Covid-19 has pushed the banking sector into a rapid transformation from brick and mortar services to cyberspace service as banks have put all their efforts into tightening operational costs and expanding alternative delivery channels to regain profitability.
In the first half of the current year, most banks experienced a sharp decline in their operating profit which is assumed to continue in the second half of the year.
Banks are now re-engineering their business strategies to cope with the "new normal" amid the pandemic and the lending rate cap regime.
As part of that, many private banks have decided to continue their work-from-home policy and reduce floor areas as office rents are a significant part of the banks' operating cost.
At the same time, banks are expanding their services in cyberspace. Increasing investments in remote work software for employees enabling them to work from home is one of the ways banks are doing this.
They are also expanding banking services on digital platforms to take banking to their clients thus reducing footfall in bank branches.
Prime Bank – one of the largest private banks in the country – has decided to cut office space by around 50,000 square feet by December this year as part of its cost minimisation plan.
Around 30 percent of the bank's 3,150 employees are attending the office physically for the last several months in the wake of the pandemic, while the remaining 70 percent have been working from home.
The bank will continue this remote work policy permanently to minimise rental expenditures.
Prime Bank focuses on digitalisation by expanding alternative channels. Customer response is also positive in digital transaction channels.
For instance, internet registration has increased three to four times during the pandemic situation. Prior to the coronavirus outbreak, monthly internet banking registration was 400 which increased to above 1,500 in April.
"The bank will not go for the expansion of its physical infrastructure this year. Instead, it will downsize the existing floor areas and promote digital alternative channels," said Rahel Ahmed, managing director of Prime Bank.
Digital banking is of great benefit to customers because banks are bringing all touchpoints of their everyday life-style into a single platform. For example, customers can make small transactions, payments of online shops and other utility bills through banking app based delivery channels.
Digital banking will increase their operational efficiency, they believe. Banks have to spend a huge sum of money for maintaining a branch of 3,000-5,000 square feet area, Rahel added.
Brac Bank – the largest SME (small and medium enterprise) centric bank having the largest network of SME offices across the country – is also planning to reduce its dependence on real estate for offices.
The bank has decided to start a remote working system for its employees.
Around 500 among 1,200 employees of the bank have been attending office physically since the coronavirus outbreak in the country. The bank will continue this practice.
The bank has 190 branches and 455 SME offices across the country.
"We are going to formalise the remote working policy," said Selim RF Hussain, managing director of Brac Bank.
"The new working process will help the bank reduce office space in the near future," he added.
The bank also emphasises reducing the use of papers by digitalising office work, he said.
The bank has also cut its travelling and training costs as all training programmes are currently being held virtually. This practice will continue in the future, he said.
The Brac Bank managing director also noted that the bank holds 7,000-8,000 hours of training annually and all employees from across the country used to come to Dhaka to attend the training.
"The bank started to invest extensively in digitalisation in 2018, which gained momentum during the pandemic situation," he said.
Customers also have adapted to digital banking as online banking registration of the bank has now improved to 15,000 to 20,000 per month, which was between 4,000 and 5,000 before the virus outbreak.
The bank has set a target to raise the number of clients being registered with internet banking to 25,000 a month, said Hussain.
The overall objective of the bank is to introduce more new digital products and services by this year to carry on this digital transaction trend.
Meanwhile, Mutual Trust Bank has taken steps to reduce its operational cost. The bank will release an office building by January next year which will save it annual rental expense of Tk5 crore.
The bank has some 118 branches in total, of which 15,000 square feet space will be released by this year.
Moreover, the bank will revise down its office rents by 15-20 percent for at least six months.
The bank has also invested heavily in digitalisation. It has purchased a software that enables its employees to access the office server and work remotely.
"We are planning to continue the work-from-home policy to reduce office space," said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
He said the bank has developed a voice and text chatbot through which customers will get basic information about products and services.
The app was started in messenger and viber and whatsapp will be added soon, he said.
"The bank also plans on going for partnership with mobile financial service providers like bKash, Nagad, and Rocket to increase alternate delivery channels," he added.
Customer response to the app is also very good as the number of users of the bank's app currently stands at 50,000, which was around 30,000 three months ago.
The bank is in the third position in the financial market in terms of the number of app users.
The bank is also encouraging its customers to use mobile apps, he said.
Bangladesh Bank data show the total number of internet banking users stood at 27 lakh in April, 8.3 percent higher than 25 lakh in December last year.