Chalking out the next decade of Bangladeshi banking

Bill Gates once said that we overestimate what changes in two years and underestimate what changes in ten. Banking proves the point. On the surface, branches open, ledgers balance, and ATMs hum. Underneath, the ground is moving. Digital habits are now the default, AI is maturing fast, regulation is shifting, and a younger, mobile-first customer expects banking to feel invisible and intuitive.

What wins in this environment is clear: keep costs tight without cutting care; use digital and AI to remove friction, not people; manage the balance sheet with discipline; build the kind of teams that can learn, unlearn, and deliver; and look beyond the branch by placing banking inside the platforms people already use through embedded finance.

The pattern is visible across markets that invest in research and execution. India shows how quickly new rails can scale when policy, talent, and technology pull in the same direction. Bangladesh has real strengths yet faces stubborn headwinds. Non-performing loans remain high. Automation is uneven. Retail offerings are still narrow. Internet banking adoption is lower than it should be. Credit is too concentrated among a few groups, which weakens both returns and resilience.

Even so, the public has voted with its thumbs. Mobile banking is now a daily utility. In 2024, transactions reached 1,737,000 crore taka, up 28.42% year on year. Salary disbursements, bill payments, remittances, and merchant collections have all moved to the screen in the hand. Agent banking has broadened the net, with more than 21,000 outlets run by nearly 16,000 agents bringing formal finance to rural doorsteps. When access improves, inclusion follows.

Policy has nudged the system in the right direction. Bangladesh Bank's e-KYC guidelines, introduced in December 2024, use national IDs and biometrics to speed up onboarding and reduce fraud. Faster verification is not just a matter of convenience: it lowers acquisition costs, strengthens AML and CFT outcomes, and narrows the path to default — all of which strengthen the entire system.

Global investors are watching the same currents. In PwC's 2024 survey, a slim majority expected growth and were leaning into technology, AI, climate transition, and trust. For banks, that translates into a practical mandate: make the experience seamless; diversify products; treat automation as essential, not exceptional; and use alternative channels — from virtual banking to POS-based services — to reach customers where they work and sell.

So, what should banks in Bangladesh do now — not in theory, but in practice?

First, make digital feel effortless. Map every journey from onboarding to dispute resolution and remove unnecessary steps. AI can auto-classify documents, flag risks, route service requests, and predict churn. Customers should never have to repeat themselves.

Second, rethink distribution. Embedded finance places lending, payments, and insurance inside payroll systems, supplier platforms, ride-hailing apps, and retail POS networks. When finance shows up where value is created, risk data improves and acquisition costs fall.

Third, upgrade risk management with data. Use real-time signals from transactions, invoices, and device behaviour to price dynamically and detect early signs of stress. Predictive models and automated collections will not solve NPLs alone, but they will shrink the pipeline.

Fourth, invest in people. The best models still need judgement. Train frontline teams to use new tools, and recruit engineers, product managers, and data scientists who can deliver securely in regulated environments.

Fifth, keep the house in order. Hedging, liquidity buffers, and income optimisation may not be headline topics, yet they determine who can invest through the cycle — and who cannot.

There is also a mindset choice. As Jim Marous argues, the banks that matter most will live closer to their customers' daily lives, advising across moments rather than reacting to transactions. Each institution must decide its stance: shape the industry with bold bets; follow fast with focus; or manage defensively and delay. Any of these can work if chosen deliberately and executed well.

The next decade will not reward slogans. It will reward banks that pair operational discipline with curiosity, regulation with speed, and technology with empathy. Bangladesh has already shown what inclusion looks like when access expands. The task now is to deepen that inclusion with smarter credit, safer systems, and services that simply work.

Mamun Rashid is an economic analyst and Chairman at Financial Excellence Ltd. He worked for more than three and a half decades with international banks and advisory firms.

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.