Covid-19 brought remarkable changes in customer expectations. Clients now have a much higher desire to receive personalised services from banks and financial institutions to meet their customised needs. Moreover, the pandemic has made business clients more aware of the necessity of timely information and transparency on the product and services offered by the banks and financial institutions. To respond to that the business transformation and reengineering process of banks/financial institutions must accommodate 'personalised services' and 'transparency' as part of their strategic goals to sustain.
From the perspective of banks and financial institutions, they do business because people have trust and confidence in their credibility. For them, once trust is gone, business and everything is gone. Being at home during our first lockdown phase, there was fear and scepticism amongst the bank clients on their lives, resources, and savings; there was erosion of trust and confidence-- everybody was expecting some form of communication on the part of their banks. Some information, connections showing care. Some banks did so responsibly. And this should be the norm to meet the expectations of the new normal bank clients. Probably 'hyper personalisation' is the appropriate term to reflect the growing extent of service expectations and demand.
Information and products or services need to be made available to use through both physical and virtual channels, and these must also be very convenient for future clients. New normal clients need to be offered differential deposit options with minimum documentation/formalities adjustable with their surplus fund flows. Flexible loan products with alternative repayment options, attractive features, efficient documentation, and instant services have to be offered to prospective good borrowers. Clients require a much bigger product basket and options to select from. It is the adoption of appropriate technology that can serve these changing needs and requirements. Alongside the requirement of hefty investment, it has become challenging for the banks and financial institutions to strategize for coming up to the level of expectations of the clients.
'Transparency' issues received newer impetus in the context of the Covid-19 crisis. It is not about marketing, rather about the dissemination of constructive and useful information. Especially, sharing the negative features associated with the products or services is a must to ensure transparency. Consumers deserve the right to make informed decisions. Transparency issues are connected with information disclosure and quality reporting that have become even more vital than ever to maintain and strengthen trust among all stakeholders. It is not only about disclosing information and sustainability reporting using traditional channels, it is rather about using multiple avenues to reach the clients with the desired data and information.
Transparency and sustainability reporting are key elements of sustainable banking activities. In Bangladesh, it has been regulatory-driven. Especially, I must remind the year 2011 when Bangladesh Bank issued the first Environmental Risk Management Guideline (ERM) and first Green Banking Policy Guideline to start the green and sustainable banking journey comprehensively. And we can observe that the first green policy document referred to GRI as a standard guiding framework for sustainability reporting. And it was noted that 'Banks should publish independent Green Annual Report following internationally accepted format like Global Reporting Initiatives (GRI) targeting their stakeholders. There should also be an arrangement for verification of these publications by an independent agency or acceptable third party.' So, the importance of installing and using sustainability reporting has always been part of the overall target framework of the central bank of Bangladesh.
It may also be observed that if not extensively, as a whole there are reasonable responses on the part of the banking and financial industry of the country to the sustainable banking movement of the central bank. Specifically, about reporting and disclosure, though most banks are yet to publish separate 'Sustainability Report', but most are offering relevant information as part of their annual reports. Yes, some banks are coming up with very good annual reports, standard sustainability reports, and some are following globally recognised GRI guidelines. The developments are appreciable. Following standard sustainability reporting practices would very well complement today's business requirement of 'transparency and disclosure'. Quality reporting by a bank signals responsible behaviour and accountability. Sustainability Reporting is one of the core elements of the due approach to reflect accountability to the clients and to the society.
'Governance' is another associated issue. We are aware that the banking and financial industry needs changes in their approach and transformation to sustain the Covid-19 scenario. It became essential to show accountability, responsibility, and sound governance practices to realise the transformation to strengthen the trust of the clients. We all are aware of the crisis approach of Enterprise Risk Management by banks where boards are supposed to shoulder and share their accountability and responsibility. Personalisation and transparency issues must receive due support and endorsement from the board. It would be burdensome to take the giant transformation and reengineering work forward by the bank management without responsible behavior and active support on the part of the board at this critical time.
Finally, it is time to work more on the demand side. Banks and financial institutions need reliable information to cope with the personalisation of the banking products and services. The customers' needs must be changing, evolving with time requiring newer personalisation adjustments.
Banks and financial institutions need to install efficient technology to capture information on the customers' level of satisfaction and their preferences on a continuous basis.
Covid-19 forced the demand side to learn so many things and changed the expectation framework. However, 'rational pressure and logical information expectation' on the part of the demand-side need to be nurtured by the policymakers and the market players for the desired development of the 'transparency framework' in the banking and financial industry.
We are aware that our literacy rate is reasonably good, but the financial literacy rate is low. The financially literate demand side is the most powerful pressure group to change transparency and disclosure framework. The Supply-side is getting reasonably good attention, and demand-side needs more to ensure quality transparency.
Dr Shah Md. Ahsan Habib is Professor, Bangladesh Institute of Bank Management.