Why Bangladeshi banks need more of the Blue Ocean Strategy in a crowded market

Over the past 10 years, Bangladesh's economy has grown significantly, and the financial industry has played a key role in this development. However, the industry is still intensely competitive, with many institutions vying for the same market share. 

Banks in Bangladesh must use cutting-edge tactics to set themselves apart from rival institutions if they are to remain competitive. The Blue Ocean Strategy is one such tactic that has achieved success in numerous sectors all over the world.

W Chan Kim and Renee Mauborgne introduced the concept of the Blue Ocean Strategy in their book of the same name. The emphasis is on generating new demand and rendering the competition obsolete while creating an unchallenged market area where there is no need to worry about rivalry. This tactic is especially pertinent to Bangladesh's financial industry where differentiation is essential due to fierce rivalry. 

The Blue Ocean Strategy states that businesses must generate new demand by providing a special value proposition that is not provided by their rivals. To compete in the crowded and intensely competitive 'red ocean' of current markets, one must first create a new market area, or 'blue ocean', for goods and services.

Having more than 61 authorised commercial banks functioning in it, Bangladesh's banking industry is indeed very competitive. To stick out in this congested market, banks must set themselves apart from their rivals. 

Due to rivalry, banks now compete on the same criteria, such as interest rates, fees, and customer care. They are now trapped in a red ocean, a market where rivalry is so intense that it is challenging to create a separate identity. 

The idea of the Blue Ocean Strategy provides a solution to such a situation. Banks can generate new demand and draw clients who weren't previously serviced by the sector by finding untapped markets. This could entail the creation of fresh goods, fresh distribution methods, or fresh marketing tactics.

In every country, including Bangladesh, the financial sector has been disrupted by the emergence of fintech. To stay relevant, banks must keep up with the most recent developments in digital banking. 

This entails spending money on cutting-edge digital products and services that provide a smooth customer experience and satisfy the demands of contemporary clients. 

For instance, Rocket, a mobile banking application created by Dutch-Bangla Bank, enables users to conduct a variety of financial operations from their mobile devices. This has aided the bank's efforts to both acquire and keep clients.

bKash is most likely the finest example of a bank in Bangladesh that has applied the Blue Ocean Strategy effectively. Its customers can use their phones to send money, pay bills, and make transactions. 

Since its 2011 debut, it has grown to be one of Bangladesh's most well-known providers of mobile banking services. To serve the requirements of the unbanked population in Bangladesh, bKash created a cutting-edge product. 

Those without bank accounts can also use it. People who would not otherwise have access to banking services now have more of a chance of using them.

Even though Bangladesh has made great strides toward financial inclusion, a sizable portion of the population remains unbanked or underbanked. By concentrating on these groups and creating goods and services that address their specific requirements, banks can generate new demand. 

For instance, Grameen Bank has been effective in assisting Bangladesh's rural poor by providing microloans that cater to their unique requirements. By doing this, Grameen Bank has established its niche market and elevated itself to the top of the lending sector.

Brac Bank is yet another example of a bank in Bangladesh that has embraced the Blue Ocean Strategy.  Founded in 2001, the bank has positioned itself as a dominant force in the SME banking industry. It has positioned itself as a pioneer in this field by concentrating on the requirements of small and medium-sized businesses. 

The foundation of Brac Bank's success in the SME banking market is its capacity to comprehend the requirements of small and medium-sized businesses and create goods and services to meet those requirements. Due to this, it has been able to stand out from the competition and build a solid reputation in the industry.

To open up new market opportunities, banks must provide value-added services that are not provided by their rivals. This entails moving beyond conventional banking services and providing services that address their clients' shifting requirements. 

For instance, Eastern Bank has introduced a programme called 'Women Banking', which provides a variety of services and advantages tailored especially for women. 

The Eastern Plus card is one of EBL's most efficient cards. Customers can enjoy savings at associate retailers, free travel insurance, and entry to VIP areas at airports with the Eastern Plus debit card. 

EBL has created several other cutting-edge goods and services in addition to this card, such as mobile banking software, online account opening, and a virtual helper for customer support. 

These goods and services have helped EBL carve out a distinctive niche in the market and draw in clients who are seeking alternatives to conventional banking services. This has aided the bank in differentiating itself from rivals.

Our banking industry has benefited from the Blue Ocean Strategy because it enables banks to set themselves apart from rivals and provide clients with distinctive goods and services. Banks can open up new marketplaces where there is no current rivalry by concentrating on underserved market segments and creating cutting-edge goods and services. 

One of the main benefits of the Blue Ocean Strategy is that it makes it possible for banks to establish a long-lasting economic edge. By identifying underserved markets and creating novel injunctions, banks can become market authorities in their respective industries. As a result, they can produce long-term profitability and a group of devoted customers.

The Blue Ocean Strategy's adoption, though, is not without difficulties. One of the most significant challenges is the requirement for substantial investment in research and development. Smaller institutions may find it difficult to develop innovative goods and services because it takes a lot of time and money. 

Banks must also be conscious of the possible Blue Ocean Strategy traps. One danger is that the bank could lose its competitive edge as a result of new rivals being drawn into the market area it has established. Another possibility is that the new market won't be as lucrative as expected, which would reduce the bank's revenue.

The requirement to inform consumers about new goods and services presents another difficulty. Customers might not be acquainted with the goods and services being provided because the Blue Ocean Strategy entails developing new marketplaces where there is no existing rivalry. 

For customers to grasp the worth of these goods and services, banks need to make marketing and education investments.

Despite these difficulties, the Blue Ocean Strategy can revolutionise Bangladesh's financial industry. Banks can expand into new markets and attract clients looking for unique products and services by emphasising innovation and differentiation.