Each time a borrower ventures abroad, new opportunities are created. As managers of such financial relationships, banking institutions can be part of this process by fostering the banking relationship into a long-term strategic partnership, and by providing the right range of financial products. These opportunities may also be realised by setting up presence in new markets. It can also be in the form of partnerships or strategic acquisition of an existing banking institution in a foreign market. Mergers or alliances in services and products can be pursued through co-branding or complementary products, delivery channels and marketing or product development. Alliances can also be formed to capitalise on intangible assets such as human capital. Such alliances can also translate into increased innovation in processes, structures, business models and ultimately innovation in products and services. Indeed, strategic alliances have been growing, cutting across many industries and business segments. As banking institutions are able to fulfil the differentiated demands and expectations, this would enhance their capacity to compete in both the domestic and external markets and thus be able to capture the opportunities accorded from liberalisation and globalisation. Customer-centric banking system Ladies and Gentlemen: As the financial landscape evolves and competition intensifies, banking institutions need to respond to the changing market needs, and continually reassess strategies and alternatives in this rapidly changing and dynamic market and shift from just the traditional offerings. Consumers are becoming increasingly discerning and demanding.

Strategic decisions about the future needs to be made to sustain the ability to offer and deliver unique value propositions to customers whilst at the same time effectively managing customers’ expectations. An area that banking institutions may venture into is micro-financing. Micro-enterprises perform an important economic activity for a large segment of the country’s population. While institutional arrangements are being put in place to increase access to financing for such micro-enterprises, the banking sector with its large network of branches can become an important channel for such financing. 4  BIS Review 28/2004  These could be provided via a micro-financing window. Global experience has shown that such microfinancing operations can be successful and profitable with good loan portfolio quality. As part of the efforts to raise the quality performance in the financial services sector, Bank Negara Malaysia initiated a nation-wide survey in 2003 to assess the requirements, expectations and the satisfaction level of consumers on the quality of products and services offered by banking institutions. While the primary objective of the study is to develop an index on the levels of quality of customer service, the findings indicate that the real issues in enhancing the industry’s level of performance goes beyond this, towards developing a stronger customer-centric orientation. The findings provide a discernable indication of the differences in customer needs and requirements, and identify specific areas where customer-orientation issues tend to arise. Let me briefly share some of the key findings of the survey.