Question

Maybank: Meeting Customer Needs in a Changing Environment

Menara Maybank, the Head Office of Malaysia's largest financial services group, Maybank, may stand 58 storeys in central Kuala Lumpur, but the corporation's activities are by no means restricted to its home city, or even home country. Of the 14 countries over which more than 450 offices are spread, eight (Malaysia, Indonesia, Brunei, Singapore, Philippines, Vietnam, Myanmar, and Cambodia) are part of the Association of South East Asian Nat ions (ASEAN). Maybank also works closely with 700 foreign banks around the globe.
Now almost 50 years old, Maybank has matured into a corporation offering an extensive range of financial products and services. Its businesses include commercial banking, insurance, finance, asset management, investment banking, and Islamic banking. This Malaysian bank has been able to develop into the success that it is today by analyzing and reacting to various relevant macro-environmental forces that influence its business. The social, economical, regulatory, and technological forces in Asia appear to have directed much of May bank's actions in recent years.

SOCIAL FORCES
The social forces that influence Maybank can be categorized into changes in demographics and changes in values. One of the most obvious recent demographic changes in Asia is the increase in the median age of the general population. This indication of an aging population has brought about substantial growth in savings and retirement plans. Other factors that have caused a surge in savings include increasing number s of both smaller household s and double- income families. The resulting higher gross house­ hold incomes mean higher discretionary incomes that can be saved or invested. Maybank offers a number of savings and investment account options such as the Gold Savings Passbook Account and Flexi Plan 2. The variety of choices makes it possible for customers to select the most appropriate plan, which can be personalized to best suit themselves. Another noteworthy change in Asian demographics is the increasing level of education and academic qualification of the average person. This leads to a better aware­ ness and understanding of the importance of saving and investing among the younger generation. To further educate the youth and encourage financial management, Maybank pioneered on line savings accounts for the teen­ age market by developing the "imteen" account. Teenagers with an imteen account can access banking services over the Internet; they can track their savings balances and pay their bills on line. Additional features include a range of downloadable product s and cash awards.
Large proportions of Asian populations have relocated, from urban to more rural regions, as well as from home to foreign countries. Maybank has responded to the urbanization of previously rural areas by establishing branches throughout the Asian region as well as the world. This helps to support and serve customers regardless of their location.
In general, the reshaping of Asian values stems from changes in the demographics of the people who hold these values. For instance, people with higher educational qualifications place great importance on efficiency and staying up-to-date with current events and situations. To support the busy lifestyles of these customers, Maybank developed the low-maintenance Premier Club account for "individuals who are constantly on the go” Another important demographic change is the increase in the number of double-income couples, resulting in a growing emphasis on the togetherness of a family. As more parents have less time to spend with their children. they have come to place higher value on leisure time spent as a family. In China, an increasingly more educated population , who are more aware and open toward foreign practices, has brought about the implementation of the Jive-day working week. Emphasis on family unity and longer weekends has contributed to increased tourism at home and abroad, while a more open attitude toward foreign influences has resulted in a growth in foreign investments and multinational businesses. The consequent increase in foreign currency use in Asia, propelled by the overall globalization of the world, led Maybank to offer its customers its range of foreign currency accounts.
The most significant advantage of Maybank's foreign currency accounts is the minimized risk of foreign exchange rate fluctuations. Available in over 10 currencies, each account is a comprehensive package with a list of additional features, one of which is discounts on traveler's checks. The targeted segments include Malaysian residents who have an overseas source of regular income because they are employed in foreign countries, and non -Malaysians who are employed in Malaysia.

ECONOMIC AND REGULATORY FORCES
Asia has recently experienced much liberalization in trade and investment, which can be categorized as both an economic and regulatory force. Maybank's range of foreign currency accounts was also a response to this macro-environmental change.
Liberalization in trade and investment is encouraged in Asia in order to facilitate international interactions in the economic and social arenas by diplomatic coordination of regulations and standards. Examples of changes in regulations concerning trade and investment include the reduction of import tariffs, and the abolition of subsidy payments and tax exempt ions granted to exporters. The ASEAN countries Free Trade Agreement (AFTA) is a typical example of regulatory changes that aim to change the economic environment of Asian regions. This trade bloc agreement was first signed in 1992, and today the ten ASEAN countries conform to it. In addition to reducing tariffs, AFTA also eliminates other trade barriers such as the formalities of verification and cross-notification. The result of such trade liberalization is improved economic efficiency, which in turn means increased attractiveness of the countries to foreign direct investment.

TECHNO LOGICAL FORCES
The ever-changing technological scene in Asia, a part of a global development, has prompted Maybank to implement various features and services to better satisfy customer need s and wants. One of the most evident recent technological developments is the declining cost of computers and other electronic devices. Complemented by the development and expansion of the Internet, this has led Maybank to not only create a corporate website, but also offer a comprehensive range of services that are accessible online. For example, customers can view and make transact ions, pay bill s, and send questions or feedback from the website. Such services create substantial value for customers, many of whom use the Internet on a daily basis. Maybank also offers a brief yet informative tour of services for those who are less confident about using the Internet-based tool. With the sophistication of the Internet has arisen the issue of cyber security, yet another technological change to which Maybank has had to respond. Its website provides information and advice on safe Internet banking habits, including choosing appropriate usernames and passwords, clearing browser cache, logging out securely, and updating security software. Moreover, Maybank implemented the Transaction Authorization Code (TAC) system in 2004 to create an even more secure Internet environment for its customers. Customers are required to provide a TAC in addition to their username and password; TAC provide s a second layer of security for customers performing online banking transactions. Furthermore, the Maybank website is constantly undergoing expansion and enhancement. Cell phones have become commonplace in Asia, as they have in other parts of the world. Dependence on cell phones is increasing, fueled by an expanding range and network of mobile services. Maybank offers many services accessible by cell phones. For example, customers can send text messages via Short Message Service (SMS) or call to request their TAC. Maybank's mobile financial services enable customers to use their currency via mobile phones. Maybank promotes it as a "secure and convenient" method of conducting electronic cash transfers, downloading and purchasing products and services, paying bill s, as well as topping up prepaid accounts.

Questions

What macro environmental forces affect the banking industry? What implications can be drawn as a result for marketing strategies in the banking industry?

How has Maybank responded to the macro environmental changes? Are the responses appropriate? What other responses would you suggest?

3a.   How do you see the similarities and the difference between managing a product vs managing a service?

3b.   What are the four characteristics for managing a service industry; and if apply into a banking industry, what are the proposed solutions for each of the unique characteristic. Please kindly elaborate each of the characteristic.

Answer 1

Answer 1:

Macro environmental forces have significant affect on the banking industry. Some of these macro environmental forces and their impact on banking industry are discussed in brief as follows:

· Political forces: Although the impact of political environment of country where bank is performing is not discussed separately in Maybank scenario but the fact is that government laws affect banking sector to great extent. Apart from legislative laws (labor laws, trade restrictions etc.) corruption in politics is the leading factor that affects banks operations to significant level.

· Economic and regulatory forces: Economy of nation and banking industry are closely collaborated. Depending on the income flows, inflation and economic conditions have impact on the capital that bank can access. Regulatory forces affects banking sector to greak extent. An example of ASEAN countries Free Trade Agreement (AFTA) as mentioned in scenario have impacted banks operations.

· Sociocultural Forces: Sociocultural factors have tremendous impact on buying behaviours and necessities of target population. It influences customer’s preferences and desires. With consumers becoming more knowledgeable and educated they demand clarity in services provided by banks. Such factors greatly impact banking industry.

· Technological Forces: Ever changing technology has changed the entire banking experience for customers. It has given ease to customers to manage their funds and accounts. Although technological advancement has raised threats for banks regarding cyber security issue. But by educating their customers and implementing secure systems banks mange to deal with this threat.

· Legal Forces: Every country have different laws regarding consumer privacy, consumer laws etc. These factors impacts the manner banks operate in different countries to great extent.

Implications that can be drawn as a result of the above macro environmental forces for marketing strategies in the banking industry are as follows:

· Marketing strategies should lay emphasis on the social and cultural element of their target population. Marketing strategies must be different in different countries.

· Marketing strategies should be prepared keeping in consideration legal factors of the operational country.

· Marketing strategies must be based on the regional requirement.

Answer 2:

Maybank has responded to the macro environmental changes in a very impressive manner. Macro environment has tremendous impact on the success of banks and Maybank has adapted the changes in macro environment and managed to grow in such changing environment. These changes are as follows:

· Changes in demographics of customers,

· Changes in values of Asian customers,

· Change in economic environment included liberalization in trade and investment,

· Regulatory changes like ASEAN countries Free Trade Agreement (AFTA),

· Technological changes.

I believe that of Maybank has responded appropriately towards changing environment. They have managed to convert every change in their favour and improved their operations along with changing environment.

Other responses that will suggest are that:

· Maybank must implement market research regularly to evaluate the effectiveness of their operations,

· Maybank must not ignore local competitors and keep keen view on competitors strategies to stay in competition.

Answer 3a:

Similarities between managing a product vs. managing a service are as follows:

· Both managing a product as well as managing a service requires similar activities for promotion.

· Both managing a product as well as managing a service has great impact of macro and micro environmental factors.

· Both managing a product as well as managing a service needs to manage Public Relations

· Both managing a product as well as managing a service requires activities to increase sales.

· Both managing a product as well as managing needs interaction with customers.

Differences between managing a product vs. managing a service are as follows:

· While managing a product emphasis is laid on value whereas while managing a service emphasis is laid on relationships.

· Products can be returned whereas services cannot be returned.

· While managing a product quality is easily manageable whereas while managing a service it is difficult to measure quality.

Answer 3b:

Four characteristics for managing a service industry that also apply into a banking industry are:

· Heterogeneity: Requirements of every individual are different. Not every individual will find services of Maybank interesting. Some might want more interest on savings others might be happy with current interest.

· Inseparability: Services being provided by the banks or service provider are inseparable from the provider’s involvement as well as customers involvement. Example in a bank provider must be available at his/her desk as well as customer willing to enjoy services must also visit the bank.

· Intangibility: It is an important factor that makes functional responsibility of banks more complicated. Example: Banks have special sales team for promoting intangible services along with tangible goods like credit cards.

· Ownership: in service industry like banks no ownership is transferred from provider to consumer.