Fitting in tech-driven 4IR era
Bangladesh soon sees complete digital bank, banking innovations
Bangladesh is set to see soon full-fledged digital bank as the country braces itself for fitting in the fast-changing technologies in the fourth industrial revolution (4IR).
Bangladesh Bank Governor Abdur Rouf Talukder Wednesday apprised bankers of this and a slew of other latest innovations the central bank plans for upgrading the banking industry.
Speaking as chief guest at the inaugural session of a two-day digital transformation summit, he called upon the management of the country’s commercial banks to brace themselves for facing the changes and work on the 4IR and its accompanied technologies.
In the last one decade, the economy has seen a shift from manual to digital, from legacy banking to disruptive innovating banking in the financial sector.
The governor notes that AI (artificial intelligence), machine learning, robotics, quantum-point computing and other disruptive technologies are anticipated to radically transform the banking industry
“Not only are we emphasizing digitizing existing legacy system but soon we’ll introduce a digital bank in the country,” he told the bankers, who are just adapting to digitization process.
At the same time, he said, the central bank plans to introduce an online and real-time credit-scoring system.
On the other hand, it is very close to launching the country’s first-ever national debit card, the BB governor further informed about the transformation tandem.
It also has a goal to make 75 per cent of all the transactions cashless. To achieve that end, commercial banks have to revisit few areas.
“Banks need to address what kinds of risk it faces in the new banking model. Whether the existing risk culture is good enough to meet the already-faced risks…whether banks require adopting new risk- management policy,” he said.
A good-governance framework can mitigate risks and the culture of compliance could help banks to keep safe distance from suck risks, he added.
Terming corporate governance and NPLs (non-performing loans) two burning issues hurting banking business here, he said there is a need to bring in cultural changes, enforce ethical and good practices through training and proper education of people involved in the industry.
“Enforcing prudential guideline and strong role of the CEOs may resolve the NPL problem,” the BB governor told the meet.
Banks worldwide are now embarking on a digital-transformation journey in response to customers’ demand for greater convenience and Bangladeshi banks are no exception, said Selim RF Hussain, chairman of the ABB.
“Digital transformation is more of a mindset than a physical infrastructure. That is why training and people development are of utmost importance. We must align our people to adopt new ways of doing things using technology and leaving behind traditional methods,” he added about the dos from their side.
Top executives of the country’s leading banks called upon all in the industry not to go for digitisation without knowing the importance of value addition and enough readiness as the automation process requires a good amount of investment.
Instead of concentrating on automating only the payment system with opening a digital unit, they suggested industry players to concentrate on digitising the entire process of the banks to get maximum returns on the investment.
Speaking as a panel discussant, managing director and chief executive officer of City Bank Limited Mashrur Arefin said bankers in cases are trying to basically turn the bank into digital without understanding the importance of value addition.
“This should not be the goal. The goal should be what digital can bring for me. Goal should be to simplify things for the customers,” he said.
Highlighting the importance of complete readiness, Mr Arefin, also ABB vice-chairman, said the bankers should properly analyse their absorbing capacity before going for embracing the digitisation move.
Giving a different view, managing director and CEO of Eastern Bank Limited Ali Reza Iftekhar said payment is a part of the digitisation. It is not the digitisation. It is probably 5-10 per cent of digital banking.
“We have a concept that if we make payment through a digital channel that means the bank completely digital. I humbly disagree with those people,” he said.
“Digital banking is that you first fix up your internal process. First you have your data captured and make sure that you can interpret the data,” he said, adding that the entire bank must be ready to go for automation.
A total of 150 participants from Bangladesh’s 46 commercial banks, aiming to explore the digital-transformation journey of the banking industry in the country, participated in the summit meet.