In­no­va­tive bank­ing prod­ucts on the rise

The Pak Banker - - COMPANIES/BOSS -

The use of fi­nan­cial tech­nol­ogy Fin­tech is fast be­com­ing vis­i­ble across the spec­trum of all bank­ing prod­ucts but no­tably for han­dling of home re­mit­tances. As the cen­tral bank keeps push­ing us to mo­bilise more re­mit­tances from over­seas Pak­ista­nis and as growth rate of re­mit­tances has started slow­ing down, fin­tech is keep­ing us on track in our task, says a se­nior ex­ec­u­tive of Na­tional Bank of Pak­istan.

Banks, equipped with IT so­lu­tions of var­i­ous pro­ce­dural is­sues now claim that they de­liver the re­mit­tances sent home by over­seas Pak­ista­nis to their ben­e­fi­cia­ries here in less than 24 hours. Cen­tral bankers say that banks must fo­cus now on de­vel­op­ment of long-term fi­nanc­ing and in­vest­ment prod­ucts as well as green bank­ing prod­ucts. Banks need more prod­ucts to han­dle the de­mand that is ex­pected to come up as work on CPECre­lated mega in­fras­truc­tural and en­ergy projects start. And, they also need to de­velop the kind of needed prod­ucts in an­tic­i­pa­tion of faster in­dus­trial growth in com­ing years. In the past few years, banks have come up with new fi­nan­cial prod­ucts to cater to the chang­ing needs of their clients and to build their strengths for pro­mot­ing their busi­nesses. How­ever, it is a con­tin­u­ing process in a di­ver­si­fy­ing econ­omy.

Many aspects of the new bank­ing prod­ucts merit dis­cus­sion, but a cou­ple of things stand out. First, both con­ven­tional as well as Is­lamic banks have fre­quently in­tro­duced Is­lamic bank­ing prod­ucts in re­sponse to ris­ing de­mand for Shariah com­pli­ant bank­ing.

Se­cond, Is­lamic and con­ven­tional banks have a num­ber of prod­ucts to serve their clients bet­ter in in­land and over­seas fund trans­fers, e- pay­ments, on­line hedg­ing of com­modi­ties and busi­ness-to-busi­ness (B2B) pay­ments flow man­age­ment in a di­ver­si­fy­ing econ­omy.

A third as­pect of prod­uct de­vel­op­ment is that some of them are de­signed for a fast-ex­pand­ing con­sumer class or least doc­u­mented small busi­nesses. Or they help large com­mer­cial and cor­po­rate clients in overnight bor­row­ing and cash park­ing with least has­sle. Phe­nom­e­nal growth in Is­lamic bank­ing has en­cour­aged banks to de­velop Shariah-com­pli­ant prod­ucts for de­posit mo­bil­i­sa­tion, lend­ing, liq­uid­ity man­age­ment of com­pa­nies, mort­gage fi­nance and cor­po­rate and con­sumer leas­ing and in­sur­ance. Is­lamic bank­ing has di­ver­si­fied their prod­uct-base to tap the grow­ing de­mand. 'That`s why you see mort­gage fi­nance and leas­ing be­ing some­what dom­i­nated by Shariah-com­pli­ant bank­ing prod­ucts,' says a se­nior ex­ec­u­tive of Meezan Bank.

To pro­mote branch­less bank­ing, fi­nan­cial ser­vices prod­ucts like Omni and Easy­paisa have gained some foothold while, sim­i­lar prod­ucts with dif­fer­ent names like U-Paisa have also hit the mar­ket. And, on­line and in­ter­net bank­ing with SMS alerts are fast gain­ing cur­rency as they are well­suited to busier life and chang­ing busi­ness styles of in­di­vid­u­als and com­pa­nies. MCB Lite is and Dubai Is­lamic bank`s e-sav­ings are just two ex­am­ples.

More im­por­tantly, banks are now pro­mot­ing such well-pack­aged cur­rent and sav­ing ac­counts wherein the clients are not only able to de­posit and with­draw money on daily ba­sis but also get monthly re­turns. In ad­di­tion, they also get in­sur­ance cover and a host of so-called free fa­cil­i­ties in­clud­ing pay-drafts etc whose cost is ac­tu­ally built-in in the rates of re­turn on the to­tal amount bor­rowed in a cer­tain pe­riod.

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