KUALA LUMPUR (Oct 7): Usage and subscribers for mobile banking as well as internet banking have increased noticeably in recent months, data shows.

While this shift to online and mobile banking is expected, just how big and fast of a jump is this?

A closer look at Bank Negara Malaysia's data shows the increase is at a faster pace compared with before the Covid-19 lockdown period.

For example, the number of internet banking individual subscribers for July 2020 rose to 33.6 million, from 30.8 million in January 2020. This translates into a 9% increase, which is three times the 3% increase for the same seven-month period in 2019.

The internet banking penetration rate to population rose to 107.4%, compared with 92.8% in July 2019 and 88.2% in July 2018.

Meanwhile, the penetration rate to the population for mobile banking is also on the rise although still lower than that of internet banking.

In July 2020, the penetration rate to the population for mobile banking stood at 57.5%.

It saw an increase every month since March 2020's 53%. The 57.5% rate was higher than the 48.9% a year earlier in July 2019 and 41.2% in July 2018.

Meanwhile, the mobile banking data shows that the volume and value have also risen at much faster rates this year.

The volume of mobile banking transactions was at 82.1 million in July 2020, a 46% increase from the 56.2 million at the start of the year.

For the same period, the value of transactions rose 54% to RM40.44 billion in July 2020 from RM26.22 billion in January 2020.

These are larger growth upticks compared with the same period last year.

In 2019, the volume rose 32% to 41.9 million in July from 31.7 million in January while the value increased 35% in the same period to RM17.6 billion in July 2019.

Interestingly, the volume of mobile banking transactions at 82.1 million in July 2020 was double the 41.9 million in July 2019 while in terms of value for mobile banking, the RM40.44 billion in July 2020 was more than double the RM17.6 billion in July 2019.

Meanwhile, internet banking data also reveals a similar trend in terms of growth when it comes to volume and value of transactions.

The volume of internet banking transactions rose 25% in the seven months of 2020 to 136.3 million in July. It was also up 34% year-on-year (y-o-y) from 101.4 million in July 2019.

The value of transactions increased by 17% y-o-y to RM810.1 billion in July 2020 compared with RM691.3 billion in July 2019.

The shift to online transactions also correlates with the decrease in cash transactions.

McKinsey estimated the percentage of cash used in total transactions by volume in Malaysia to decrease to 72% in 2020 from 93% in 2010 (see table).

By the end of 2020, it is predicting a shift of four to five percentage points in the share of global payment transactions executed via cash propelled by evolving behaviour in both mature and emerging markets.

"This is equivalent to four to five times the annual decrease in cash usage observed over the last few years. The reduced use of cash benefits banks overall: the cost of cash handling exceeds cash-related revenue inflows, and electronic payments generate incremental revenue," it noted in its 2020 McKinsey Global Payments Report, adding that it expects Covid-19 to lead to a further decline in cash usage.