100 companies in Asia by Channel
NewsAsia in terms of sustainability performance. In 2014 and 2015, Maybank was
named the Best Retail Bank in Malaysia by the Asian Banker. Maybank also won
the title of Brand of the Year 2014–2015 for the banking sector by the World
Banking Awards. During the same tenure, Maybank was also named as the World’s
Top 20 Strongest Banks, awarded by Bloomberg Markets (Zieman 2014).

Evolution of Maybank’s Service Technologies

To sustain competitive advantage, Maybank realises the importance of

differentiating and innovating its products and services to create a cutting edge in
the industry. Thus, Maybank has been very committed to providing the best value to
its customers through innovation in service delivery and operations. In fact, back in
late 1970s and early 1980s, Maybank was the pioneer in technology and
computerisation of banking operations by being the first Malaysian bank to estab-
lish ATMs. This service provides customers the convenience of withdrawing their
money without having to deal with a teller. To serve customers better, Maybank
continued to adopt innovation in the 1990s by launching the first computerised
telephone service called Mayban Autophone, and, by working together with
Malaysia Airlines (MAS), to offer domestic flight passengers the convenience of
ticketless travel through MAS Electronic Ticketing (MASET).
Being the leader in financial services in Malaysia, the new millennium in year
2000 marked the birth of Maybank’s internet-based technologies such as View &
Pay service for credit card and debit card holders, and most importantly, an internet
banking portal called Maybank2u.com.my (henceforth M2U). As convenience is
central to Maybank’s innovation initiatives, Maybank then launched M2U internet
kiosks at selected branches which allowed customers to self-serve themselves at the
bank without having to queue to be attended by a teller. Six years after the launch of
M2U, Maybank went the extra mile to be the first bank in Malaysia to offer online
mobile banking via short messaging services (SMS) and M2U Mobile services via
GPRS or 3G smartphones. These innovations are reflections of Maybank’s com-
mitment to positive change in creating more value for its customers.
In 2013, Maybank adopted Microsoft’s Windows 8 platform for its corporate
mobile banking application making it the first ASEAN bank to be involved in such
enterprise. As online shopping began to pick up in Malaysia (Maybank2U.com
2015a), Maybank launched Maybank2u Pay in 2013 which facilitates fast, easy,
convenient and reliable shopping experience to online shoppers. Maybank
continues to innovate to the present time with several other technology launched
in Malaysia such as cardless withdrawal services via ATMs without an ATM card,
M2U Pay ‘Snap&Sell’ mobile application that supports selling activities on social
media such as Facebook, and M2U Visa Direct in partnership with Visa Interna-
tional, a money transfer service to Visa users across the globe.
Clearly, these innovations fully complement the needs of Malaysia’s
technology-savvy consumers. Among these technologies, online banking appears
to be one of the fast-growing services and acts as a popular alternative distribution
channel besides ATM due to its many benefits. It empowers customers to conduct
their banking transactions conveniently through Internet-based self-service tech-
nology platforms. With the introduction of M2U, Maybank has now become the
largest online banking provider in the country and is fully committed to being a
digital lifestyle banking site, giving customers 24/7 accessibility beyond the tem-
poral and spatial constraints of brick-and-mortar branches.

M2U Customer Experience

Maybank’s pioneering self-service technology via its online portal, M2U, has
clearly transformed customers from a passive to an active audience, reflected in
the astounding number of over 2.8 million monthly unique visitors and 2.6 million
active users from a total of 7.4 million registered users for the service in Malaysia in
2014. Since then, Maybank’s rivals have started to utilise the Internet as marketing
and distribution platforms in order to stay agile and competitive in the marketplace
(Maybank2U.com 2015a).
During the early stage of its inception, customers could only access M2U on
personal computers, laptops and M2U Internet kiosks to perform financial
transactions and many developments have taken place since. In 2011, Maybank
launched M2U Mobile Apps for iPad, iPhone, Android and Windows phones users
in the hope of increasing its market share, boost its online transaction value and
strengthen its leadership in the online banking industry (Maybank2U.com 2015a).
These multiple channels have allowed customers to enhance their engagement with
Maybank’s technology-mediated self-service platforms. As a result, M2U active
users grew by 17.0 % to 2.15 million in 2012 along with the number of mobile
banking users by an astounding 135.2 %. Maybank launched a variety of innovative
products via M2U. For instance, customers can monitor their expenses and manage
their savings and investments using the personal financial management tool
(Malayan Banking Berhad 2001).
Maybank refers to the M2U as a one-stop solution centre which provides “the
convenience of an all-in-one banking solution, all at one stop” (Maybank2U.com
2015b). With M2U, customers derive satisfaction as they are able to personalise and
customise their personal banking transactions at their own convenience. For
instance, customers handle their routine transactions by checking their account
statements and transferring money from their own accounts to a third party account
easily without having to go to the branch and having to queue up. However, in
conducting money transfers, it is important to ensure that the information provided
is accurate, such as the recipient’s name and account number, as well as the amount
of funds to be transferred. Such accuracy is important as banks cannot be held
responsible for any disputes that may arise between customers and the payees or
recipients.
For first time transfers of funds or any new transaction that is to be conducted,
customers have to request for a Transaction Authorizations Code (TAC) from the
bank as part of a security measure. Within a few seconds, the bank will issue a TAC
number via a text message that is sent to the customer’s mobile phone. Such
security measure has increased customer’s confidence in dealing with M2U virtual
services. To facilitate regular transactions, customers have an option of saving the
payee’s details under a favourite payee category. Subsequently, transactions can be
performed without having to request for another TAC number (Maybank2U.com
2001).
Besides funds transfer, customers are able to pay bills such as utility bills, loan
instalments, credit card payments, summons, insurance premiums, and other
payments to various creditors or merchants of their choice. Another service offered
includes online investment for share trading that allows customers to place and
confirm share trading 24 h a day, 7 days a week. Most banks offer a wide range of
money market instruments from various issuers. With M2U, all these can be done at
the customer’s finger tips without having to sacrifice precious time, energy and cost.
In other words, M2U has made banking transactions completely hassle-free as
customers can do their banking from the comfort of their own homes. Customers
can also track their payment history online to trace any debit or credit transactions
that were made to/from their account within the past 3 months.
In addition, through the online portal of M2U customers can instruct the bank to
make scheduled payments to a creditor on a specified date of every month. The
funds will automatically be deducted from the user’s account on that specified date.
This standing instruction ensures that regular transfer payments are made without
delay, as long as there are sufficient funds in the payer’s account. The beauty of this
service is that the transactions are performed on time without delay, and customers
are able to view updated bank report immediately via M2U (Maybank2U.com
2001).
Overall, M2U has simplified customers’ lifestyle. Customers are able to manage
their financial transactions conveniently through the reliable and hassle-free M2U
portal.
M2U Challenges and Resolutions

Low Adoption of M2U

As earlier noted from Table 1, the internet banking penetration rate was relatively
low 10 years ago compared to today. Hence, it is not surprising that the adoption
rate of M2U was not too encouraging when it was first introduced in year 2000. The
low adoption rate suggests that customers are not confident about security issues,
or, perceive the online platform difficult to use. In terms of security and privacy,
some customers may be worried that the privacy of their information would be
compromised in case their personal laptops or computers are stolen by unscrupu-
lous parties. In addition, some customers may simply prefer to personally deal with
employees of the bank rather than through self-service technology interfaces.
In response to this issue, Maybank launched a campaign to create awareness
about Internet banking. The campaign intended to educate existing and potential
customers with regards to the handling and protection of their account information.
In October 2001, Maybank also launched a special promotion called the “Paybills
Promotion” to encourage customers in Sarawak, East Malaysia, to utilise the online
payment facilities via M2U. Through this campaign, Maybank collaborated with the
leading telecommunications company in Malaysia, Telekom Malaysia Berhad, to
promote the convenience of paying Telekom’s bills such as their telephone bills,
TMnet and TM Touch bills via M2U (Maybank2U.com 2015c).
Similarly, Maybank also launched the “Love Earth Campaign” from 1 April
2010 to 30 June 2010 to show support in preserving mother earth. This campaign
aimed to enhance customer awareness of the benefits of using M2U. By using the
M2U platform, the use of paper would be significantly reduced. The green calcula-
tor available on the M2U website enables customers to track how much time,
money and natural resources they can conserve by conducting their transactions
online (Maybank 2013).
Through Maybank2u Pay which is a payment gateway to facilitate purchases at
blog shops, Maybank promotes not only fast and safe transactions, but also a
convenient and reliable online shopping experience for e-shoppers. Through this
facility, blog shop owners can manage their own transactions via Maybank2u
systematically and efficiently. For example, these business owners can have a
detailed view of the sales transactions that were conducted, complete with informa-
tion such as the date and time of purchase, the buyer’s name and email address, as
well as the amount of funds transferred to the seller’s account (Scam Alert 2009).

Security and Phishing Issue

One of the most critical issues faced by customers is the issue of safety and security
while using M2U. There are cases where M2U users have received fake short
messages (SMS-es) via their mobile phones or e-mail messages sent out by
phishing scams. To prevent any untoward incidents, Maybank would provide its
customers with constant reminders and safety guides on how to prevent the
customer’s accounts from being hacked. Below is a typical message customers
would receive from hackers:
 Dear Valued Customer,
Maybank discovered a serious security problem in your account as several unauthorized
transactions were attempted. We deactivated and also restricted access to your account for
security and safety reasons. Your urgent attention is required to reactivate your account.
Please be informed that your account will be terminated if not activated now. (Maybank2u.
com 2015d)

In response to this situation, Maybank continuously sends its customers security

alerts to warn them not to respond to any email or SMS from unidentified parties.
This security alert is available on the front webpage of M2U. To further enhance
M2U security, additional features have been introduced such as the use of an image,
a phrase and three questions that are unique to the customer. This information is
only known to users when logging into their accounts. These steps of verification
safeguard customers’ account information from unwanted intrusion and aims to
boost customers’ trust and confidence in the online system (Maybank2u.com
2015e).
Maybank has collaborated with CyberSecurity Malaysia, a non-profit organiza-
tion under the Ministry of Science, Technology and Innovation (MOSTI) via an
exchange of Memorandum of Strategic Alliance with CyberSecurity Malaysia
signed on 30 November 2007. The focus of this memorandum is on Internet
banking safety which covers the development of Internet banking safety promo-
tional collateral, the conduct of awareness programmes, and the provision of
distribution channels. The public awareness campaigns include those made through
various media channels such as radio, newspapers, online as well as Maybank
branches. Maybank also introduced a phishing report page so that customers
would be able to alert Maybank customer service of any Maybank2u.com phishing
site (Ker 2014).

Transaction System Delay

Delay in receiving the TAC number to perform transactions has been acknowl-
edged as one of Maybank’s slight glitches in regards to the M2U online service.
Such delays would cause the customer to request for multiple TAC numbers for a
single transaction, which would cause interruptions in the performance of the
transaction as only one request of the TAC number is required per transaction.
When multiple TAC numbers are requested, this automatically invalidates the first
request. Hence, the customer would need to redo the transaction from the begin-
ning and this would cause frustration and annoyance among users as time would be
wasted in completing a simple task. In addition, customers may also experience
missing links or non-functioning links in which messages such as ‘not available’,
‘under construction’ or ‘under maintenance’ would be prompted (Maybank
2014b).
Upon receiving a complaint, Maybank would immediately notify its customers
via Maybank’s Twitter account or Facebook with the following notice:
 We are aware that some of our M2U users are experiencing intermittent slowness in
accessing M2U at the moment. Rest assured that we are investigating the matter urgently
and will look into resolving it as soon as possible. Apologies for the inconveniences caused.

To address this situation, Maybank ensures that their online system is monitored
efficiently. The bank undertakes daily system maintenance during certain parts of
the days (usually at midnight). During the maintenance period, all ATM
transactions and M2U services are not available. However, prior notification
would be given to customers advising them to plan their transactions in advance
(Maybank2u.com 2015e).

Complaint Handling
Surveys conducted by Maybank indicate that customers are sometimes dissatisfied
with problem resolutions pertaining to the TAC system, security issues, phishing,
and others. To aggravate matters, the response and feedback on customers’
complaints were sometimes not properly tracked. To address this issue, in July
2012 Maybank launched a project called “G.I.F.T.” (Get Involved and Follow
Through) whereby all complaints are channeled to a centrally managed unit called
the Customer Feedback & Resolution Management (CFRM) team. With the imple-
mentation of Project GIFT, complaints received via various touch points are logged
into a centralised system. This allows CFRM to focus relentlessly on complaint
resolutions by providing status updates until the issues are fully resolved (Maybank
2012).

Future Outlook

Customer requirements are fast-changing and banks in developed and emerging

nations are under pressure to provide the level of service that meets customers’
expectations. Transactions between channels and among banks are expected to be
seamless and hassle-free and mobile banking application utilisation is seen to be the
in-thing as smartphone adoption surges. Competition has also become more intense
as customers nowadays are multi-banked and switching between providers
becomes hassle-free. In order to stay afloat, customers demand transparency on
rates and fees, excellent online banking features and facilities, and that banks do not
compromise on matters concerning their security and privacy (Ernst & Young
2015).
Maybank has displayed strong commitment toward constant improvement and
innovation since its inception. Innovations in financial products and services are
believed to be important in meeting the needs of customers who desire for simpler
and better life styles. Issue resolutions will be one of important agendas to
strengthen customers’ trust and confidence. The long term relationship with
customers will be further established through continuous adoption of innovative
technology that provides holistic services to meet customers’ needs and
expectations. Maybank is proud to have won their customers’ hearts and gain
their trust and it will remain committed in delivering the best service. Stemming on
its mantra of “putting people first, each and every day”, it is no doubt that May-
bank’s mission of ‘Humanising Financial Services’ will indeed become a reality
(Maybank 2014a).

Discussion Questions

1. Explain the strategies that have been used by Maybank to differentiate them-
selves from those of competitors, in terms of self-service technologies.
2. How do individual customers engage in the value-creation process with
Maybank?
3. What are some initiatives taken by Maybank to recover their service failures?
4. How does customer value co-creation via M2U benefit Maybank and its
customers?
5. With the given future outlook, specify a detailed plan that would help Maybank
achieve its objective to remain the most preferred online banking platform in
Malaysia.