Banking Industry in Malaysia

Topics: Bank, Fractional-reserve banking, Credit union Pages: 12 (3320 words) Published: July 27, 2010
Money is closely linked to our lives, so the financial institutions become an inevitable and important part of our lives and people are always focusing on the situation of financial institutions. So the banking industry is the most suitable topic to study. Then, we decided to use scenario model to analyze the industry (Showed by diagrams 1).


Diagram 1

After analyzing the situation of the industry, we choose ten years because it is the most proper time for our scenarios. The environment can not reach the enough degree to support these scenarios if the time is too short. On the other hand, long period of time is hardly to forecast the future careers.

In the process of searching materials about banking industry, we found the major Stakeholders influencing the industry. They are government, consumers, and competitors in term of development of banking industry.

The banking industry in Malaysia started from the early 1900s , in 1913 Malaysia’s first domestic bank – Kwong Yik (Selangor) Banking Corporation (now Malayan Banking Berhad) was set up, as thriving profits from rubber plantations and the tin industry. Besides, a statutory body, Bank Negara Malaysia (Central Bank), which is wholly-owned by the Federal Government, was established to the need for a governing body to oversee the activities and operations of the numerous banks in the country. Now, In Malaysia banks mainly consist of commercial banks, Islamic banks, and merchant banks. In addition, Malaysia has become an international Islamic Financial centre (Edge, 2006). As far, the banking industry in Malaysia has made conventional banking products and services, such as deposits and loans or hire purchase, taking on more advanced features, which are facilitated by advanced technological developments and make bank customers easier and simpler methods and processes of going about their daily banking. Furthermore, it also has introduced new products and services like credit and debit cards, investment products, financing products and services, and so on.

RHB bank, which stands for Rashid Hussain Berhad, from throngs of banks for some reasons. Firstly, we are more familiar with it for it is a bank surroundings our. Secondly, we think it has a great potential RHB Bank is one of Malaysia's leading financial service providers, offering commercial banking, corporate and international banking services. RHB Bank has built an impressive 200 branch network across Malaysia and also has a number of overseas branches, the majority in neighboring Singapore what’s more, after being acquiring by government in March, 2007, it becomes more competitive compared with other banks (Edge, 2006).

Identify and discuss on the main driving forces shaping and affecting the industry.

Business organizations exist to turn inputs from their environment into goods and services which customer in the environment want to purchase. This transformation process within the organization cannot be seen as a steady state, because external environment influences have a tendency to be continually shifting, having the effect of undermining the current balance within the system. The environment influencing business organization mainly involves the macro-environment, the micro-environment and internal environment. In our essay, we will use macro-environment, which comprise political, environment, socio-cultural, technology, legal and ecological factors, to analyze Malaysian banking industry environment.


The political environment is one of the less predictable elements among them. In Malaysia, the Government has proposed that Malaysian-owned banks be given five-year tax exemption on income received from their new branches or remittances from subsidiaries overseas, operating within the three-year period, from the year of assessment 2007 to encourage banks to expand overseas and establish a regional presence. Furthermore, the Government will establish an...
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