QUESTION 1

In this modern day and age, Information Technology (IT) plays a big role. However, if you
are not in the field of IT, you might not know just how IT touches your life. IT plays a role
in a number of different fields such as education, business, healthcare, finance,
transportation and many more. IT is the use of systems for storing, retrieving and sending
information. This can include the use of software, hardware, applications and so much
more.

Do a research about IT in online banking. Then discuss the information which contains the
following requirements:

(a) How does IT play its roles in online banking in Malaysia? Justify your answer with
appropriate examples.
Banking environment has become highly competitive today. To be able to survive and grow in the
changing market environment banks are going for the latest technologies, which is being perceived
as an ‘enabling resource’ that can help in developing learner and more flexible structure that can
respond quickly to the dynamics of a fast changing market scenario. It is also viewed as an
instrument of cost reduction and effective communication with people and institutions associated
with the banking business

Information Technology enables sophisticated product development, better market infrastructure,

implementation of reliable techniques for control of risks and helps the financial intermediaries to
reach geographically distant and diversified markets. Internet has significantly influenced delivery
channels of the banks. Internet has emerged as an important medium for delivery of banking
products and services.

The customers can view the accounts; get account statements, transfer funds and purchase drafts by
just punching on few keys. The smart card’s i.e., cards with micro processor chip have added new
dimension to the scenario. An introduction of ‘Cyber Cash’ the exchange of cash takes place entirely
through ‘Cyber-books’. Collection of Electricity bills and telephone bills has become easy. The
upgradeability and flexibility of internet technology after unprecedented opportunities for the banks
to reach out to its customers. No doubt banking services have undergone drastic changes and so also
the expectation of customers from the banks has increased greater.

IT is increasingly moving from a back office function to a prime assistant in increasing the value of a
bank over time. IT does so by maximizing banks of pro-active measures such as strengthening and
standardising banks infrastructure in respect of security, communication and networking, achieving
inter branch connectivity, moving towards Real Time gross settlement (RTGS) environment the
forecasting of liquidity by building real time databases, use of Magnetic Ink Character Recognition
and Imaging technology for cheque clearing to name a few.
The key driver to charge has largely been the increasing sophistication in technology and the
growing popularity of the Internet. The shift from traditional banking to e-banking is changing
customer’s expectations.
In Malaysia, IT played a big role in online banking. There are few examples that I can integrate in this
assignment.

The banking industry in Malaysia has a significant role in Malaysia’s economic growth. Banks
frequently attempt to maintain great customer experience through providing excellent services and
reducing operating costs.  The industry also constantly innovates concurrently with technological
developments of telecommunications and information technology (IT). Following the innovation and
digitalization, as reported by The Star (2018), more new jobs are opened in the Malaysian banking
sector in the areas of automation and information technology (IT).

History – Banking Industry in Malaysia

The banking industry started off in the 19th century. Penang’s strategic location and port facilities
oiled the wheels for Penang’s identification as the catalyst for banks.  A bank, back in the days, was
an office with a big safe. It was called a “strongroom” in banking terms. Time passes and customer’s
trust towards banks was built up. This is upon seeing the inflow and outflow of banking transactions. 
Through revolution and modernization, the design and landscapes of banking halls improved over
the years. Look at our banks now. 

The banking halls are as good as hotel lobbies!

Now, banks emphasize one-to-one service and excellent customer service. 

The System and Components
Malaysian banking system comprises 3 major parts: The Central Bank, Banking Institutions and
Others.

1. The Central Bank (Bank Negara Malaysia)

BNM is crucial in promoting economic growth. It maintains monetary, price and financial stability.
This statutory body started its operation on 26 January 1959 with the name Bank Negara Tanah
Melayu. 

The first office of the Bank Negara in 1959.

It was later changed to its name now.
2. Banking Institutions
Banking institutions comprise of Commercial Banks, Finance Companies, Merchant Banks, and
Islamic Banks. All these institutions are registered with Bank Negara Malaysia (BNM) as licensed
financial institutions. 

3. Others
Another minor yet important part of the banking system involves Discount Houses and
Representative Offices of Foreign Bank.

“A discount house is a money lender that participates in the buying and discounting of bills of
exchange and other financial products.”
However, Malaysia no longer has any Discount Houses as all previous ones had its operations ceased
and was transformed into investment banks in 2006.

A Representative Office of a foreign institution in the banking sector is an office established in

Malaysia to perform permissible activities for its head office/principal. 
The Representative Office should be totally funded from sources outside Malaysia.
Don’t get scammed!

Now let’s see the challenges Malaysia have to go thru.

The Challenges
Banks, like any other institution, deal with challenges in ensuring growth and maintaining stability. 

Among the intricate challenges that the Malaysian banking industry deals with are:

1. The competitive landscape against new entrances such as Fintech companies.

2. Having in-depth and specific understanding of customers’ perceived requirements.

3. Meeting customers demands and expectations.

4. Ensuring financial security of its own as well as the customers.

5. Securing customer’s personal privacy from being invaded and misused. 

PHEW!! There are more challenges Bank have to go thru actually. I will save the scary issues for now.

Ok.

What else have IT contribute to Malaysia Banking.

IT in Malaysia Banking Industry
In the earlier years when the bank was established, tasks and transactions were manually carried
out. 

The banking industry is impacted by the evolution of technology, so in the 1960s, it started adopting
computerization banking services. 

The use of technology in retail banking was since then seen to escalate. 

How are IT integrated into Malaysian banking?

Automated Teller Machine (ATM)

Automated teller machines are computerized telecommunications devices that provide clients of a
financial institution with access to financial transactions in a public place.
Malaysia’s first ATM appeared in 1981, which is Maybank’s Ampang Park branch ATM. 
With more technology advances, the branch’s electronic banking hall added more ATMs as well as
other machines for better services. 

The machines added are cash deposit machines, cheque deposit machines, and bank statements
printing machines.

This is now seen not only in Ampang but in every bank in Malaysia. 

Below is the number of ATMs in Malaysia per 100,000 population:

(Source: the Global Economy)
The number is gradually but very slowly decreasing due to the vision of going totally cashless. 

This is plus the fact that we also have Internet Banking, so fewer people are queuing in the hall.

Let’s add some spice on this assignment shall we. The spices are online banking, telebanking services
and banking kiosk.

Internet Banking

The first internet banking experience in Malaysia was in the year 2000, where Maybank became the
first bank (again) to roll out an online service portal. 

With this system, customers are able to carry out banking transactions online, not needing to visit
the physical financial institution or bank.
Internet banking enables the checking of account inquiries, performing payments and loan
repayments and placement of fixed deposit.

Other parts of online payment include e-payment, e-wallet, P2P Money Transfer and Cashback.

Telebanking Service
Telebanking, or in full term telephone banking, is a bank or financial institution’s service provided
over the telephone. 

Through this service, cashless financial transactions and financial instruments (cheques, for example)
could be done without the customers needing to visit the bank or ATM.

Most often, telebanking is used for inquiries and minors services such as reactivating internet
banking account and procedure confirmation.

Banking Kiosk
With the help of technology, people living in remote areas or villages where bank branches are
unavailable can also perform banking activities. 

This is made possible through banking kiosk, which provides customers accessibility to banking
services without having to visit the bank. 

In layman language, the bank comes to you, in a machine form so transactions are made possible for
you. 

Impressively, the first bank to launch a banking kiosk in Malaysia is also Maybank. 

Next topic. The importance of IT in Malaysia Banking Industry.

The Importance of IT in the banking industry in Malaysia

Why is IT so important in this era, and how helpful it is for the banking industry?

1. Reduce Cost 
IT helps in reducing operating and processing costs that banks need to bear. Using the latest
technology results in fewer costs with an additional market advantage. 
2. Improve Productivity
Banks have a lot of accounting, planning and control happening all at once. 

Computerization helps ease management. 

It also makes reporting risks and performance accurately and on time. 

Combining all that, productivity is improved as progression is increased. 

From this:

To this: 

3. Competitive advantage through technology

Taking into consideration the two importance of IT in banking, adopting and updating technology in
Malaysian banking creates a competitive advantage. 

As mentioned, it reduces transaction, operating and processing costs and increases overall
productivity.
It will also ensure better product and services quality through greater product differentiation with
competitors. 

Cross-border banking- Biometrics Identification

Any financing or banking arrangement and transactions made that crosses national borders is called
cross-border banking. 

These arrangements or transactions include cross border loans, letters of credit or bankers
acceptances. 

Cross-border banking is made possible with technology, precisely with biometrics identification and
biometrics payment. 

Biometrics uses unique human physical characteristics (iris, fingerprints, etc)  as security for
automated authentication. 
As Tricubes designs, develops and integrates biometrics verification hardware for various installation
platforms and devices, we develop biometric payment hardware too. 

To date, identity authentication solution is being used at national borders, access controls and
facilities management in offices, MyKad programs and airports (such as Orly, Paris).

(b) How is online banking different from mobile banking? Justify your answer and support
with appropriate diagrams.

Internet Banking or otherwise known as online banking is among the convenient e-banking modes,
which caused the change in banking operations and provides virtual banking facilities to its
customers continuously. In this method, the clients can access their bank account details, no matter
where they are located, with the help of bank’s website.
Internet Banking is not similar to mobile banking, which implies a wireless, internet-based facility
provided by the banks to their customers, to operate their bank accounts, through handheld devices
such as smartphones, tablets and so forth, with the help of a website or a mobile application.

As the services provided by the two facilities, resembles a lot, there are instances when people
assume that they are one and the same, though they are not. In this article excerpt, we are providing
you all the important differences between Internet banking and mobile banking, take a read.

DING DING DING!!! Mobile banking VS Internet banking.

Lets see the comparison of this fight

Comparison Chart

BASIS FOR
MOBILE BANKING INTERNET BANKING
COMPARISON

Meaning Mobile banking refers to an internet Internet banking implies a service that
based facility provided by banks that allows the customers to conduct the
enables the customers to execute bank financial transactions electronically, with
transactions, via cellular devices. the use of internet.

Device Mobiles or Tablets Computers or Laptops

Uses Short message service, mobile Bank's website

application or website

Fund transfer Through NEFT or RTGS Through NEFT, RTGS or IMPS

Functions Limited Comparatively more

It’s a draw in this fight. Thank God, I didn’t bet on this fight.

Lets see the definition of mobile banking, internet banking and the key difference.

Definition of Mobile Banking

Mobile banking can be described as the facility provided by the banks to its clients, in which they can
access their bank accounts and undertake monetary transactions remotely using mobile
telecommunication devices like smartphones, tablet or cellular device. It can take place through
short message service (SMS), mobile web or application. The customer can avail this service anytime
and anywhere.
Transactions that take place through mobile banking includes online payment of bills, locating an
ATM, fund transfer, monitoring account balances, the list of latest transactions, m-commerce,
mobile/DTH top-up, etc. Further, the mobile banking also offers advanced security by sending alerts
or notifications on the registered mobile number, on the account’s activity.

Definition of Internet Banking

Internet Banking can be understood as the banking method, in which the financial transactions are
conducted with te help of internet. It is like a revolution, in the era of the traditional banking system,
which does not require customers to visit the bank branch to proceed a simple bank transaction.

Put simply; internet banking is an electronic payment system, that allows the bank account holder to
execute the monetary transaction, such as bill payments, fund transfer, stop payment, balance
enquiries, etc. anytime and anywhere using the bank’s website. Online banking is part and parcel of
the core banking system handled by the bank.

Any customer of the bank can avail this facility by registering, with the concerned bank for the
facility and set up the password and other credentials for account holder’s verification. After that,
the bank will allocate customer number called as Personal Identification Number (PIN), which is
linked to the bank account, held by the customer.

Key Differences Between Mobile Banking and Internet Banking

The difference between mobile and internet banking can be drawn clearly on the following grounds:

1. Internet banking is nothing but a banking transaction, carried out over the internet, via,
respective bank or financial institution’s website, under a personal profile, with a personal
computer. Conversely, mobile banking is a service that enables the customer to perform
banking transactions using a cellular device.
2. Mobile banking can be performed with the help of mobile telecommunication devices, i.e.
Mobiles or Tablets. On the contrary, for conducting internet banking transaction, one needs
to use devices like computers or laptops.
3. Mobile banking uses Short message service, mobile application or the web. In contrast,
Internet Banking uses bank’s website
4. In mobile banking, fund transfer is possible with the help of IMPS (Immediate Payment
Service), NEFT (National Electronics Funds Transfer System) or RTGS (Real Time Gross
Settlement). As against, in internet banking, funds can be transferred from one bank or
branch to another, with the help of NEFT (National Electronics Funds Transfer System) or
RTGS (Real Time Gross Settlement).
5. While the number of functions performed by Mobile banking system is limited, internet
banking offers an array of services to their customers.

Conclusion

Both internet banking and mobile banking require internet access, to carry out the banking
transaction and have a variety of uses. The scope of internet banking is relatively higher than that of
mobile banking because the latter is a part of the former.
(c) Identify TWO examples of online banking application/software (e.g.; M2U application)
that YOU have used before. Discuss YOUR experience of using these applications. The
discussions have to be from YOUR own experience (DO NOT copy from other sources),
which include of:
 Introduction and background of the application/software. Support with a diagram,
screenshots or illustration.
 What were the TWO reasons why you used the application/software? Support
with appropriate scenario examples.
 What are the security features provided? Support with appropriate scenario
examples.
Detail specification of software, hardware, device or connectivity (Internet) required to
run the application.

CIMB

CIMB Malaysia now offers digital banking services through their CIMB Clicks Mobile App (formerly
CIMB EVA) for their current cardholders. This app is their portal that lets you check your account
balance, view transaction history, transfer money, purchase online, and pay bills and loans.

Their app also lets you top up your credit and start investing through their e-IPO, ASNB, Travel
Currency, and more. This ensures that your investment platform is safe and secured from malware
or hacking.

CIMB Clicks Mobile App has FaceID & TouchID feature that lets you log in without typing your
username or password which is pretty convenient when you’re paying using QR. Because this digital
app is new, they feature a “Revamped’ home screen that is more user-friendly than the previous
app.

In case you don’t have a CIMB account yet, you can just visit their website and apply for an account
online. Also, if you are a Samsung user, CIMB has a Partner Pay Solution with them that purchases
from numerous retail stores in Malaysia.

Two reasons for using this application is that because they have 15+ investment companies partners
and partnerships with retailers for easy purchase.

HSBC MALAYSIA

HSBC Malaysia segregated its digital services to mobile banking, online banking, and online account
application. You can download the HSBC Malaysia Mobile Banking App from the App Store and
Google Play with just a few clicks.
There are three payment channels you can use with their digital banking services like JomPAY and
FPX. You can also register to DuitNow using your HSBC account for your payments and money
transfer needs, and this is widely used across Malaysia so you are sure that every merchant has this
payment option.

For investments and trading services, HSBC features their EZInvest that lets you start investing at a
minimum of RM500 to any of their unit trust funds. They also give you global access to help you
explore your investment options not only here but also abroad.

The app has a voice ID feature which is something new to us because we’re more familiar with face
and touch ID. This helps HSBC verify your identity through your voice when you check in their call
centres to easily direct you to the handler of your account type.

There’s a Remote Engagement Service that’s used for customers to interact with the bank through
video conferences. Even when you need to talk to your branch manager or tellers, you can still
absolutely stay safe at your home.

Two reasons for using this application are that because they have telebanking services extended to
video conferencing and complex security system for safety.

CONCLUSION

Information Technology is the basic requirement of today’s world. Technological progress is entering
into all fields. Education was a big and important part of development and progress.
Information technology has changed human life radically, and not necessarily, all of the changes are
positive. Some may be negative and have a detrimental effect on the individual and the community.
For example, traffickers use the Internet to offer and promote their products for sale.
There are many means of technology, including what serves science, education and economy. There
is a close relationship between science and technology. It is noted that the basis of technology is to
study science and employ (IT) inventions in the different life’s areas, in order to meet the needs of
the individuals and the societies. Therefore, it connects the governments, companies and societies
to develop strategies to enhance the lifestyle quality of the citizens.

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