Monday, 6 February, 2023

Banks focus on digital services to reduce cost, improve efficiency

Some top executives of the country's commercial banks emphasized the benefits of technology-based solutions to reduce operating costs and satisfy the demands of their tech-savvy customers.

State-run banks and private banks have all relied on digital platforms to make their services more competitive.

Both in cities and rural areas, banks established branch offices and installed ATMs, point of sale (POS) devices, cash deposit machines (CDMs), and cash register machines (CRMs) designed to facilitate financial transactions.

According to Bangladesh Bank's monthly review report, there were 13,269 automated teller machines, 1,02 lakh point of sale machines, 1,221 CDMs, and 2,256 CRMs in October last year. Based on the review, a bank branch serves an average of 15,332 people, whereas an ATM serves 12,745 people.

Ahsan H Mansur, executive director of the Policy Research Institute, said digital banking is the future of the economy since it can reduce operational costs.

"We have to move further. All banks are trying to develop apps differently. There should be a focus on service migration based on the user experience. Customers are drawn to the apps by the services and interfaces," Dr Mansur, also the chairman of Brac Bank, told the Daily Sun.

He recommended that the banks change their mindset to inspire customers in all kinds of services, including business-to-business transactions.

State-run Sonali Bank has set an example in digital banking, while private sector banks such as Islami Bank, City Bank, Mutual Trust Bank, Brac Bank, and Prime Bank are also on the scene. Through its fast-track outlets and integration of mobile banking with conventional banking, Dutch Bangla Bank is leading the way in alternative delivery channels.

According to Dr. Mansur, banks should come out of the circle to connect all services to digital platforms, including cash management and loan approval.

"When a customer comes to a branch, the bank incurs infrastructure costs. By using the digital platform, these costs can be reduced. For example, we are developing LOS (Loan Originated System) to support customers in getting a loan within one day without having to exchange any physical files," Dr Mansur added.

Syed Mahbubur Rahman, former chairman of the Association of Bankers of Bangladesh (ABB), believes that the objective of digital banking is to make customers' lives more convenient by reducing processing time.

"We are trying to provide efficient service. From cash management to digital solutions, banks are becoming more involved in connecting with new customers. Banks are opening new accounts using eKYC and issuing statements online," Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told the Daily Sun.

According to the banker, MTB is developing an incubation center to support digital innovations.

As of October last year, there were 11,030 physical branches of scheduled banks, according to the Bangladesh Bank's review of e-banking and e-commerce statistics. Users transacted Tk 930.13 billion through mobile financial services in October, up more than 21 per cent year-on-year.