Banking industry is viewed as the core of a solid economy. This is particularly true for a developing country like Bangladesh. Since independence, this sector has kept the wheel of the economy pushing ahead. So it’s normal that any disturbance in the industry will prompt impacts in the economy of the country. There has been a lot of discussion about the banking sector lately, for the most part because of its increasing non-performing loan (NPL), absence of good administration, impact of the public authority over Bangladesh Bank, illegal tax avoidance, and misbehaviors by certain brokers. These elements are influencing our effectiveness and efficiency. However, the challenges faced by Banking Industry are pointed below:
Customer retention
Understanding the customer and engaging in with them properly can bring about customer fulfillment. Financial institutions can utilize Bots, which is a compelling and proficient innovation for conveying prevalent customer services Bots[1] can help with expanding customer commitment without causing costs. Financial institutions are changing in accordance with such technologies to improve consumer loyalty. Notwithstanding, different demands will consistently emerge. However, with supportive data at hand, the industry will raise their strategies to hold customers in the coming year.
Increasing expectations
The present customers are smart, brilliant, and more educated. They expect a serious level of accommodation and personalization out of their financial help. Modifying customer socioeconomics assumes a vital part in these high expectations. Each new age of financial help customers is having a superior knowledge of technology. Therefore, there is a raised expectation for digitalized possibilities. Recent college grads have been on the forefront charging for digitalization. Around six or seven twenty to thirty year olds like to have connections with different financial brands through online media. Furthermore, recent college grads make up the most level of portable financial clients. In view of these measurements, financial frameworks ought to expect that the coming generations should be much more invested into computerized banking and more joined to technology. This presents the banking industry with a unique challenge. They need to sort out procedures to fulfill younger and more established generations of banking customers simultaneously. Satisfied customers are essential to a business. Banks should keep all customers cheerful, consequently keeping up and pulling in more financial investors.
Altering Business model
The expense that is connected with consistence the management is among the various financial service challenges financial organizations to change the way they direct business. [2]After the Great Financial Crisis, banks’ exercises and plans of action have gone through enormous changes. Significant changes in cash and securitization markets, cross-line banking action, mechanical development, and the post-emergency regulatory reaction, have influenced how banks account themselves and award credit, i.e. on the “bank business of models”. The changes in plans of action have likely modified how banks react to financial policy as a few examinations have appeared for progressive financial aspects. The impacts on banks in developing business sectors, however, have been less researched.[3]
Cultural change
The mechanized world has no access to manual frameworks. The banking industry needs to sort out innovation based goals to financial industry issues. In this manner, financial associations should promote a culture loaded up with technology. Development is utilized to improve the current systems and process for maximum effectiveness. This social progress towards an innovative attitude is an impression of the more prominent industry-wide acknowledgment of digitalized transformation.
Regulatory compliance
This is among the most crucial financial industry challenges. The expansion in regulatory expenses has guided this. Compliance with different set guidelines can fundamentally damage financial institutions as they assemble assets. Also, if banks neglect to conform to the regulations, they are confronted with costly outcomes. They bring about extra risks and cost for them to remain updated on the most recent regulatory changes. Also, they need to administer the controls that are needed to see those necessities fulfilled. Overcoming the regulatory compliance issue requires credit unions and banks to sustain a culture of compliance inside the organization. Innovation can play a significant part in building up a culture of compliance.
Good governance
Good Governance is another central point that our Banking sector needs. Corporate governance might be rotten when at least one bank is without transparency, responsibility, and consistence. The nature of governance can influence the financial sufficiency markers, for example, resource quality, capital ampleness proportion, liquidity, earning capacity, and more. The executives in these banks should watch out for the activity of the bank and its branches to guarantee corporate governance within the organization.[4]
The banking industry is faced with many challenges. Come the year 2021; the industry will have to chart a clear path that will overwhelm the obstacles. However, with digital transformation and a reliable team, most of these financial challenges will be abolished.
Reference
‘Banking Industry Challenges & Opportunities In 2021 | Linchpin’ (Linchpin, 2021) <https://linchpinseo.com/challenges-facing-the-banking-industry/> accessed 2 March 2021
‘The Change In Banks’ Business Models And Their Impact On Bank Lending: An Empirical Analysis Using Credit Registry Data (2017-19)’ (Bis.org, 2021) <https://www.bis.org/am_office/wgfinstab/cbbm.htm> accessed 2 March 2021
Hossen M, ‘Challenges For
Our Banking Sector’ Dhaka Tribune (2021) <https://www.dhakatribune.com/opinion/op-ed/2019/05/05/challenges-for-our-banking-sector>
accessed 2 March 2021
[1] is a software application that runs automated tasks (contents) over the Internet
[2] https://linchpinseo.com/challenges-facing-the-banking-industry/
[3] https://www.bis.org/am_office/wgfinstab/cbbm.htm
[4] Md Naimul Hossen, ‘Challenges For Our Banking Sector’ Dhaka Tribune (2021) <https://www.dhakatribune.com/opinion/op-ed/2019/05/05/challenges-for-our-banking-sector> accessed 2 March 2021.
