I am amused to see the frequent advertisements showcasing one bank or the other winning awards like “Bank of the Year”. For one, it is rather well-known how underhanded means are used to win some of these accolades. And even if these awards are genuinely won, it is often done following conventional methods of doing business.

Traditionally, if a bank is well-capitalised, generates a decent deposit base and has economies of scale, then it should be able to do well – until now.

My hypothesis of the traditional industry structure being unable to withstand emerging changes is based on watching consumer needs and technology evolve over the last decade or so.

Products such as checking and savings accounts, outdated processes for lending (or more like non-lending), and even corporate advisory remain completely indistinguishable from one bank to the other. Imagine promoting “free cheque books” as a feature of your service in this day and age!

But let me come to the faux pas of the Pakistani banking industry in a bit. First, let us look at the international arena.

Global banking heading towards specialisation

The biggest change in the global banking industry is driven by the introduction of new technology, which has seriously challenged the economies of scale model built on bricks and mortar. A bank’s size used to be an advantage in reaching customers, aggregating services and building loyalty. But not anymore. In the last 10 years or so, hundreds of digital banks have appeared along with payment platforms, wealth management providers, venture capital firms as well as e-commerce retailers bundled with consumer finance options.

All of them have raised the bar for customer expectations. Consumers now demand much more from their financial services providers and are likely to seek........

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