When a business leader makes a bold move, people take notice. That is what happened when Maybank, the biggest bank in Malaysia, outsourced its IT infrastructure to CSC in 2003. IT outsourcing was almost unheard of in Malaysia at the time, and is still regarded as highly risky.

Which is why other banks in the country are watching Maybank’s move. Amirsham A. Aziz, president and CEO of Maybank, tells us about Maybank’s decision to outsource and how the bank is faring in an increasingly competitive market.

CSC World: Why did Maybank decide to outsource its IT?

Amirsham: When I started in Maybank, way back in the late ’70s, I worked for some time in the IT department. I eventually realized that IT was not my calling. It was banking as a business that I wanted to focus on. Similarly, as a financial services group, and with local and foreign competition both escalating, outsourcing our noncore areas such as IT became a strategic move. Banking is our core business, and it is here that we must stay focused.

CSC World: What were those some of the IT issues that led to the decision to outsource?

Amirsham: One issue was motivation. We are bankers, and we didn’t think we could give our IT people the right motivation. At the same time, we saw the increasing difficulty in recruiting IT talent.  We decided it would be best for IT professionals to be managed by IT professionals.

CSC World: Surely cost was an issue.

Amirsham: Yes, it was. We started looking at IT 10 years ago, when the banking cycle was at its worst. The volume of transactions went down after the Asian crisis, but IT remained a fixed cost. So we were looking to transform fixed costs to variable costs. That’s critical for us because economic cycles can cause the volume of transactions to drop again, and I must be assured that I would be able to manage costs when that happens.

These were the main reasons why we decided to outsource our IT. We are more focused in terms of what we want to do in banking. CSC has proven thus far to be sufficient and reliable in managing our IT services.

CSC World: These are reasons that would have been shared by every other bank in Malaysia. Yet most of them have not outsourced their IT. Why do you think they haven’t?

Amirsham: IT outsourcing is still fairly new in Malaysia. Also, different companies have different strategies in the way they look at IT infrastructure. Some banks may think that IT is so critical, so strategic to their business, that it shouldn’t be shared with somebody else. I took a different view of that. Maybank has always been a pioneer in the way we manage things.

CSC World: Maybank has been a pioneer in outsourcing. Do you believe other banks will follow your lead?

Amirsham: I think what I’ve seen in the last year in the market is that other banks are watching us. If we do well, if we’re successful, then whatever risk is associated with IT outsourcing has been dealt with by Maybank. Then the other banks can just walk in and transform themselves without having to work through the difficulty of being the first in the market.

Being first, there were things in the agreement we did not foresee. Fortunately, we work well with CSC and we were able to iron out some of those issues. This is a learning experience, which allows us to pave the way for others to venture into IT outsourcing without going through the difficulty of a learning curve.

CSC World: How did you go about selecting an outsourcing partner?

Amirsham: IT is so integral to our business that selecting the right partner was critical to success. The first thing we did was to list the key players in the world for IT outsourcing. We narrowed the list down to three. Then we worked with those three players so they would understand Maybank’s needs.

We made our final decision based on who was best able to understand Maybank’s needs. And more important, we wanted a partner who could demonstrate flexibility and reliability. We were entering a new area and needed a partner who could understand that we needed solutions that would evolve over time and who was capable of developing solutions that were a best fit for us.    

CSC World: What do you think will be your greatest challenge when Malaysia opens its financial industry to foreign competition?

Amirsham: Malaysia’s banking industry has been open to competition, both local and from overseas, for many years now. Malaysian banking was started by foreign banks over 100 years ago, by the likes of HSBC and a few others. Local banks have been around for only about 50 years. So foreign competition is not something new. The greatest challenge isn’t from foreign competitors coming to Malaysia, but our own customers who are going abroad.

CSC World: Please expand on that.

Amirsham: Malaysia is one of the top 10 trading nations in the world. We are exporting our products all over the world, to the Middle East, to China, to India, to the United States, and to South America. How do I serve customers who need to do business in different parts of the world when I do not have a physical presence in some of those locations? That is our greatest challenge. I think we can overcome it with technology, by giving our customers the ability to reach us wherever they are. If I am not able to serve my customers when they travel and do business overseas, I will lose them to the foreign, global banks, which have a global presence.

CSC World: Has outsourcing helped you meet that challenge?

Amirsham: Indirectly, yes. CSC has given us a reliable and stable IT infrastructure, and that allows me to give our customers Internet access when they are abroad. We were the first to introduce Internet banking in Malaysia, and we have the country’s best Internet banking portal.

We are also leveraging our IT infrastructure in Malaysia to help our overseas operations. We worked with CSC to upgrade our infrastructure, and now we are leveraging the volume in Malaysia to deliver services to other countries — Indonesia and Vietnam, for example — instead of setting up different infrastructure in those locations. We’re looking at extending that to Brunei and other countries.

Today, we are among the top five banks in ASEAN, with a presence in Singapore, the Philippines, Indonesia, Vietnam, and Cambodia. We have branches in New York, London, Shanghai, and Bahrain.

CSC World: Is Maybank better prepared than other banks for global competition?

Amirsham: We have continued to gain market share in the years since we outsourced, even though the market was beginning to open more than it had been. I’m happy that, in spite of the fact that the competition is heating up, we are able to stay focused in terms of our market positioning. Our numbers are coming in well, which means we have been providing the right kind of service and products to our customers.