Banking in and after coronavirus pandemic

All the government and non-government organisations, except emergency services, have been closed to prevent the transmission of the novel coronavirus (Covid-19) pandemic. A total lockdown has been imposed in many districts and upazilas of the country one after the other.

But, banks remained open amid the lockdown as emergency service institutions, but are operating through few branches and providing a limited range of services. Since fewer branches are operating, customers of the closed branches are facing problems in their financial transactions.

This is because there are many people who keep all except their pocket money in the bank. Also, there is no history of bank closure in the country for such a long time, and most banks and their customers are not accustomed to digital banking.

However, we cannot say that the suffering is caused by the banks alone. Of course, there is a failure on the part of the banks. But the customers are also equally liable. 98 percent of transactions of the state-owned banks are not digital, and 99 percent of the country's banking transactions are branch-based.

On the other hand, many customers are reluctant to avail digital banking services, such as debit cards and internet banking, due to annual charges.

However, in view of their own customers' satisfaction, business growth, and current and upcoming challenges, banks will have to overcome the limitations and mitigate the customers' sufferings arising from the manual banking transactions. That is why banks now have to think about banking both in and after the coronavirus pandemic. In both cases, banks need to focus primarily on virtual banking.

Banking in coronavirus pandemic

The collection of all utility bills should be temporarily closed. If that cannot be done, banks can arrange to receive such bills fortnightly, and all other customer services will remain closed on that day.

A customer or his cheque bearer shall come to the branch only once a week to withdraw cash. A banking software should be put in action to track and block multiple cash withdrawals in a week from an account. The withdrawal limit from ATM booths has to be increased and their transaction on the branch cash counter has to be blocked.

Similarly, those accounts which have internet banking services activated should be barred from transfer of funds to other accounts of the same bank through cheque or manual fund transfer methods. This can be followed permanently.

For the time being, banks without digital banking services, can also come into agreement with bKash, Rocket and Nagad for money transfer from bank account to mobile banking account and vice versa.

After identification and authentication of customers, banks will provide them with a "User ID" and a secret "PIN number", which can be used to link the bank account to the digital financial platform as well as to other bank accounts to transfer funds.

If scheme or loan account installment and credit card bills can directly be deposited in the bank from mobile banking account, it will shorten the queue of customers in the branches.     

Banking after coronavirus pandemic

Thirty years ago, Microsoft founder Bill Gates said, "People do not need banks, they need banking."

Here he makes a clear indication of virtual banking. But even in this era of technological excellence, no bank of our country could yet bring all customers under the umbrella of virtual banking.

According to a report by the Bank of England, cash is not used in four out of every five transactions in countries, including Norway and Denmark. In Norway, only six percent of total purchases are made in cash. Digital transactions in China at the end of 2017 were 34 percent. But according to the data of Bangladesh Bank's "Reducing Cash Transactions" report, only six percent of Bangladesh's total transactions are digital!

Smart mobile phones are one of the media of digital transactions. According to data from the BTRC, the number of mobile phone users in the country at the end of 2019 was 16 crore 55 lakh 72 thousand, and mobile internet users stood at 9 crore 36 lakh 81 thousand.

On the other hand, the number of deposit accounts in the banks of the country at the end of June 2019 was 10 crore 3 lakh 37 thousand and 196. At the same time, the number of loan accounts was 1 crore 6 lakh 55 thousand and 459.

According to data released in the March publication of "Economic Trends" by the statistics department of the Bangladesh Bank, the total number of debit cards in the country at the end of January 2020 was 1 crore 86 lakh 11 thousand and 681, prepaid cards was 4 lakh 28 thousand and 910, credit cards was 15 lakh 56 thousand and 448, and the number of customers using internet banking services was 25 lakh 16 thousand and 685.

This information easily explains the gap between the potential and current state of our digital banking. However, a bank becoming digital without making its customers digital will bring no result for that bank.

From the above information, we can see that digital technology, i.e. mobile phones are in the hands of more than 90 percent of the people of the country, and more than half of the population are using the mobile internet enabling virtual banking sitting at home.

Therefore, if the mobile app-based internet banking cannot be introduced as an alternative to manual banking, banks will lose customers at a rapid speed. Due to coronavirus aftermath, card-based banking and biometric banking may not last long.

Banks should eliminate from their heads such thinking that all the customers will come to the branch to open their bank accounts and receive banking services. So, the first post-coronavirus task of banks would be this – banks that have not yet launched core banking software should migrate to that within the next six months to one year after the pandemic is over.  

The banks using core banking software but have no mobile apps will have to develop their own within the fastest time. With the rapid implementation of e-KYC of Bangladesh Bank customers who want to make a limited range of transactions can be offered the convenience of opening their own bank account and making transactions sitting at home.

Besides, the cooperation of banks with mobile operators and e-payment service providers and related collaborating parties should be increased. Every bank has to provide internet banking as well as mobile banking services.

However, instead of offering mobile banking services under individual names, banks can come to a long-term agreement with bKash/Rocket/Nagad as they have already penetrated the major share of the market. Or, using one technology under the Bangladesh Bank-controlled National Payment Switch Bangladesh (NPSB), they can provide this service under a uniform name.

Besides, the Bangladesh Bank must rethink about the circulation and necessity of bank notes where existence of three thousand germs was found.

Considering the proposal of the Anti-Corruption Commission (ACC), if the use of banking channels or mobile financial services channels can be made mandatory for any transaction over Tk10,000, it will reduce the demand for paper money.

This will also reduce the pressure on the bank's cash counters, and, above all, increase financial transactions in the economy of the country by about three to four times.

Besides, the Bangladesh Bank will be able to save about Tk450 crore that is incurred per year for the production and circulation of paper currency. Similarly, the country will save more than Tk9,000 crore in connection with cash dealing every year.

Mosharaf Hossain is Principal Officer and Head of Branch, National Bank Limited