This is an age of information technology. Consequently the global banking sector is becoming both more strategically focused and technologically advanced in order to respond to consumers’ expectations while trying to defend market share against an increasing array of competitors. Here in Bangladesh, now we are facing a tough time in the financial sector in terms of challenging decision related to approving more new banks, increasing the rate of NPLs, a huge liquidity crisis and data security. As these issues are somehow related to building Digital Bangladesh within 2021 and thereafter to achieve Sustainable Development Goals (SDGs) within 2030, it is the right time to focus on innovation trends, especially in retail banking of Bangladesh.
In recent years, banks are focusing on commencing agent banking operations around the country for the implementation of the first National Financial Inclusion Strategy (NFIS). Though most of the financial institutions of Bangladesh are giving more effort at gaining new customers rather taking care of the existing ones, it is pivotal to offer a customer focused, strategy focused and technology focused combo in order to retain the existing customers as well as attracting new ones. Thus, it is not mandatory to welcome new banks or to open new branches here and there for stepping towards financial inclusion. In this digital era cellphones with internet connection can be the simple solution.
As National Payment Switch Bangladesh (NPSB) facilitates interbank ATM, POS and Internet Banking Fund Transfer (IBFT), most of the banks (as per record of Bangladesh Bank in 2018, there are 51 banks in ATM transaction, 50 banks in POS transaction and 19 banks in IBFT transaction) in Bangladesh have connected their fund transfer channel to NPSB. As a result, the internet banking users are increasing enormously. According to the record of BTRC, there are about 80 million mobile internet users in Bangladesh. According to Brain Station 23, an IT company based in Bangladesh, approximately 80 percent of different banks’ online banking is taking place through the mobile phones.
For the last three years, both foreign and local banks have come up with their very own mobile apps for providing their banking services. To extend the retail banking services across the country many banks have launched their own app with the internet banking features like inter-bank fund transfer facility, utility bill payment, mobile top-up, credit card bill payment, loan installment payment, school/university fees payment, insurance premium payment, broadband internet connection fees payment, mini & detail statement view, balance check and so on. Because of easy access, user-friendly features, portability, no extra charge, ease of technology and two-factor authentication security system, internet banking is gaining more popularity among cross-sections of people (students and young professionals to be particular).
According to a study by The Financial Brand, an international digital publication, the innovation in targeting and expanding services, re-configuring delivery channels, delivering proactive advice and some other advanced efforts will be increased in 2019 as global financial and tech giants will revolutionize the financial service arena. It is considered by the experts that in the upcoming decade there will be revolutionary changes in banking services because of maximum utilization and innovation in Applications Programing Interfaces (APIs), conversational interfaces (Chatbots, voice-enabled gadgets) for immediate response to customers, Artificial Intelligence (AI) for automating data science and Blockchain for improving cash flow and reducing transaction settlement times. And all these advanced facilities altogether will facilitate “Open Banking” for customers by ensuring greater freedom and control in how they interact with their financial service providers. These will also enable financial institutions to enhance operational excellence, reduce time to promote products, offer access to additional customer data and open new opportunities to study further on accumulated data. For instance, JPMorgan Chase, a renowned global bank, has recently introduced Contract Intelligence (COiN) platform for analyzing legal documents and extract important data points and clauses which enables the bank to complete the review of 12,000 annual commercial credit agreements in seconds whether it requires approximately 3,60,000 hours manually.
Moreover, innovation has turned into a driving force in the banking sector. For example, Wells Fargo Bank began piloting an “AI-driven Chatbot through the Facebook Messenger” platform with several hundred employees in April, 2018 in order to respond to the customers immediately. With the help of that technology internet banking behavior of the customers is being scrutinized with a razor-sharp focus. Nowadays banks have started using AIs in order to determine “Next Best Action” by analyzing the accumulated data.
Now the question comes- how innovation in the financial institutions of Bangladesh can play a vital role in accomplishing “Digital Bangladesh Vision” and SDGs? The government is putting emphasis on four elements of “Digital Bangladesh Vision” - human resource development, people involvement, civil services and use of information technology in business. Being one of the major sectors of Bangladesh, banking sector is a huge hub of information (especially for financial information), a big source of employment and contributes to the infrastructural development of Bangladesh directly and indirectly. Besides, it is important for the banks to take a leading role with a view to helping the country achieve SDGs.
In the end, it is mentionable that Bangladesh is the second largest economy in South Asia and it will be the 24th largest economy in world by 2033 (according to think tank based in the UK). Therefore, keeping this in mind as an inspiration financial institutions (specially banks) need to focus on innovative trends and the proper utilization of state-of-art information technology for competing with the developed countries and creating Digital Bangladesh by 2021.
(The writer is working as Principal Officer in the Credit Department of AB Bank Limited.)