FINANCING

ALTERNATIVE

OVERDRAFT
a type of credit facility provided by bank or FI

allow acc holder to withdraw more money than available in acc

.
can be arranged or unarranged have different term condition , ,
fees & interest rate depending on FI or cust credit worthiness

-
used as short term solution for covering unexpected expenses

or cash flow gap

key features

1. flexibility

flexible & can used to cover unexpected expenses & CF short fall

borrowers can excess fund quickly & easily

2. repayment

repaid as soon as borrower has fund available

interest charged for amount borrowed for outstanding time

3. interest rate

can be higher than other form of financing

variable & tied to banks prime rate

4. fees

charge annual fess or transaction fees

depends on bank & term of overdraft agreement

5. credit limit

determined by bank based on creditworthiness & acc history

6. collateral

unsecured form of financing meaning no collateral is required

some bank requires it or personal guarantee

7. availability

available to individual & businesses with bank acc in good

standing

offered as a checking acc

process

1. application

apply for overdraft at their bank or FI

acc holder provide personal & financial info such as income ,

credit history & acc balance

2. approval

bank or FI will review application & determine whether acc holder

eligible for overdraft

, -
if yes acc holder received pre approved OD limit

3. fees & interest

comes with fees & interest that acc holder needs to pay

depends on FI & acc holder credit worthiness

4. usage

,
once approved acc holder can use OD up to pre approved limit -
,
can be done by writing cheque withdrawal or debit card

must be careful not to exceed limit because can cause penalties

& additional fees

5. repayment

pay back OD included with interest & fees according to term &
condition of OD agreement

period & term depend on FI & amount of OD

FINANCING
ALTERNATIVE

OUTPUT CHEQUE PURCHASE

banking service where cheque drawn on bank outside of its local

area

bank may choose to purchase instead of waiting for it to clear

through other bank

-
a way of obtaining short term credit

person purchasing the cheque is essentially paying for cheque

upfront with the expectation of receiving face vale later

key features

1. drawer

person who writes & sign cheque is known as drawer

2. payee

person who received money from cheque

3. amount

amount of money that is used to be paid to payee mentioned in

cheque

4. date

date of cheque is written mentioned in cheque

5. signature

drawee signature is needed for cheque to be valid

6. acc number

drawers bank acc num is mentioned

7. bank name & branch

name of bank & branch where drawer has an acc

8. MICR code

printed at the bottom of the cheque containing bank code branch ,

code & acc num

9. cheque num

has num to identify it

10. payee bank detail

if cheque is to be deposited in payees bank acc need to have detail ,

such as bank name branch , & acc num

process

1. identification

present valid identification to FI

verify identity & ensure transaction is legit

2. application

apply for outport cheque at FI

filling out form & provide info such as purpose amount , & other

relevant detail

3. approval

bank or FI will review application & determine whether to approve

OCF

depends on creditworthiness purpose , & policies of FI

4. payment

,
if approved FI provide cust with outport cheque containing the

requested amount

cust pay upfront or at a later date depending on terms &

agreement

5. deposit or cashing

cust can deposit or cash OC depend on need & policies of FI

,
once deposited in their acc may use the fund for intended

purposes

6. repayment

pay back OCF according to term & agreement

can make regular payment involved interest or full payment at a

later date
FINANCING
ALTERNATIVE
FIXED LOAN
type pf financing where borrower received a specific amount of money

from lender & repays it at a fixed installment & pre determine period

pays interest on loan calculated based on amount & rate

,
used to purchase car home or even funding small business

offered by bank & ,

FI term & condition depend on borrower

creditworthiness & lender

key features

1. fixed interest rate

interest is fixed for the duration of the loan

borrower knows how much they will be paying for interest

2. fixed payment schedule

pay loan in fixed installment over per determine period of time

set at the beginning of the loan term & cant be change

3. predetermine loan amount

received a specific amount of money at the beginning of loan term

based on creditworthiness & lender policies

4. collateral requirement

provided to secure the loan

reduce lender risk & result in lower interest rate

process

1. application

apply to lender providing personal & ,

financial info purpose & amount

seek to be borrowed

2. credit check

lender perform CC to assess borrowers creditworthiness

,
review credit history income debt , & other factor

3. loan approval

lender provide loan offer that includes loan amount interest rate , &
repayment term

4. acceptance

borrower review loan offer & decide to accept or not

,
if yes loan agreement is sign & provide required document such as

income proof & collateral

5. funding

lender disbursed loan fund to borrower

can be provided in lump sump or installment depend on term

6. repayment

repay in fixed installment over pre determine period

interest is include in each installment & rate is fixed

7. completion

loan is complete when borrower has fully repaid loan

FINANCING
ALTERNATIVE
HOUSING LOAN
LT loan used to purchase or construct home

a way to finance the purchase or construction of home over a long

period of time

key features

1. loan amount

available for a wide range of loan amount depend on borrower

need & financial situation

2. loan tenure

long range tenure (10 -30 years )

base on borrower capacity

3. interest rate

can be fixed or floating & usually lower than other types of loan

4. processing fees

,
involves fees such as loan application fees administrative fees &
valuation fees

5. repayment charges

fees charged by lender if borrower pays loan before the end of

loan tenure

6. collateral

secure loan so property that is purchase or constructed is used as

collateral for loan

7. eligibility criteria

, ,
minimum income credit score employment history

8. repayment schedule

paid in fixed installment with paying principal & interest

process

1. application

apply to lender providing personal & ,

financial info purpose &
amount seek to be borrowed

2. credit check

lender perform CC to assess borrowers creditworthiness

,
review credit history income debt , & other factor

3. property valuation

lender conduct valuation on property to ensure it is worth the

amount being borrowed & not overpaying

4. loan approval

lender provide loan offer that includes loan amount interest rate , &
repayment term

5. acceptance

borrower review loan offer & decide to accept or not

,
if yes loan agreement is sign & provide required document such as

income proof & property ownership

6. funding

lender disbursed loan fund to borrower or directly to seller or

builder

7. repayment

repay in fixed installment over period range from 10-30 years

interest is include in each installment & rate is fixed or variable

depend on term

8. completion

loan is complete when borrower has fully repaid loan & become

owner of the property

FINANCING
ALTERNATIVE
PERSONAL LOAN
unsecure loan used to cover borrowers expenses such as medical

,
bills home renovation or travel expenses

(
dont require collateral pledge any asset as a security for the loan )
,
offered by bank credit union & online lenders based on borrower

creditworthiness & ability to repay loan

key features

1. unsecured loan

borrower dont have to provide collateral to secure loan

2. fixed loan amount

offer fixed amount to be used for personal expenses

3. fixed interest rate

can be fixed throughout loan tenure

4. flexible payment tenure

tenure range from 1 to 10 years

allow borrower to choose payment that suite their financial needs

5. easy application process

simple & easy application process

applied online or in person

6. fast processing time

processed quickly usually takes a few days to be approved

7. no restriction in use

can be use for variety personal expense

8. credit score requirement

offered to borrower with good credit score

process

1. determine loan amount

determine how much money need to be borrowed

2. check credit score

determine ability & interest rate for loan

higher CS lower interest rate

3. compare lender

search & ,
compare different lender gather document such as

,
income employment detail bank statement ,
ensure have all document needed

4. apply loan

fill out application & submit document needed to lender

lender evaluate application before approving loan

5. loan disbursement

lender disbursed loan to bank acc

time taken depends on lender

6. repay loan

pay loan according to agreed schedule

pay loan installment on time to avoid late payment fees & negative

impact on credit score

 INTERNATIONAL

TRADING
EXPORT
EXPORT CREDT
CREDT REFINANCING
REFINANCING

provided by central bank or OFI to support export

provide short-term credit to exporter who have extend credit term to overseas buyer
exporter obtain liquidity by refinancing their export receivable at lower cost
basic principal
exporter transfer export receivable to FI
FI provide loans to exporter for short-term (usually 180 days)
FI pays exporter discounted value of exporter receivables
exporter uses fund to further export or do other business activities
pre-shipment
available for direct (final exporter such as manufacturing or trading companies)&
indirect exporter (domestic supplier such as raw material or final product)
objective -
i) promote export of goods
ii) stimulate growth of small-scale industries
post-shipment
exporter who export eligible goods on credit
can obtain immediate funds at a reasonable rate from bank upon presenting relevant
document on goods shipment & endorsed by EXIM bank
objective -
i) promote export of manufactured & agriculture food product
ii) provide exporter to ready access to credit facilities at reasonable interest rate to
compete more in overseas market
process
1. application
applies FI for ECR, provide details of their export receivables & other info
2. assessment
asses exporter credit worthiness & quality of export receivables
consider business history & risk on exporter transaction
3. approval
issue ECR agreement, specifying the term & condition
4. disbursement
FI disburse fund to finance working capital requirement
5. repayment
repay according to agreed-upon terms & condition
typically made from exporter export receivables
6. refinancing
can obtain further ECR by refinancing existing export receivable
benefits
improve CF
exporter obtain short-term financing at lower cost. this helps them to improve cash flow &
meet working capital requirement
reduce credit risk
secure against exporters export receivable providing a level of security to FI. this reduce
credit risk associated with extending credit to exporter
increase competitive
helps exporter become competitive in global market due to lower cost. enables them to
expend & increase market share
promoting export
important tool in promoting export due to the reduce cost of credit enables them to
compete with global market. helps support growth of export industries & create job
opportunity
 INTERNATIONAL

TRADING
SHIPPING
SHIPPING GUARANTEE
GUARANTEE

used to secure cost of shipping goods from 1 location to another

issued by bank & OFI
commitment to pay shipping cost if party responsible fail
party responsible will arrange bank to to issue SG to shipping company
SC release good for shipment
if party fails, SC make claim on shipping guarantee & bank pays for outstanding SC
process
1. application
party responsible to pat for SC (exporter/importer) applies SG to bank or OFI
include detail shipment , value of goods, shipping route
2. assessment
bank assess creditworthiness & risk associated
review FS, credit history
3. issuance
bank issue SG to SC if approve
SC release good for shipment upon receipt of SG
4. payment
if party responsible fails to pay, SC make claim on SG
bank pays for outstanding SC
5. repayment
Party responsible repays bank for amount paid out under SG with interest
benefits
1. reduce risk
provide level security to SC
ensure they will be paid for service even if party responsible pays to do so
reduce non payment risk
2. increase trust
SG help build trust between parties involved in IT
provide reliable payment mechanism
3. facilitate trade
reduce non payment risk, provide assurance to SC
4. flexibility
Sg tailored to needs of parties involved
include specific term & condition of guarantee
5. lower cost
lower cost than LC
quicker to obtain
 INTERNATIONAL

TRADING
TRUST
TRUST RECEIPT
RECEIPT

financing doc used in traditional trade to provide temporary financing for good
importation
agreement between buyer & bank where bank release goods to buyer on condition that
buyer holds them in trust for bank until loan is repaid
used when importer does not have sufficient fund to pay for goods
often used in international trading transaction where there’s lack of trust between
parties involved
importer may take possession of goods while retaining ownership until loan is repaid
security level to ensure loan is repaid
process
1. importer apply trust receipt from bank
info detail of goods to be imported (value & quantity)
2. bank approve application & issue TR to importer
TR is evidence that bank release good to importer but bank retain ownership of good
until loan is repaid
3. importer take possession of good
importer may use or sell goods as needed with the understanding that they are holding
goods in trust of bank
4. use fund to generate sale & repay loan
5. importer gain full ownership when loan fully repaid

benefits
access to financing
TR provide financing option when importer dont have sufficient amount of funds, helps
import goods that is not able to purchase
flexibility
flexibility in term of repayment schedule. can repay at time it is convenient as long within
agreed time frame
reduce risk
risk associated with importing goods as it allows importer to take possession of good while
retaining ownership until repaid
building credit
help build importer credit history & improve credit worthiness
security
level security for bank as it ensure loan will be repaid
control
control over collateral
reduce risk
goods can be used as collateral if loan not repaid
 INTERNATIONAL

TRADING
BANKER
BANKER ACCEPTANCE
ACCEPTANCE

provide STFI issued by borrower guarantee by bank

used in international trade to facilitate buyer & seller
time draft, written order from 1 party to another promises payment at future date
used both import & export
secure & flexible since provide reliable payment mechanism
allow buyer defer payment & provide guarantee to seller
BA sold at secondary market providing immediate fund
process
1. S export good to buy in another country & issue invoice for payment at future date
2. B applies BA at bank to finance payment
3. Bank accept application guaranteeing payment to S at future date
4. bank issue BA doc to S & can be solf at secondary market if need immediate fund
5. at future date in BA, bank pay seller full amount of invoice

benefits
low risk investment
backed by creditworthiness of bank. bank reputation & financial strength ensure payment
made on a specific date
trade financing
used in international trading. seller use BA as collateral to obtain loan from bank & use
them to finance production or good shipment
liquidity
can be trade at secondary market & may sell before maturity date to obtain cash
discounting
holder can sell at discount to obtain cash before maturity period. holder may obtain fund
quickly & at lower cost
risk mitigation
mitigate risk for non payment in international trading. bank ensure payment is made on
specific date, reduce risk of non payment due to political or economic instability
 specialized FS
FACTORING
purchasing acc of third party company (factor) providing immediate cash flow to business by
buying outstanding invoice
known as invoice financing, acc receivable financing & invoice factory
company use outstanding invoice or collateral to obtain immediate cf
provide by specialize financial companies that specialize in factoring
used by small business whos limited in credit history or have loan payment term with cust
financial transaction where company sells acc receivable at a discounted price for immediate
cash
acc receivable = invoice issues by company to cust for goods & services
process
1.application
applies factoring service at factoring company
provide info on outstanding invoice, cust, business operation
2. due diligence
credit assessment of business & cust to determine risk level of invoice being factor
3. approval
provide financial agreement that outline term & condition of factoring arrangement (fees,
interest rate)
4. invoice verification
submit invoice to FC for verification & processing
FC verifies the validity of invoice & confirm amount & payment term with cust
5. funding
a percentage of total invoice amount within few days verification
6. collection
FC responsibility to collect payment from cust in the invoice
sending reminder & follow-ups
handle issues that may arise
7. settlement
cust pays fees, FC deduct fees & charges from amount collected & remit the balance to
business
benefits
1. Improved Cash Flow
Factoring enables companies to convert their accounts receivables into immediate cash,
providing them with the necessary funds to meet their short-term financial obligations.
2. Reduced Risk
companies can transfer the risk of non-payment or late payment to the factor, reducing the
risk of bad debts and improving their financial stability.
3. Efficient Collection
Factoring companies have specialized skills and resources in collecting debts, allowing
companies to focus on their core business activities.
4. Access to Working Capital
Factoring provides access to working capital without incurring additional debt or diluting
equity, making it an attractive option for small and medium-sized businesses.
5.Customizable Financing
Factoring is a customizable financing option, with flexible terms and rates that can be
tailored to the needs of the company.
6.Improved Creditworthiness
Factoring does not appear on a company's balance sheet as debt, which can improve its
creditworthiness and enable it to access more favorable financing terms in the future.
types
1.Recourse factoring:
business retains responsibility for any bad debt or nonpayment by its customers. If the
customer does not pay the invoice, the business is responsible for buying it back from the
factoring company.
2.Non-recourse factoring
factoring company assumes the risk of non-payment by the customer. If the customer does
not pay the invoice, the factoring company absorbs the loss.
3.Full-service factoring
involves the factoring company providing additional services, such as credit checks,
collections, and account management
4. Spot factoring:
businesses to sell individual invoices on a one-time basis, rather than committing to a long-
term factoring arrangement.
5.Invoice discounting:
business retains responsibility for collections and managing customer relationships. The fc
provides funding based on the value of the invoices, and the business repays the funding plus
fees and interest when the invoices are paid.
 specialized FS
HIRE PURCHASE
instalment purchase agreement allow I or B to purchase asset such as vehicle or machinery
over a fixed period
hirer pays item in installment while using it & ownership is transferred on final payment
hirer take possession of asset but ownership is transferred after all payment is made
process
1.select item that wants to be purchased
hirer select item such as cars, motor, equipment, machinery
2. submission of Hp application
submit to company include personal detail, income & details on item
3. credit evaluation & approval
evaluate hirer creditworthiness & approve hp application if hirer meets obligation & criteria
4. down payment
a percentage of total purchase price (10-20%)
5. sign hpa
sign agreement that specifies term & condition (interest rate, payment period, total cost)
6. Payment by instalment
pay regular installment over agreed period of time monthly until full amount paid
7. transfer of ownership
ownership transferred to hirer once final payment is made
benefits
1.Access to assets
acquire assets that they may not be able to afford otherwise, enabling them to invest in
their operations or improve their personal lives.
2.Fixed payments
have fixed monthly payments over a fixed period, making it easier for individuals or
businesses to budget and plan & finance
3.Flexibility
tailored to meet the needs of individual including the length of the payment term, the deposit
amount, and the frequency of payments.
4.Tax benefits
In some cases, the interest and fees associated with a hire purchase agreement may be tax-
deductible, providing additional financial benefits
5.Ownership
While the asset is being paid for, it is in the possession of the buyer, enabling them to use it
for their personal or business needs. asset is fully owned by the buyer when payment
completed
types
1.Regular hire purchase
common type of hire purchase arrangement
where the hirer pays a deposit (usually 10-20% of the purchase price) and then repays the
balance of the purchase price in equal monthly installments over a fixed period of time.
The hirer has possession and use of the item during the repayment period, but ownership is
only transferred once the final installment is paid.
2.Islamic hire purchase
follows Islamic principles of finance
where the financing company buys the item and sells it to the hirer at a markup (profit)
instead of charging interest.
The hirer makes monthly payments to the financing company to repay the purchase price and
the markup.
Ownership is transferred to the hirer once the final payment is made.
3. Lease purchase
hirer leases the item for a fixed period, paying monthly instalments, with the option to
purchase the item at the end of the lease term for a nominal amount.
The hirer has the use of the item during the lease period but does not own it until the final
payment is made.
4.Hire purchase with balloon payment
hirer makes lower monthly payments throughout the repayment period
a large balloon payment due at the end of the term to fully repay the purchase price.
The hirer may choose to sell or trade-in the item at the end of the term to make the balloon
payment.
 specialized FS
LEASING
common option in international trade that allows companies to acquire asset for a set period
without having to purchase them
may be specialized company or manufactured
usually used for expensive asset that are necessary
acquire asset without having to use a large capital amount
process
1.application
lessee submit application to lessor
info such as type of asset to be leased, term & payment
2. credit assessment
lessor asses creditworthiness of lessee to determine whether to approve or no
3.asset selection
lessee select asset to be leased & nego the term & condition of lease agreement
4. documentation
lessor prepare lease agreement & other document signed by both parties
5. delivery & acceptance
asset delivered & inspected to ensure it meets agree-upon specification & condition
6. payment
make regular payment to use asset over agreed upon time
7. end of lease
lessee return asset to lessor or purchase asset for predetermined price
benefits
1.Lower upfront costs:
Leasing typically requires lower upfront costs than purchasing an asset outright.
beneficial for businesses that need to conserve cash or individuals who cannot afford to
make a large payment
2.No need for a large loan
Since leasing does not require a large loan or down payment
3.Predictable costs
Lease payments are typically fixed for the duration of the lease term
making it easier for businesses to budget and plan for expenses
4. No asset depreciation
Since the lessee does not own the asset, they are not responsible for any depreciation or
reduction in value of the asset over time
5.Access to newer equipment
Leasing allows businesses to access newer and more advanced equipment
6.Tax benefits
In some cases, leasing can offer tax benefits to businesses
such as deducting lease payments as a business expense.
7.Flexibility
Leasing agreements can be tailored to the specific needs of the lessee
adjusting the lease term or payment structure to better suit their financial
types
1.Operating lease
An operating lease is a short-term lease in which the lessor retains ownership of the asset
lessee pays for the use of the asset.
At the end of the lease term, the asset is returned to the lessor.
commonly used for assets that quickly become obsolete or need to be regularly replaced,
such as technology
2.Finance lease
long-term lease in which the lessee has the option to purchase at the end of the lease term.
lessee assumes most of the risks and rewards of ownership, such as maintenance and repair
costs.
used for assets that have a longer useful life
3.Sale and leaseback
involves the sale of an asset by the owner to a leasing company
who then leases the asset back to the original owner.
way for businesses to free up capital tied up in assets and use it for other purposes.
4.Cross-border lease
lease agreement between parties in different countries.
This type of leasing is commonly used in international trade and can offer tax benefits for
both parties
 specialized FS
BRIDGING LOAN
ST used to bridge gap between purchase of new property & sale of existing asset
used when buying new home & selling the current one
access fund quickly & allow secure purchase of new property without having to wait for sale
of existing property to complete
have high interest rate & requires collateral
purpose
1. Property purchases
Bridging loans can be used to finance the purchase of a new property before the sale of an
existing property has been completed.
2.Property development
Bridging loans can be used to finance property development projects, such as renovations,
refurbishments, or conversions.
3.Auction purchases
Bridging loans can be used to finance the purchase of a property at auction, where quick
access to funds is often required.
4.Cash flow
Bridging loans can be used to provide cash flow for businesses, allowing them to bridge
temporary gaps in their finances.
5.Investments
Bridging loans can be used to finance investments in property or other assets.
process
1.determine loan amount & term
based on purchase price of new property & expected sale price
2. find lender
search & compare different lender to find the one offer best term
3.apply
include info such as financial situation, properties, exit strategy to repay loan
4.provide collateral
may be property or asset
5. receive approval
loan offer outlining term & condition of loan
6.sign agreement
include loan amount, interest, repayment term & fees
7.receive fund
receive in few days
8.repay loan
repay according to agreement
make regular payment of interest loan in full at end of term
benefits
1.Quick access to funds
processed quickly, often within a matter of days
allowing importers and exporters to complete transactions more quickly.
2.Flexible terms
tailored to meet the specific needs of the borrower, including the length of the loan term, the
interest rate, and the repayment structure.
3.improved cash flow
providing access to funds that might otherwise be tied up in outstanding invoices or accounts
receivable.
types
1. Closed Bridging Loans
short-term loan that is secured against a property or other collateral with a fixed repayment
date.
commonly used when the borrower has a clear exit strategy for repaying the loan, such as
the sale of property.
2.Open Bridging Loans
short-term loan that is secured against a property or other collateral
but with no fixed repayment date.
commonly used when the borrower does not have a clear exit strategy for repaying the loan
 specialized FS
END FINANCING

use when they completed the purchase property using a bridging loan & need long term
financing to repay BL & provide on going financing for the property
LTF to repay bridging loan used to buy property
in form of conventional home loan, islamic home financing
process
1.application
applies with mortgage lender
info such as financial situation, property & amount
2. valuation
value property & assess borrower ability to repay loan
3. offer
make an offer of end financing
4.acceptance & fund
B accept & fund transferred to b acc to repay bridging loan & provide ongoing financing for
property
5.repayment
makes regular payment to lender over period of years until fully paid
benefits
1.Longer repayment period
borrowers have more time to repay the loan
result in lower monthly repayments and greater affordability
2.Lower interest rates
result in significant cost savings over the long term.
3.Fixed monthly repayments
easier for borrowers to budget and plan their finances.
4.Access to larger loan amounts
useful for borrowers who are looking to purchase more expensive properties.
5.Ownership of the property
b becomes the owner of the property once the loan is fully repaid.
This provides the borrower with a sense of security and stability, as well as the potential for
capital appreciation if the value of the property increases over time
 remittance

process of sending money to remove or pay obligation.

also the sum payment made when one person wire transfer of
money to another who is overseas

cashier order demand draft

cheque issued by bank payable to the cheque drawn by bank on its head
order of specified payee for payment office on a branch or another bank
within local area for payment outside local area
rate decided by credit committee on (domestic or abroad)
remittances products features
features 1.transfer fund within & outside country
1.printed with crossing “not negotiable” 2.if send abroad, draft drawn on foreign
2.issued for use only within clearing country in appropriate currency
area of issuing bank& if cleared 3.demand draft is paid by cust at time
outside clearing area, then normal issue
outstation cheque commission is 4.cust send draft to payee who present
payable it at drawee bank for payment
3.accepted as good by payee as it has 5.type
been paid by cust at time issue i) local dd (RM)
4.cant be returned except technical drawn in RM & payable in malaysia
issues drawing / issuance bank inform
5.used by cust who dont have current drawee bank that it has issued dd &
acc but want to make payment by make arrangement to transfer fund
cheque or in situation when personal to drawee bank
cheque unacceptable maturity 6 month
6.in malaysian ringgit only a) inward local DD- issued by other bank
& received by drawee bank
b) outward local DD- drawn by issuing
bank/ drawing bank
ii) foreign dd (foreign currency)
a) inward foreign DD - issued by other
bank & received by drawee bank
b) outward foreign DD - necessary to
mentioned the amount & currency
involved & selling rate

telegraphic transfer
fastest mode of money transfer & presently used in payment in or outside
malaysia required within shortest possible time
by telegraph, telephone transmission, telex, cable or swift from bank to its branch
or another bank authorizing payment of fund to specified acc
all foreign currency will require supporting doc accordance to foreign exchange
admin (FEA) rule
types -
i) Local telegraphic transfer (between local bank branches & RENTAS interbank)
ii) foreign telegraphic transfer (foreign currency)

online transfer
internet bank transfer requires internet connection
first timer user, need to register an acc by following instruction
uses website provided by bank & logins to the banks website
cust place request to transfer certain amount of money to acc
cust bank transfer amount to another acc if same bank otherwise transfer
request is forward to ACH (automated clearing house) to transfer amount to
other acc & amount is deducted from cust acc
once transferred, cust notified of the fund under transfer by bank

standing instruction
bank arrangement where cust authorized bank to perform a specific transaction
on their behalf at regular intervals without further instruction from cust
use for recurring payment (loan, insurance, bills)
bank initiate transaction on specified dates without requiring any further input or
approval from cust
benefits -
1. convenience - save time & effort by automating regular transaction
2.avoid late payment - more secure way of verifying a customer identity
3.improve financial management - help manage finance more effectively by
ensuring that payment is made on time
 remittance

society worldwide interbank financial

telecommunication

provide national financial institution with secure, standardize, encrypted network

in a reliable environment for the transfer of various important info
can be from 1 financial institution to another branch
when there’s bank transaction, SWIFT assign standardize code to FI entering into
transaction
either 8 digit or 11 digit
3 interchangeable code ( swift, bank code, SWIFT ID or ISO code)
dont transfer fund but provide code & payment order to FI that need to be settled
by corresponding acc that institution have

electronic & digital banking

E-sistempenjelasan informasi cek

kebangsaan

image base clearing system where cheque image & magnetic ink character
recognition code line date are captured & transmitted electronically to facilitate
clearing
reduce risk & cost associated with physical handling of cheque & improve the
efficiency of entire cheque clearing process

ATM
electronic telecommunication device where cust to FI perform financial
transaction without the need of human cahier
cust identified by inserting a plastic card with magnetic stripe or magnetic smart
card with chip that contains unique card num & security info (expiration date or
CVV)
SAN enable cust to access fund from any participant bank ATM. 2 shared ATM
network
1. MEPS SAN - cross-border cash withdrawal, interbank ATM fund transfer,
interbank mobile prepaid top up & credit card & loan repayment
2.HOUSe (owned by 4 locally-incorporated foreign bank) - cash withdrawal &
balance enquiry)
advantage -
i) convenience & multiple location
ii) dont have to carry cash around
iii) use to pay for some retail shop
iv) withdraw anytime
v) faster than going to bank
disadvantage -
i) off-line (system down)
ii) forget pin num
iii) training needed
iv) chances of robbery

CDM
Self service terminal enable cust to deposit cash without manual intervention
service -
i) cash deposit
ii) balance enquiry
iii) view previous bank transaction
features & benefits
i) instant credit to acc
ii) immediate receipt
iii) no need for cash deposit slip
iv) no need for long queues at counter
v) no need to sort & arrange cash
 electronic & digital banking

electronic fund transfer at point of sale

(EFTPOS)

payment system to make payment of goods & services at point of sale using
debit or credit card
transaction processed electronically
benefits -
i) allow cust to make electronic payment quick & easy without cash needed
ii) high secure using encryption & other security measures to protect cust personal &
financial info
iii) have lower transaction fees than CC
iv) processed instantly so cust can complete transaction quickly

direct debit

recommended for organization that enables recurring payment & automated

collection
can formed online (eMandate)
more efficient collection method
direct debit agent - agent act as middle party that refers potential billers to the
biller bank
biller bank for agent - appoints agent to refer potential direct debit biller to bank
for enrolment in Direct debit

payment gateway (FPX)

authorized payment for e-business, online retailer

virtual equivalent of physical point of sale terminal located in most retail outlet
encrypt sensitive info (cc num) to ensure info passes securely between cust &
merchant
facilitate transfer of info between payment portal & front end processor or
acquiring bank
steps -
1. cust place order on website by pressing ‘submit order’ or enter card detail
using automatic phone answering service
2.if order website, cust web browser encrypt info to be sent between browser &
merchant webserver
3.merchant forward transaction detail to payment gateway
4.payment gateway forward transaction info to payment processor used by
merchant acquiring bank
5.payment processor forwards transaction info to card association
6.CC issuing bank receives authorization & send response back
7.processor forwards it to payment gateway
8.payment gateway receives it & forwards to web where it is interpreted as
relevant responses then relayed back to cardholder
9.merchant submit all approved authorization in batch to acquiring bank
10.AB deposit total of approved fund to merchant nominated acc
11.takes 2 days to complete

duitnow

malaysian real-time payment network managed by malaysia’s central payment

authority
Payment provider are unified under 1 national regulatory standard & run on
same network, making payment compatible
can digitally transfer money between online bank & digital wallet with phone
number, national identification number or business registration number
can send money instantly 24/7 basis to mobile num, NRIC num or business reg
num
allows cust to make payment & receive fund from any participating bank & e-
wallet with QR codes
allows payee to send digital payment request to collect fund from payer. may
send payment request at instance through mobile, mykad, business reg or bank
acc num
 retail payment instrument

debit card

transaction amount is deducted directly from cardholder bank acc upon

authorization
CH can manage finance more effectively & dont need to worry on late payment
penalties, finance charges & snowballing card debt
no income requirement
anyone who has acc bank with domestic bank & has ATM card may make
payment using the card at any merchant displaying the bankcard logo
have international brand DC under VISA & mastercard
also have cards with both international debit & domestic pin based ATM

credit card

small plastic card with unique num attached to an acc

magnetic strip embedded in used to read cc via card readers
when cust use cc to purchase product, cc issuer bank pays for cust & cust has
certain period after to pay the CC bill
enables holder to buy goods & services with credit line given by CC issuer &
amount is settled at a later date
CH billed monthly & bear finance charges on outstanding amount when payment
not made when due
can be used for cash advance at ATM & respective CC issuer counter
example - Visa, mastercard & JCB
tiered pricing structure -
i) Tier 1 - max of 15% per annum (promptly settle min payment due doe 12
consecutive month)
ii) Tier 2- max of 17% per annum (promptly settle min payment amount due for at
least 10 month in a 12-month cycle)
iii) Tier 3- min of 18% per annum
features on cc
1.signature - located in the back & contain element that repeats the name of card
brand
2.magnetic strip - where acc info is stored. has a unique 3 digit code used to detect
counterfeit card
3.card security code - located in white box to right signature panel or in white box
within signature panel
4.acc num - acc num of all cc compromised 16 digit
5.expiration date - located below acc num

charged card
function similar to CC
charge card holder must settle outstanding amount in full by due date every
month
fees are higher than cc
offer more privilege

biometric
security measures use in bank to verify cust identity
use biological characteristic (fingerprint, facial recognition, retina scan, voice,
person gait) to confirm identity
works by capturing & store cust biometric data & compromising it to a store
databased
benefits
i) increase security - provide more secure way of verifying a cust identity
ii) faster authentication - speed authentication process due to cust dont have to
remember pass or pin
iii) improve experience - more seamless & convenient user experience since they
dont have to worry about forgetting pass
 retail payment instrument

digital signature
in form of coded message, DS securely associates signer with doc in recorded
transaction
uses standard format called public key infrastructure (PKI) to provide high level
of security & universal acceptance
algorithms act like cipher, creating data matching signed doc (hash) &
encrypting the data
marked with time doc is sign
if doc changed after signing, DS is invalidated

digital token
digital representation of value & right that is offered & sold for :
a) facilitating access to participation in or development of distributed ledger,
blockchain or any digital data structure
b) raising capital for development of network or platform
token issued by blockchain developer in initial coin offering
example - crypto token & non-fungible token
can be used in exchange medium, means of payment & measure & store value

retail payment channels

digital banking
digitization of all traditional banking activities & program that were available to
cust at bank branch
technology application ensuring seamless end-to-end processing of banking
transaction or operation
include online banking, mobile banking, mobile payment, electronic banking
(ATM, home banking, phone banking)

online banking
provision of facilities such as accessing acc, fund transfer, buy financial product
cust complete banking transaction electronically without having to visit bank
primarily focus on remote deposit, money transfer, bill pay & basic online
management acc
cust may access banking features & services via bank web from computer
log in acc to check balance, pay electricity bill.
access additional banking features such as loan or cc at many bank or online
banking portal

mobile banking

ability to conduct bank transaction via mobile device or to conduct financial

transaction via mobile device
similar to internet banking, provide fast convenient way to perform everyday
bank transaction
need mobile phone to enjoy service
advantage
i) utilize mobile connectivity & do not require internet
ii)can perform several financial function conveniently & securely
iii) can check acc balance, review recent transaction, transfer fund, pay bills, locate
ATM, deposit cheque
iv) available 24/7 making it easy & convenient making it accessible for someone in
rural areas
disadvantages
i) risk at receiving fake SMS & scam
ii)loss of person mobile device means criminal can gain access to mobile baking Pin
& other sensitive info
iii) requires modern device such as smartphone & tablets
transactional non- transactional
1. fund transfer & deposit 1. check recent transaction
2. payment 2.view acc history & info
3.investment 3.check acc summary & current
balance
4.download bank form & statement
5.request debit card or cheque book
 retail payment channel

mobile banking online banking

online-based banking system allow online-based system allows cust to

cust to make transaction via cellular make transaction through any
devices electronic devices using internet
mobile, tablet, IOT (applewatch) desktop, web based interface
has limitation in its function since it is (google, microsoft)
complicated have much more function than MB
use for short message services or more used by bank & their web
immediate fund transfer

mobile banking mobile payment

digital wallet services runs through digital service through an app &
an app installed in phone connected managed by bank
to internet encompasses all possible mobile
CIMB Click Mobile app, Maybank2u banking services including e-wallet
MY App, allianceonline mobile, OCBC Boost App Malaysia, Grabpay,
Malaysia Mobile Banking, Touch n’ Go eWallet

financial technology

computer program & other technology use to support banking & financial
services
integration of technology offering by financial services to improve use & delivery
to consumer

marketing of FS

intergraded process of creating & sustaining mutually beneficial relationship with

cust through creating, attracting, retaining & ensuring cust loyalty towards bank
product & services
management process responsible for profitability, identifying & anticipating &
satisfying consumer requirement
promote & sell financial product or services to potential cust. involve identifying
target market, create awareness on financial product & services, generate
interest & persuading cust to use service

effective marketing strategies

1. conduct situation analysis

understand context of bank business & other factor like economy, cust & bank
bank analyze the need, want, demand to create value & satisfaction
example - unit trust, fixed depo, saving, personal loan. housing loan
2. develop cust focused marketing
identify strategies for market segmentation, target, position & corporate binding
set objectives
3.decide on marketing mix
conduct detail analysis of the marketing mix (product, price, promotion)
4. implement & control marketing plan
conduct detail analysis & implement the marketing plan & ensure implementation
is carried out with control
 marketing of FS

intangibility inseparability

service cant be seen or touched sold to cust & produced

may purchase service but has in contrast to goods, it is produced
nothing physical to display & sold
eg - insurance, saving

variability
perishability
cant be stored & must be produced quality depends on personnel
on demand & often can be conducting the transaction
produced by cust presence high quality management control is
challenging
fiduciary
responsibility risky

all financial service have them to riskier than product

manage cust fund & give financial service is infrequent
advice
gov control
indirectly involve with economy & policy
respond to macroeconomic changes

price

involve - operating cost, creditworthiness, types of facilities, loan losses

product

provide value with system to regularly check what cust need & want
understand cust attitude & behavior influenced by lifestyle & age

promotion
types of promotion - flyers, banner, TV, Radio, website, brochures

place
refers to who buy the product & modes of distributing the product
bank modes of distribution - banking premise, digital banking, mobile banking,
e-wallet