Top Banking Trends of 2018 in Pakistan

Top Banking 2018 Trends in Pakistan

Banking industry is shaping rapidly, in recent year we observed many changes in the industry and with the start of this year below mentioned trends observed in Pakistan’s banking and finance industry. We believe that will have a serious role in shaping the future of banking and finance.  

Digital Banking:  it is observed that almost every bank in Pakistan has started its digital banking more or less, some are making infrastructure if some have made infrastructure, some are on boom where some are starting. Digital financial services are playing the major role in it, till the end of 2017 25 banks offered internet and call centers/IVR (interactive voice response) banking services, while 18 banks dealt in the mobile phone banking. In 2016-17 total 625.8 million electronics transactions worth Rs. 37.1 trillion registered, internet banking increased 32% to 25.2 million transactions worth around Rs. 969 billion in fiscal year 2017, mobile accounts are increased to 33M within short span of time which are 67% of conventional banking accounts. So Trend towards digital banking will increase greatly in 2018.

By: Mazhar Mahmood Jatoi

Changing Consumer Behavior: Consumer behavior in all industries including banking industry is drastically changing and different than it was 5 to 10 years ago, with the inclusion of financial technology and surge of mobile banking over the past few years, now customer demand convenience & customer perspective. The branch banking is no longer the only way the customers can interact with their banks, Fintech have provide millions of solutions to interact with your banks without going to your banks hundred times in a day, they don’t want to go to their banks and waste their times, this is particularly a true story of millions of customers and exclusively millionaire customers. Fintech have totally changed the behavior of customers, which observed in past few years and will the top trend in 2018 as well.

Uncertainty in Regulations: In today’s political and social climate, the potential for increased regulation seems just as possible as the potential for dramatic deregulation. The issues are polarized, and the discussions tend to be rather emotional, social media have played a vital role in it. Now the regulatory banks can listen the voice of consumer’s even political cases and severe nature of criminal cases decisions are giving on social media pressure. Digital banking is on its rise almost 33M mobile accounts are registered but regulatory bank didn’t share its prudential regulations till date. In order to improve effectiveness and to Counter Terrorism Finance SBP is more vigilant and reviewing regulations to development a culture of controls. Today’s consumers are more educated and aware from the consumer protection laws of the country and international as well, so it’s a time to prioritize consumer protection and fair lending compliance. Not only will this signal a commitment to compliance, it can also serve as proof that you understand and prioritize the needs of your community to potential customers.

 Another significant factor for this uncertainty will be the decision of The Financial Action Task Force (FATF), the global money-laundering watchdog, to put Pakistan on the 'grey list', its impact would be very substantial on Pakistan’s banking industry and will create a pressure on state regulatory bank to review and strengthen its regulations on Combating terrorist financing, so the uncertainty of regulations will increase and will be a top banking trend this year.

Compliance: Banking compliance is something with you as an officer or leader is dealing with daily, it has become one of the most significant concerns for financial institutions in the recent years. With the surging of technology the compliance risk have become more higher. All banks are different in operations but they have common in compliance so compliance will be a top trend in 2018 as well.

Digital Banking – The Bank at Your Fingers

Traditional banks are organized around money in branches, their thinking, their technology, their incentive systems, and their knowledge about customers — are all structured around branches and product lines. Cell center systems were layered on top, with the result that customer service reps sometimes needed six open windows to see a customer’s business with the bank.

While digital banks have to focus on electronic platforms and data as their core and branches as secondary. Their thinking, their technology, their systems, data of customers– are all structured around data hubs.

Digital means democratization and decentralization. We are putting power into the customers’ hands and so, rather than having multiple identifier from a bank who issues him with proofs of access, customer now have his own digital bucket for which he can issue access to his account on an as-needed basis.

Now we live in a world that is turning digital, Banking Accounts revolving in Mobile accounts. Customer demands digital solution of their needs, they don’t have time to go for shopping, money transfer, bill payments and financial services, they want a single touch solution of all problems. So in future banks will have make place at the fingers of their customers.

Digital banking war has begun in Pakistan also, there are many banks providing digital solutions to their customers but with over 10 million mobile wallets, Mobilink Microfinance Bank Ltd. (Mera Phone, Mera Bank) becomes the largest digital bank in Pakistan in terms of coverage in partnership with JAZZ, Pakistan's largest telecom & Technology Company. Digital wallets allow users to send and receive money including wages, pensions and other welfare payments , get loans disbursed, pay utility bills, pay for groceries and buy airtime etc digitally.

The decision for banks to add more digital solutions at all operational levels will have a major impact on their financial stability and future survival. Otherwise, it would be very difficult for them to sustain financial stability.