AmBank's Lee targets Malaysia's SMEs

Malaysia’s AmBank has launched a full suite of cash management products to customers. Malaysia’s sixth largest bank by assets will now compete directly with foreign banks in the country with its new suite of solutions, following its official launch in Kuala Lumpur this week. It will also launch a suite of Islamic cash management products by the year’s end.

The new services suite will be known as AmBiz-CashPro and is marketed by AmBank as a tool to increase efficiency and reduce costs for businesses. Like service offerings marketed by foreign cash management banks in Malaysia, AmBiz-CashPro will cover a full spectrum of activities such as receivables management, payables management, liquidity management and corporate internet banking.

Speaking at the launch of AmBiz-CashPro, Tan Sri Dato’ Azman Hashim, chairman, AmBank Group, says: “With this service in place, we address the two issues that are of paramount importance to customers: efficiency and reducing the costs of doing business.”

The official unveiling of AmBank’s full cash management capabilities comes after a busy few years for the firm, which has seen both its cash management headcount increase and subsequently, its business substantially grow.

The first step came with the appointment of former Citigroup banker Andre Lee as head of its cash and trade services management. At the helm, Lee has supervised AmBank’s emergence as one of the country’s large domestic cash management banks. Lee also led the gradual shift of many of his colleagues to Ambank, of which approximately 15 have joined on the product, sales and operations side since 2003.

“Historically, AmBank has been a lender, but we have always been a local bank serving local needs, which justifies our enhanced focus on cash management” he tells FinanceAsia. “The people that we’ve hired for the cash management team are of an exceptional skill set and we see this as a huge advantage in the market.”

Upon officially launching the new solution suite, Lee has set AmBank the target of ramping up the amount of clients exponentially by years end. A soft launch of AmBiz-CashPro in early April has resulted in AmBank bringing approximately 140 customers online, who have taken up a variety, if not complete, array of services.

“The customers that are already using AmBiz-CashPro are not all using the entire suite of services, and we expect this to continue as we ramp up more customers,” he says. “At this stage, we’re expecting to see a huge take-up of the solution suite and anticipate by the end of 2006 to grow our customer base to over 400.”

Unlike fully functioning foreign cash management banks operating in Malaysia, AmBank will not focus their newly launched services on government corporations and multinational corporations (MNC). Instead, AmBank will direct its attention, like it does in other business lines such as trade finance, to the domestic middle-market and small-medium enterprise (SME) sector.

This is not likely to worry the foreign cash management banks with a presence in Malaysia greatly, given the fact they actively tie themselves to the big corporations and that their solutions are more catered to processing large volumes. Given this idea, AmBank believes that the middle market and SME segment is prime for the taking, and through increased education, are recipients in waiting for full cash management services.

“Foreign cash management banks in Malaysia have their hands full with MNCs and they service them extremely well,” says Lee. “For them, SMEs do not afford expensive returns, but we see it differently.”

“In the past, cash management has been an idea not too familiar to a lot of SMEs, and although this inexperience still exists, times are changing. We are showing them the benefits and have invested time and money into education, as we see this market segment is changing their attitude to both payments and receivables.”

“When looking at the middle market and SMEs, we don’t see the take-up as much as a product driven initiative, as much as we will actively acquire customers. Many of these companies are now in the second or third generation, and are being run by the educated children of the founders.”

Once customers are acquired, the major selling point of AmBiz-CashPro will the four distinct solutions offered in the suite.

Firstly, managing payables - such as vendor payments, fees, dividends, premiums, claims, dealer incentives and duties, among others. These are handled by a solution named ProPay. As with the other three solutions under the AmBiz-CashPro umbrella, ProPay is programmed to handle cheque and wire transactions and both domestic and foreign payments.

Customers will also have the option of sending all payments through a single electronic file and through ProPay, AmBank stresses that businesses will experience easier reconciliations through automation and the option of simplified bulk processing.

On the receivables side, ProCollect will link directly with customers’ existing systems to enhance collection efficiencies, and clearance reconciliation.

In regards to liquidity management, which Lee earmarks as a key component in its plans to acquire middle-market and SME clients, the ProLiquidity solution will assist in better management of financial liquidity through monitoring and facilitating fund movements to improve yield on idle balances.

The final solution, called e-Ambiz, allows customer to execute cash and trade transactions and the luxury of retrieving information online anytime, anywhere. This component will also ensure security of transactions through the authorisation function.

Outside of the four main solutions, AmBank’s membership in the Malaysian Electronic Payment System (MEPS), the national payments system is also a major benefit to customers. As a member of MEPS, AmBiz-CashPro can also handle payments by GIRO, the electronic interbank fund transfer system, as well as through the country’s other clearing system, Real-time Electronic Transfer of Funds and Securities (RENTAS). SWIFT can also be used on the new solution.

The suite was developed by India’s Nucleus Software Export Limited, and is powered by its Cash@Will system, which is the software firm’s web-enabled end-to-end integrated solution.

“The reasons we selected Nucleus was a really a decision based on cost and the company’s position and understanding of Asia,” says Lee. “Although there was a large element of customisation on our behalf, we felt that their model was much closer to our vision than other firms that specialise in North American or European cash management solutions.”

The next phase of Ambiz-CashPro will come from the Islamic cash management segment. Although Lee stresses the solutions will not differ too dramatically from the newly-launched conventional product, it will appeal to a segment of the market already conducting the majority of their banking business in accordance with Islamic principles.