'Adept software developers, IT professionals, and engineers will be backbone of digital banks’ infrastructure'

Why is there such a huge rush for digital bank licences? 

The prospects of digital banks are numerous because of the advantages it brings for the customers and the banks. 

First of all, digital banks need less money and individual sponsor funds. The users can apply online easily. Also the banks want to provide safe and technology-driven banking services and include more people in banking. These might be the reasons why many are rushing to get a licence for setting up a digital bank. As for whether it's the future of banking, it's better to say it is one of the possible futures of banking.

Why are traditional banks opting for digital bank licences although they already have internet banking services?

Some banks have already set up digital platforms to acquire and deliver banking services in response to the growing demand for convenient remote banking.

However, traditional banks are seeking more efficient channels, and obtaining a digital licence can help them reach customers who are not currently in their network yet. On the other hand, it offers an additional option for customers who prefer digital banking. Also, it is a cost effective way of banking. 

Obtaining a digital bank licence enables traditional banks to enter new markets, innovate, and adapt to changing consumer preferences. In short, to stay competitive, meet customer expectations, and position for future growth, traditional banks are vying for digital bank licences.

How can digital banks save time and cost for overall banking operations, and also for customers? 

For banks, digital banks will reduce infrastructure costs by eliminating the need for physical branches, automate processes to cut labour expenses, process transactions efficiently, reduce paperwork, scale operations easily, and leverage customer data for better decision-making and risk management.

On the other hand, digital banks will provide numerous benefits for customers, including 24/7 accessibility through web and mobile apps, faster transaction processing, remote banking, paperless transactions, and automated services like bill payments and budget tracking. They will offer real-time alerts for account activity and provide access to integrated financial tools. Additionally, some digital banks can offer lower or no-fee banking services compared to traditional banks, reducing account maintenance fees and transaction charges. 

These advantages may vary depending on the specific digital bank, but they collectively enhance efficiency, convenience, and cost-effectiveness in banking operations.

How are digital banks different from online platforms of conventional banks?

Digital banks and the online platforms offered by conventional banks share some similarities. But they are not the same.

Online banks, or digital banks, operate solely online, devoid of physical branches. They focus on mobile-centric services with user-friendly apps, digital customer support, and innovative features like AI-driven insights. Moreover, their lean operations often lead to lower costs and competitive rates. Some digital banks target specific customer segments, such as millennials or travellers, with tailored features and benefits. Furthermore, digital banks aim to become financial ecosystems by integrating third-party fintech services like investment platforms, insurance providers, and peer-to-peer payment apps into their apps.

In contrast, traditional banks offer online platforms alongside physical branches. They provide multi-channel banking, including online, mobile, and in-branch services, offering a wide array of financial products. Customers can visit branches for various services. Traditional banks benefit from established trust but may face agility challenges due to legacy systems. They integrate digital features but offer a more balanced approach to banking. 

Will digital banks face more cybersecurity threats? How will they protect customer data?

Digital banks, like any online operations, may face cybersecurity threats such as data breaches, phishing attacks, fraudulent transactions, malware, and DDoS attacks. They have to protect customer data through the most up to date security measures like encryption, multi-factor authentication, advanced authentication methods. 

Also there must be continuous monitoring, security audits, employee training, secure development practices, adherence to data privacy regulations, incident response plans, customer education, and adapting to evolving threats. However, no system is entirely immune, so customers must also follow best practices to safeguard their data, like using a strong password and not sharing their password or pin with anyone.

What will be the advantages of the growth of digital banks in Bangladesh? What obstacles could digital banks face?

The growth of digital banks in Bangladesh can bring several advantages to the country's banking sector and its economy as a whole. However, there are also certain obstacles and challenges that need to be addressed. 

On the positive side, digital banks will promote financial inclusion by reaching underserved populations and provide convenient 24/7 access to banking services through mobile apps. Banks' lower operating costs translate into potential cost savings for customers. Also, they will introduce innovative financial products and enhance efficiency by streamlining processes, which can stimulate economic growth, attract foreign investment, and foster entrepreneurship.

However, digital banks may face challenges in adapting to regulatory frameworks, ensuring cybersecurity, educating customers about their services, and addressing infrastructure gaps, particularly in rural areas. Building trust and overcoming competition in an already competitive banking sector will be additional hurdles. Moreover, digital banks must diligently manage compliance and risk to prevent financial crime and fraud, which can be complex and resource-intensive.

Will we have enough skilled manpower to run digital banks?

Securing a skilled workforce, indeed, is paramount for the operation of digital banks. 

In this era of hi-tech, the necessity for adept software developers, IT professionals, and engineers cannot be overstated. They are the backbone of digital infrastructure. At Midland Bank, we take pride in our capable Software Development Team.

UX designers are entrusted with crafting intuitive interfaces for digital banking platforms. Effective marketing strategies, including digital campaigns and social media engagement, are vital for customer acquisition and retention.

Besides, providing efficient customer support is another key facet. Customer service representatives, adept at addressing inquiries and resolving issues through digital channels, are essential for maintaining customer satisfaction.

In terms of Leadership and Strategy, experienced leaders well-versed in banking, fintech, and digital transformation are indispensable for steering the digital bank in the right strategic direction.

It's important to note that while Bangladesh, like many other countries, has a pool of talented professionals, there may be a need for specialised training programs and initiatives to develop the specific skills required for the digital banking industry. Collaboration between educational institutions, industry associations, and digital banks themselves can play a role in training and upskilling the workforce.

Additionally, digital banks may leverage technology and automation to streamline some processes, reducing the need for certain manual tasks and potentially addressing skills gaps. Nevertheless, having a well-rounded and skilled workforce remains crucial for the success and sustainability of digital banks.