The following types of banking institutions are prevalent in Malaysia:
Conventional Banking
Conventional banking is the conduct of banking as per the laws and regulations that govern banking in a country. In Malaysia, conventional banking is supervised by the Central Bank of Malaysia, Bank Negara Malaysia by the powers vested in it through the Central Bank of Malaysia Act 2009.
Conventional banks in Malaysia are required to comply with the provisions under the Financial Services Act, 2013. Currently there are 27 commercial banks in Malaysia who offer retail banking services.
Islamic Banking
Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. In Malaysia, Islamic banks are supervised by Bank Negara Malaysia and have to comply with the provisions given in the Islamic Financial Services Act, 2013. Currently, in Malaysia, there are 16 Islamic and 5 international Islamic banks. And, a number of other banks operate through Islamic banking “windows”.
Investment Banking
Unlike commercial banks which focus on providing retail credit and loan facilities, investment or merchant banks provide more sophisticated and complex banking facilities like raising capital by way of syndication, corporate financial advisory services, management of investment portfolios, listing of public companies, underwriting of new issues of shares, mergers and acquisitions and the restructuring of companies, especially those under Section 176 of the Companies Act, 1965.
13 investment banks currently operate in Malaysia. Investment banks are supervised both by Bank Negara and the Securities Commission.
Offshore Banking
Malaysia also offers offshore / international investment, banking and financial services through the offshore financial hub, the Labuan International Business and Finance Centre (IBFC) which comes under the purview and supervision of the Labuan Financial Services Authority (Labuan FSA; formerly known as Labuan Offshore Financial Services Authority — LOFSA).
Banking services in Malaysia are offered through the following channels:
Branch Banking
A branch is a retail location through which a bank offers its services to customers both through face-to-face and automated delivery. One may access almost the entire array of a bank’s products or services through the bank’s branches “over the counter” though there may be certain products/services that are offered only at certain branches. All commercial and Islamic banks offer their services through branches the total number of which in Malaysia has been estimated to be nearly four thousand.
Online Banking
Internet Banking or Online Banking or PC-Banking as it was known then started off in Malaysia in the 1990s. Internet banking is basically the accessing of a range of banking services through a bank’s secure website. Today, 31 banks (conventional and Islamic) in Malaysia offer Internet banking services. And, as on March 2014 there are 15.9 million Internet banking subscribers which works out to a penetration rate of slightly more than half the population.
Phone Banking
Phone Banking or Telebanking services as it was known then commenced in Malaysia in the 1990s. Phone banking is the provision of banking services through the phone. Customers can contact their bank on the bank’s customer service number and get a range of banking services done. In many cases, these phone banking numbers are toll-free.
Mobile Banking
Customers can also access banking services through their mobile phones or smartphones. As on March 2014 as per Bank Negara statistics there were nearly 4 million mobile banking subscribers. Banking services can be accessed either through SMS or through the use of apps. Currently, there are 13 banks in Malaysia which offer mobile banking services.
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