A new form of digital service, the digital bank, is expected to launch in Bangladesh in 2023. The Bangladesh Bank issued a licence for digital banks in 2021, and a number of companies have applied for licences, including individual companies, consortiums, mobile financial service providers and state-owned banks.
We have seen many financial transaction-based innovations in our country in the last few decades. Mobile Financial Services (MFS) has been the most famous one, so much so that we are dependent on it in every aspect of our lives.
MFS providers have been operating in Bangladesh for over a decade with over 170 million active accounts. Then why are we calling the digital bank a breakthrough for the banking industry, and how is it different from MFS?
Digital banks are a type of bank that operates without any physical branches. Instead, it provides all of its services through digital channels, such as mobile apps, websites and online banking. Digital banks offer a wide range of banking products and services, including savings accounts, current accounts, loans and investments.
It is important to note that the distinction between digital banks and MFS is not always clear-cut. For example, some digital banks may offer mobile wallets and some MFS providers may offer loans. However, in general, digital banks offer a wider range of banking products and services than MFS providers.
As the new era begins, digital banks will have to confront several obstacles in reaching the rural population. Recent incidents of app-based financial scams and digital investment-related fraud have eroded trust in online financial services. Additionally, economic factors such as inflation contribute to an atmosphere of uncertainty.
These factors combine to make it essential for digital banks to engage in significant awareness-building efforts to gain the trust of potential customers. Moreover, the digital banking concept represents a significant departure from the traditional banking model, necessitating an adjustment period for both customers and the industry as a whole.
Therefore, marketing will play a pivotal role in introducing digital banks to the Bangladeshi market. Marketing professionals will encounter various challenges when promoting digital banks, primarily due to the diverse nature of the market.
Creating tailored marketing plans for different customer segments will be essential. Moreover, the simultaneous launch of several digital banks will create competition and increase pressure on marketers to differentiate their campaigns effectively.
To tackle the trust deficit, digital banks must launch extensive awareness campaigns as a central component of their marketing strategy. These campaigns should aim to inform the public about their offerings, services, and frequently asked questions (FAQs) about digital banks.
Special attention should be given to promoting various account types, such as business and student accounts. The strategies that should be focused on more by the marketers to introduce digital banks are Awareness and Education, Trust Building, and Differentiation from Traditional Banking.
To effectively market all these strategies, it is crucial to adopt a multi-faceted approach that encompasses all three marketing tiers: Above the Line (ATL), Below the Line (BTL) and Through the Line (TTL).
The ATL approach can highlight the benefits of digital banks, such as their convenience, lower fees, and more innovative products and services, with the use of television commercials and others. Print ads in newspapers and magazines can explain how digital banks work and address common concerns about security and fraud.
With BTL, educating people about digital banks and answering their questions by setting up booths at trade shows and community events will be convenient. Discounts and promotions can encourage people to open accounts with digital banks. Partnerships with local businesses can offer exclusive deals to customers of digital banks.
Social Media Campaigns can provide educational content about digital banks and engage with potential customers, which is a part of TTL. Websites can provide comprehensive information about digital banks and allow visitors to open accounts online. A targeted advertising campaign on social media and search engines can reach people who are interested in learning more about digital banks.
The establishment of digital banks in Bangladesh marks a substantial shift in the banking sector. Marketing will be critical in overcoming obstacles, creating trust and successfully introducing this innovative notion to the market.
The distinctive nature of digital banking will surely test marketers' agility and ingenuity, but with the appropriate techniques, the transformation promises to be a success.
Nilufer Yasmin Munni is a lecturer at the Department of Marketing and International Business, North South University.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.