With rapid technology transformation across the globe, traditional brick-and-mortar banks are transitioning into agile, client-centric firms that are utilising cutting-edge technologies to offer customised financial solutions.

Banks in Bangladesh is no exception, having already begun its transition into the digital domain. Though the Covid catalysed the banking industry's digital transition, the pace of innovation shows no signs of abating even as the pandemic's hold loosens. Over 72 lakh people used Internet banking in FY23, up by 221 percent from the pre-pandemic period in FY19.

Banking industry has started to implement several cutting-edge technologies to transform the financial landscape. With the use of artificial intelligence (AI) and machine learning (ML), banks are now able to assess customer behaviour, provide customised banking services, and identify potential fraud patterns. Chatbots powered by AI provide round-the-clock customer service, answer questions, and help with financial advice.

Accurate credit scoring models are being developed by ML algorithms, which leverage data from mobile phones, electricity bills, and social media to assess creditworthiness. This not only reduces default risk but also opens up credit access to formerly underserved communities.

Blockchain is accelerating international payments, eliminating fraud, and lowering transaction costs. E-KYC onboarding has reduced onboarding costs by five to ten times and revolutionised the account opening process.

According to Bangladesh Bank, 23 banks had fully implemented digital e-KYC onboarding by FY22, while 18 had done so to some extent. As a result, the onboarding process that previously took 4-5 days, now requires only 4-5 minutes.

Implementing middleware and automating back offices have changed the game by improving efficiency and reducing error rates. These technological advancements not only boost productivity but pave the way for a banking experience that is more responsive and seamless.

The future of banking in Bangladesh goes beyond simply adopting these new technologies. By focusing on customer-centricity and fostering innovation, banks are building the groundwork for a financial landscape that is more secure, efficient, and inclusive. Mobile banking and agent banking networks are making financial services more accessible to the previously underbanked and unbanked population.

Banks are increasingly presenting themselves as trusted advisors, offering comprehensive wealth management solutions that include investment planning, risk management, personalised advisory services, and digital platforms, as people and families reevaluate their financial priorities. The future of banking is being shaped by this move toward a holistic approach to financial well-being, with the changing expectations of clientele.

A recent analysis from PwC and the Association of Bankers, Bangladesh (ABB) found that in the past three years, 86 percent of surveyed banks have focused significantly on process redesign and digitisation in retail banking, followed by corporate banking and SME. From a value chain standpoint, customer acquisition is the area in which Bangladesh's CXOs have invested the maximum time and effort to bring about digitisation.

In terms of investment priority in the coming years, API-enabled integration platforms are the leaders' top choice. First- and second-generation banks that started operations before the 2000s considered omni-channel platforms as their next most common top priority, whereas third- and fourth-generation banks considered upgrading digital channels (internet and mobile banking) as their next most common priority. The report findings thus highlight that the banks here are aware of the digital disruptions that the industry is witnessing and have created well-defined plans to capitalise on the upcoming wave of digital transformation.

Furthering all these digital transformations, Bangladesh Bank's recently launched digital banking guidelines and the decision to issue digital banking licences is a significant step forward in aligning the country's banking sector with the future of banking. By careful implementation and monitoring of these initiatives, Bangladesh is poised to transform finance from a mere service into a transformative experience tailored to the aspirations of its citizens. Who will be the winner or loser, only future will tell us.

The writer is an economic analyst.