Country's state-owned commercial banks (SoCBs) are far behind the private commercial banks (PCBs) in technology-based banking in terms of infrastructure, clientele base and transaction amount, a study reveals.
The study on 'Alternative Delivery Channel: Opportunities and Challenges of New Banking Environment' conducted by the Bangladesh Institute of Bank Management (BIBM) shows that ADCs are mainly lead by PCBs.
The study has identified lack of long-term vision, proper planning and initiatives; shortage of manpower, poor information technology (IT) budget, weakness in business process reengineering, delay in procurement process and lack of advanced training as main problems for SoCBs.
It suggested that the government take initiatives to boost the share of ADCs in the existing market.
Alternative Delivery Channel signifies a broader range of options through which a customer can get access to financial services without visiting a branch. These include automated teller machine (ATMs), Internet Banking, Agency/Agent Banking, Extension/Field Services, Call Center, Mobile Banking, Electronic or Mobile
The initiation of these channels enables customers, bank employees and agents to access banking services through technology solutions.
The study showed that the number of mobile financial service (MFS) agents of SoCBs is only 94,898 against PCBs' over 0.67 million. The number of ATMs of SoCBs is 184 against PCBs' 8925, foreign commercial banks' (FCBs) 170 and specialized banks' six. The number of agents of SoCBs is 54 against PCBs' 2938. The number of point of sales (POSs) of SoCBs is 54 against PCBs' 35,725.
Total amount of transaction of SoCBs through agent banking is Tk 214 million, PCBs Tk 125.36 million. The amount of total transaction of SoCBs through MFS is 14.64 billion against PCBs Tk 2756.09 billion. The transaction amount of SoCBs through ATM is Tk 16.94 billion against PCBs' 1017.36 billion, SBs' Tk 382 million and FCBs' Tk 77.64 billion. The amount of total transactions of SoCBs through internet banking (IB) and POS is nil and Tk 236 million respectively against PCBs' Tk 85.29 billion and Tk 106.84 billion, FCBs' Tk 272.25 billion and Tk 17.42 billion.
When contacted, former deputy governor of Bangladesh Bank (BB) Khondker Ibrahim Khaled told the FE that SoCBs are controlled by the government and as the owner of these banks, the finance ministry never showed interest or pressurise the banks for technology-based banking. But PCBs have advanced in this area as they tried to follow the global trend.
"It has been observed now that the finance ministry has been showing interest in technology-based banking while some new managing directors are implementing online banking. Agrani and Janata have advanced in implementing such programmes," he said.
BIBM associate professor and team leader Mahbubur Rahman Alam said financial institutions in the emerging and developing markets are gradually deploying ICT in the form of ADCs and shifting from traditional ones.
There are 57 banks with 150.7 million bank accounts, 9,464 total bank branches and five mobile phone operators. The total number of cards is 116.78 million. The total number of IB accounts is 1.6 million, mobile banking agents 0.74 million, mobile banking customers 526.84 million, agents of agent banking 2862, agent banking customers 0.80 million, ATMs 9220, POSs 35,716.
Mr Alam said Bangladesh has a rapidly growing MFS industry, with at least 17 providers already offering services in the market. At the end of 2016, the number of total agents was 0.71 million and the number of registered customers was almost 41.1 million, of which active accounts were almost 15.8 million. In few years since the launch of MFSs, the sector has shown significant growth.
Most of the ATMs are installed in the divisional cities and district towns. Around 44 per cent of ATMs are installed in Dhaka city. A very few ATMs are being operated in rural areas, less than 4.84 per cent. It is mentionable that 46 per cent of ATMs are set up by Dutch-Bangla Bank Limited (DBBL) alone.
Among the seven divisions, the highest number of ATMs are installed in Dhaka division (61.5 per cent), followed by Chittagong (16.8 per cent), Sylhet (8.1 per cent), Rajshahi (5.9 per cent), Khulna (2.9 per cent), Rangpur (2.9 per cent) and Barisal (1.9 per cent). It is seen that divisional cities have the highest number of ATMs installed (60 per cent). District towns (excluding divisional cities) have the second highest density of ATMs (23 per cent). Only 17 per cent of ATMs are installed at upazila level towns (excluding sadar upazila).
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