New Services and Products Introduced by Commercial Banks and Other Financial Institutions

Discuss some new services and products introduced by commercial banks and other financial institutions in your geographical area in recent years. Why do you think those services and products were introduced at this time?

Every business entrepreneur aspires to remain on top in its line of business, they employ every possible strategy to be better than its competitors, competitors are good in business because they make businesses to be on their toes and make them to keep on working by developing new ideas that will keep them on top. Commercial banks and other financial institutes are no exceptions to this trend in business as they also employ the best professional strategies to keep their customers and make sure that they actively patronize the banks.

Commercial banks are banks whose main activities include collecting money deposited by its customers who could be referred to as its creditors and the bank is seen as the debtor to the customers. The commercial banks also make loan available to its customers who come to borrow money for their different purposes, these set of customers are referred to as the banks debtors while the banks are their creditors. This lending and borrowing process has an agreed amount of time for it to be returned. There are two types of commercial banking, the retail and wholesale banking. The retail banking is on a small scale where the lending and borrowing is done with individuals and companies, while the wholesale banking is on a larger scale that involves governments, multinational companies and even other banks. This is the type of banking where moneys are raised to finance capital projects by governments and multinational companies that engage in projects that cut across several countries.

There are several commercial banks in Selangor Malaysia and other financial institutions, in other to retain their customers and attract new ones, they introduce new banking products and services that will be too attractive for both new and existing customers to ignore. In this study I will look at the new products of two of Malaysia’s leading banks Malayan Banking Berhad (Maybank), and CIMB Bank Berhad. These two banks were chosen because they are among the most popular banks in Malaysia. Maybank has two new products Foreign Currency Mudharabah Deposit and Placement-i (FCM-i) and Prosperous Now! Account-i (PNA-i).

Maybank is an Islamic commercial bank thank operates within the ethics of worldwide Islamic banking. Maybank has its presence in about twenty (20) countries worldwide. The FCM-i is a short-term Islamic foreign currency term deposit account based on the principle of Mudharabah, Mudharabah is a term in Islam that means a partnership in which one or more partner brings the finance while the other partner or partners brings the labour or expertise in which both parties share the profit. This is the concept that Maybank brings which entails the profit sharing between the bank and its old and new customers (who will make deposits of foreign currency). Dividends realized from the FCM-i are based on an agreed profit-sharing ratio reached by both parties. The dividend realized will be calculated on the ratio and the amount to be paid will be known after the investment has matured. The minimum deposit for an individual customer for this product is equivalent to five thousand United states Dollars (USD5,000) with tenures ranging from 1 - 12 months. For businesses the minimum deposit is equivalent to twenty thousand United States Dollars (USD20,000) with minimum tenures of 1 day for United States Dollars. This product is also done for other foreign currencies with their own tenures, 7 day minimum tenure for the Euro, Australian Dollar and Great Britain Pound, then 1 month minimum tenure for New Zealand Dollar, Hong Kong Dollar, Canadian Dollar, Singapore Dollar, Switzerland Franc, and Japanese Yen with a maximum tenure of 12 months. The FCM-i. comes with several benefits for the customers, like the dividends being calculated daily and the payment made on its maturity, providing an alternative investment in the Shariah compliant short term foreign currency investment, it allows easier overseas fund transfer, and the rates are dependent on rates of the currency market.

The PNA-i. was formerly known as the profit Now Account, An Islamic fixed term deposit that offers instant cash the moment a customer signs