'Digital banks are the future'

How is a digital bank different from a conventional bank?

A digital bank operates without physical branches and relies on technology-driven platforms like mobile apps and websites to offer a wide range of financial services. This tech-centric approach enables them to streamline operations and reduce costs, ultimately benefiting customers with higher interest rates on savings and lower transaction fees. 

They prioritise convenience with 24/7 accessibility, making them a key driver of financial inclusion, particularly in rural areas. Digital banks in Bangladesh are subject to regulatory oversight, ensuring customer protection and data privacy.

In contrast, traditional banks maintain physical branches and often have higher operating costs, which can result in lower interest rates on savings and higher fees. While they offer comprehensive banking services, including in-person interactions, they may not provide the same level of accessibility and cost efficiency as digital banks. 

The digital banking model aligns more closely with the evolving financial needs and preferences of Bangladesh's increasingly digital-savvy population, making it a significant force in the country's financial landscape.

In your opinion, are digital banks really the future of banking?

Digital banks are, indeed, the future because they offer convenience, accessibility, and efficiency to customers. It leverages technology to provide a seamless banking experience, which is increasingly important in today's fast-paced world.

In the context of Bangladesh, digital banks can be an effective solution for financial inclusion. It offers 24/7 services, bringing the convenience and accessibility that current users most demand. 

A digital bank can introduce innovative financial products with efficiency. For example, they may offer microloans, insurance products, and investment opportunities tailored to the specific needs of the local population in the most cost-effective manner.

Moreover, with the support of regulators and government bodies, Bangladesh has been investing in robust cybersecurity measures to protect customer data and transactions. As a result, customers have become more familiar with digital banking services and their security features, and trust in these platforms is growing. And this is the future of banking.

How do you think digital banks can help Bangladesh's emerging digital economy?

Digital banks play a vital role in fostering financial inclusion and supporting the growth of the digital economy. They provide easy access to financial services for unbanked and underbanked populations while facilitating online transactions and e-commerce.

In Bangladesh, digital banks have the potential to drive the growth of the digital economy by promoting financial inclusion, facilitating e-commerce, and encouraging digital payments. They can support SMEs, streamline cross-border transactions, boost financial literacy, reduce operational costs, and harness data for more inclusive financial services. 

However, addressing cybersecurity, data privacy, and ensuring accessibility across all demographics are critical challenges that need to be met through evolving regulations and enhanced consumer protection measures for the sustainable growth of digital banking in Bangladesh.

How important will Gen Z be for digital banks?

Gen Z offers a significant opportunity for digital banks as tech-savvy and convenience-seeking customers. They value personalisation and financial education and are early adopters of digital payments. Additionally, their digital skills make them valuable assets for digital banking innovation and advocacy. However, ensuring data security, providing excellent support, and addressing their specific needs are essential for building trust and loyalty.

Gen Z's tech-savvy nature, convenience-seeking behaviour, and familiarity with digital platforms make them a natural fit for digital banks in Bangladesh, presenting both a customer base and a talent pool. Meeting their expectations while addressing security and support concerns is crucial for long-term success.

How do mobile wallets measure up to digital banking?

Mobile wallets and digital banking serve different purposes. Mobile wallets are primarily for making payments, while digital banking encompasses a broader range of financial services, including savings, investments, and loans.

In Bangladesh, mobile wallets like bKash, Rocket, and Nagad primarily focus on digital payments and money transfers, providing accessibility and convenience, especially in rural areas. They often have extensive agent networks for cash transactions but offer limited savings and investment options.

On the other hand, digital banking in Bangladesh is expected to offer a broader array of financial services, including savings accounts, loans, investments, and financial management tools. Digital banks function more like traditional banks, providing a holistic banking experience with regulatory oversight, making them suitable for those seeking comprehensive financial solutions. 

The choice between mobile wallets and digital banking depends on individual financial needs and preferences, with mobile wallets serving daily transactions and digital banking offering a more diverse range of financial services.

How will digital banks ensure the safety of their customers' money?

Ensuring the security of customers' money in digital banks is a top priority. These banks employ advanced security measures, including strong encryption, multi-factor authentication (MFA), and continuous monitoring. Encryption protocols like SSL and TLS safeguard data during transmission and storage, making it unreadable to unauthorised parties.

MFA adds an extra layer of protection by requiring multiple forms of identification, such as passwords, mobile device verification, or biometrics. 

Real-time monitoring systems detect unusual activities and potential threats, ensuring timely responses to security issues.

Regular security audits and compliance checks, often conducted by regulatory authorities like the Bangladesh Bank, verify adherence to cybersecurity standards. Employee training programmes educate staff about recognising and mitigating security risks, while secure data centres with strict access controls protect customer data.

Digital banks in Bangladesh are governed by regulatory oversight and have well-defined incident response plans to address security breaches promptly. Customer education on online security practices further enhances the overall cybersecurity framework, ensuring a secure environment for customers' funds and data. Customers also play a crucial role by following recommended security practices and staying vigilant against online threats.

How do digital banks operate in other economies?

Digital banks operate globally with a digital-first approach, offering a wide array of financial services through mobile apps and websites. They prioritise convenience, accessibility, and cost-efficiency while providing competitive rates and fees. Customisation and personalisation, compliance with regulations, integration with digital ecosystems, and cybersecurity are standard practices.

In Bangladesh, digital banks align with these global principles, catering to the country's growing digital-savvy population. However, they also adapt to local needs, particularly emphasising financial inclusion, serving diverse demographics, and complying with specific regulatory requirements.

Digital banks in Bangladesh, like their global counterparts, will be driving a transformative shift in the banking industry, meeting the evolving demands of an increasingly digital society.