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Banking Vision for Pakistan’s Next Decade

Basir Shamsie, President and CEO of JS Bank, shares his vision for banking in Pakistan in the next decade and identifies financial inclusion, branch services, multichannel collaborations, and human resource development among other necessary measures that Pakistan’s banking sector needs for a digital transformation in order to exponentially grow and provide better customer experiences.

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In the competition currently underway of digital transformation between banks and nonbanks (fintech and telecom) companies, there will be an ultimate victor: the one that serves the financial inclusion and meets the exponential – changing the customer’s expectations and their interactions to make the fulfilment easier, faster, transparent and secured.

Up until now, the nonbanks have been leading the way to redefine the digital experience and its proliferation through cutting-edge technology without any regulatory binding. However, banks have been mired in prescriptive regulatory compliance in the customer relationship journey.

Read more: JS Bank wins prestigious Certificate of Merit in Banking Sector

In the coming years, leading banks will operate as digital financial superstores that blur the line between technology companies and banks. In the next decade, banks will move towards granular, integrated and more secured solutions for its customers.

Towards Digital Transformation

Financial inclusion, alignment of the regulatory framework with technological innovation, facing cybersecurity threats, and frauds and managing multilateral collaborations could be the key features of banking vision in the coming years.

To start with wider Financial Inclusion – which means the provision of financial products and services to all individuals and businesses, introduction of innovative products with secure payment modes, usage of deep customer insights while offering products and services, alternative solutions to branch banking services and accessibility to transaction-based accounts to all, regardless of age, geographic location, level of financial literacy – shall be the purposeful milestone of this new era of banking.

Read more: JS Bank proclaimed as ‘Pakistan’s Best SME Bank’!

Branch services will start reducing in scope as compared to the new digital services that are now being offered.  In the future, customers will demand one shop and simplified solutions ‘at the touch’ associated with their lifestyle and business needs, To achieve this objective, there is a need to focus on a push-pull strategy along with the digitalization of customer relationship journey and its connectivity with the changing trends.

Such kind of fulfilment could be achieved in banking through the conscious deployment of scalable and flexible technological solutions to reduce the gap between offering and usage. However, it will not reduce the importance of the quality of customer services as simplified and competitive solutions will ultimately produce a satisfactory response from the customer. These innovative solutions will expectedly reduce the cost of services and ultimately attract a wider range of customer segment.

Data will become a more valuable asset for the banking sector as it will be utilized as an earning avenue for the banks. Banks will be required to gain the trust of their customers to keep themselves updated with the customer behavior and lifestyles – which ultimately reflects in the customer data. Banks will be able to provide better services to their customers while offering financing and utility services.

Driving through the insight gained from the data analytics and predictive modelling, banks will be able to operate within an ecosystem into which customers can plug in and out with their potential demands. Thus in the future, customers will be digitally enabled and more informed with the outcome of the products and services offered by the banks. Data will play a major role in transformation, and customers will expect their bank to be more informative, diversified, transformed, and secured. Failure to do so will ultimately reduce the trust of the customers and business relationship.

Read more: The future of banking; a lethal phenomena

Distributed ledger will become a major source of trust as data will contribute more towards risk assessment of more sophisticated models. Such models will also require to be supported by a regulatory framework and associated instructions to be followed. Financial regulator (Central Bank) will also face the challenges of equipping the financial industry with strong monitoring structure for banking activities with the assistance of new technological solutions supported by advanced data analytics and Artificial Intelligence (AI) enabling them to build more efficient and effective supervision. Information sharing among the regulatory bodies will become a practice across the geographical boundaries to support their efforts to combat financial crime.

As we move towards technological advancement and more connectivity, it will bring more vulnerabilities, requiring a stringent framework to control it. Banking sector would face bigger cybersecurity challenges in the future as technological innovation brings new ways to commit financial crimes and frauds.

Read more: COVID-19 Impact: Branchless Banking rising in Pakistan

Role of regulatory bodies will become more relevant as such challenges would only be tackled with sufficient controls governed by strong regulatory framework and cross boundaries consensus on the data management and security protocols. There should be an introduction of government-backed digital identities which will reduce the risk of money laundering and burden on know your customers’ regulations.

Multichannel collaboration will be another key feature of the banking business in the next decade. Various segments will not only be more collaborative internally but also closely work with external partners, including innovators and entrepreneurs. These changes will require a move away from the legacy IT systems to cloud-enabled architectures that offer efficient and agile solutions and will eliminate manual interventions even from business processes which are usually outsourced by the banks.

In the processing of transformation towards the future, I understand that human resource development will be the key challenge, as we need fewer but more skillful resources in the future. Many specialities may become obsolete, however, new skill sets will be evolving simultaneously.

In future, automation and usage of Artificial Intelligence (AI) will progress enough, so the workforce requirement will be focused more towards higher-value product across the enterprise with a single overall view, rather than operating in the silos. Financial Institutions will employ fewer people overall, as the need for manual processing is eradicated, but their employees will be more skillful and highly paid, as they exploit their abilities to analyze data for competitive advantage.

Read more:A panoramic view of Pakistan’s banking system

In light of the future unfolding as described above and major potential challenges, banks will have to alter their business models in order to move towards innovative, efficient, customized and secured solutions for their customers to meet their expectations within the limits defined by the regulatory bodies.

Basir Shamsie is the current President & Chief Executive Officer of JS Bank Limited. He was previously the Deputy CEO and Director of JS Bank Limited and held other prominent positions in the bank. Mr. Shamsie is a graduate of The University of Texas at Austin. He later completed his Program for Leadership Development in General Management from Harvard Business School.

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