Real estate professionals laud the importance of location, location and location in determining the value of land. Doesn’t the same concept apply to business banking? Aren’t United Kingdom, Turkey and Malaysia banks all primarily driven by local geographical and demographic concerns? Here are four (4) tips that can be learned about the importance of location based on the following factors: 1. Greece Bankruptcy, 2. UK 2008 Credit Crunch, 3. Technology Can’t Solve Banking Problems and 4. the Rising Asian Infrastructure Investment Bank (AIIB).
Traditional Banking Was Localized
A true student of history understands that the core of successful Malaysian banking is based on face-to-face personalised, localised services. A rural Malaysian farmer will need different financial services than an urban Malaysian businessman. Malaysia banking must develop a fine balance between local and global concerns.
1. Greece Cultural Shock
When Greece joined the European Union, it sacrificed a portion of its “economic sovereignty” by giving up its national currency – the drachma. As events have shown, national currencies are very important in representing the local economic, demographic and social needs of the people. Malaysians may need a different economic development plan than people living in Greece, the United Kingdom or China.
Tip 1: Retain local corporate banking strengths.
2. UK High Street Bank Credit Crunch
As soon as people face difficulties, they tend to become more parochial. In 2008, the world faced what the United Kingdom called the “Credit Crunch.” Even though the UK is well-known for having created a global banking system, when push-came-to-shove, the United Kingdom accepted a “UK political solution to its banking problems.” It turned to local tax payers to fix its 2008 Credit Crunch.
Tip 2: When afraid, people seek local solutions.
3. Technology Cannot Solve Banking Problems
Mobile banking technology is incredible, but merely creating an online banking portal cannot replace the need for robust financial services. In 2014, only 0.3% of Malaysian financial transactions used the m-Payment system. Bank transfers remained the most popular way to pay for items online. Many Malaysian consumers are still not completely comfortable with mobile banking.
Tip 3: Technology cannot solve business banking problems.
4. Rising Asian Infrastructure Investment Bank
Some Asian nations continue to follow an “export-driven” (neoclassical capitalism) model. The Chinese have asserted that a new Asian-centric model is needed with the Asian Infrastructure Investment Bank developing infrastructure, industrial synergies and banking systems. Malaysia joined the AIIB as a charter member in 24 October 2014.
Tip 4: Regional characteristics direct business banking strategy.
Malaysia has great potential for improving its banking model by merging local and international concerns. It must retain control of its banking system to avoid the problems of Greece. As financial problems arise, local leaders must develop solutions to strengthen the community. Mobile banking technology cannot hide inadequacies in financial services offered. Malaysia banking must “remain flexible” in embracing the future potential of a rising Asia!