Banking in 2023 is going to be greatly impacted by digitization. Digital tools and services are already central to effective financial management in the modern age. From budget tracking to online transactions and live chat, digital banking has evolved rapidly and is continuing to answer the changing needs of consumers worldwide. Digital banking tools have a good following among the emerging middle-class. There are a lot of financial services that work particularly well in the online/mobile environment, particularly those that enable easy and convenient access to savings. These days, not many people want to queue in a branch to make a transaction. On the other hand, sometimes people want to talk to a real person, particularly for a big-ticket item like a mortgage or life insurance, so face-to-face advice remains critical.
The financial services market is undergoing a lot of changes. Customers always have an appetite for more and are well knowledgeable, looking for convenience and ease when it comes to financial services, particularly via the internet and mobile phones making innovation and transformation two of the most powerful forces that are reshaping the banking industry. Customer expectations, technological capabilities, regulatory requirements, demographics, and economics are some of the challenges that banks need to overcome in order to sharpen their tools for entering the new era.
Pakistan’s banking sector is passing through a phase that is both challenging and exciting. Currently, there are robust growth opportunities in the retail segment across the country including rural areas, and continuing opportunities for digital transformation led by technology and telephony services. The banking industry is undergoing significant transformation and the pace of commotion in the industry is accelerating. More and more competition is coming not just from other banks but from non-bank newcomers to the market, putting a significant portion of bank business and revenues at risk. This transformation of the competitive landscape through new entrants has been facilitated through the digitization of banking services and the propulsion of e-Banking and e-Commerce. The provision of an effective payment solution, that is diverse and wide-ranging, has emerged as the basic ingredient for growth in today’s digital era. Progress in this rapidly evolving scenario lies in cross-industry collaboration, as none of the value chain participants alone can deal with the challenges involved in cash minimization and digitization. There are six priorities for success in 2023. They are:
1. Developing a customer-centric business model
2. Optimizing distribution
3. Simplifying business and operating models
4. Obtaining an information advantage
5. Enabling innovation and the capabilities required to foster it
6. Proactively managing risk, regulations, and capital
One of the challenges for new banks seeking to transition into established players is the need for brand recognition among consumers. While new services have effectively used advertising and stunt campaigns to generate media exposure and social media attention, they are competing with brands that have spent decades building brand awareness. This provides additional marketing challenges, as traditional large-scale tactics such as television advertisements tend not to be an efficient way to reach potential users.
A potential advantage for new challengers however is their embrace and understanding of digital services. Looking at internet reviews, an increasingly common measure of consumer trust, it is obvious new challengers have been more adept at securing positive reviews and promoting themselves through this medium than traditional providers. While the scores themselves may or may not accurately reflect each brand’s services, the number of reviews suggests traditional providers have not made a concerted effort to secure ratings from their customers. Online-only services meanwhile can push every customer to leave a review. This digital advantage may give new challengers an edge in building brand awareness and reputation among internet-savvy and younger consumers.
Modern powerful tendencies are reshaping the banking industry. Social media and the evolution of mobile technologies (Whatsapp banking) force the retail banking industry to evaluate e.g. Bank of Punjab has decided to create financial awareness through TikTok. These changes have to touch every aspect of the industry — product development, marketing, service, and management. In the age of the fast-growing influence of technology and innovation, banks need consistent evaluations for retail branch networks and payment systems. Cost-effectiveness and customer-centric strategies become more and more important in developing global banking networks. In light of global digitalization, cyber security and fighting hack attacks become the general priorities.
Changes in regulations and social activities also push banks to create new schemes for customer service and long-term product development strategies. The evolution of retail banking is not a perspective today; it is a consistent process, which has to take into consideration a huge number of factors.