Additionally, the potential benefits from electronic delivery channels need to be exploited without undermining the security and confidence of the banking public. The growing incidences of e-banking scams globally present banking institutions with the challenge of being one step ahead by deploying security measures that will provide customers with the highest level of confidence. Technological development has also redefined the landscape of the payment systems industry with the introduction of new payment instruments and new delivery channels, as well as the entry of non-banks into payment services once thought to be the domain of banking institutions. While a vast array of electronic payment systems and instruments have been introduced against a background of more flexible regulatory policies, the use of cheques remains pervasive, accounting for more than 90% of the non-cash retail payments in Malaysia. Significant development efforts and initiatives have been taken aimed at increasing the safety and efficiency of payment systems infrastructure, including upgrading funds transfer systems, migrating all magnetic stripe ATM and credit card infrastructure to a chip-enabled environment, and introducing payment platforms that leveraged on the Internet. These trends underpin the challenge for banking institutions to accelerate the adoption of electronic payment instruments and channels amongst consumers to gradually replace paper based payment instruments. 2  BIS Review 32/2005  While significant investments have been made to develop the network infrastructure, banking institutions should capitalise on the opportunity to further drive cost reductions and reap efficiency gains.

For this reason, they are demanding a broader range of products and services at more competitive prices through more efficient and convenient channels. Corporate customers have also become more performance-oriented and are demanding both competitively priced credit facilities and world-class financial advisory services. In this environment, the challenge is for banking institutions to anticipate and respond quickly to the differentiated demands and expectations of customers to sustain their competitive advantage. With growing customer expectations for continuous availability of services, the ability to continue to provide critical banking services at all times will also be crucial in the pursuit of building and maintaining their competitive edge. In conjunction with this, banking institutions must be able to quickly recover mission critical functions and assets during a major interruption to ensure efficient and reliable services to their customers. Technological advancement, which has increased the complexity of banking business and which has led to the emergence of increasingly innovative products and distribution channels, also presents opportunities for the banking sector. With ICT, financial services are being delivered to places and markets without requiring physical branch networks through a growing array of alternative delivery channels, including Internet, ATMs, and even mobile phones. The challenge to banking institutions is to effectively leverage on the opportunities offered by technology to innovate products and services aimed at attaining greater efficiency, reliability and competitiveness. While the efficiency of electronic means of doing banking is acknowledged, banking institutions should recognise the need for them to meet customer expectations for more personalised and quality services.