consumer banking in pakistan

hey guys..although this isn't "really" related to marketing but thought i share it this article with u! its on consumer baking n Pakistan and how it has increased over time ..
Over the last 5 years, Pakistan witnessed a phenomenal growth of consumer banking. This unprecedented development has followed privatization of nationalized banks, banking reforms brought about by the State Bank of Pakistan and an increasingly marketing-oriented approach primarily aimed by banks at a large urban consumer base.
Be they large or small bank, multinational or local, each one of them is geared towards making its mark in an already competitive environment that is the outcome of consumer banking. Multinational banks such as ABN AMRO, Citibank and Standard Chartered have the support of the knowledge base and funds of their foreign principals which made them first to introduce products, services and innovative technologies to their consumer base.
Hot on the heels were the newly privatized banks, UBL, HBL and MCB which have embarked in consumer financing activities in not just big cities but smaller ones too, by virtue of their huge branch network. In doing so, they have generated huge volumes of business while at the same time driving down the prices of the products they offer. For instance, in 2002, HBL’s consumer banking portfolio was worth less than a billion rupees. By the end of 2004, it is worth Rs. 17 billion. Similarly, since 2003 when it was privatized, UBL has launched 12 to 14 new products and according to its Deputy Chief Executive M.A.Mannan, each one of them has been a market leader on month-to-month acquisition volume. And where the local banks such as Soneri, Askari and Union lack in technology, they make up by offering similar services at a much lower costs in our urban centers.
While the foreign banks have played the pipers’ role when it comes to introducing new products, they have targeted the same segment which may be one of their limitations in this area. On the other hand, industry experts predict that the real growth will come from local giants such as the UBL, HBL and MCB which have the necessary experience and knowledge of customizing products to specific local preferences.
Prodigious Advertising
One factor that has led to an incredible upsurge of consumer financing products has been the drastic reduction in the qualification benchmarks for premium products such as credit cards. For instance, back in the 1990s when consumer banking was still in its undeveloped phase, only three banks were offering credit cards and they were all multinational concerns. That was the time when the size of the total portfolio was a mere 200,000 cards. The scene all of a sudden changed when Bank Al Falah launched a no fee credit card and its consumer base ballooned to 100,000 new consumers. The success of no fee credit card was followed by low interest packages on automobile loans and home loans. Things would never be the same again.
Today, by investing prodigiously on advertising and sales promotion efforts, banks have created awareness about their product menus in a huge way. Now personal loans have longer tenures and posses easy payment options, along with many other inducements. Yet with so many banks offering the same product, how does one bank differentiate its portfolio from its competitors? The answer lies in differentiation, which in turn is created by continuous innovation and of course a deep insight of consumer needs and requirements be the advertising is BTL or ATL. Apart from that, customer relationship management is one area in which the banks need to raise their bar especially when loyalty thresholds are low. Many consumers have expressed their reservations about the low level of service and don’t think twice when it comes to switching over to other banks. The lesson: Never trust a bank on face value or simply what they boast in ads.
The Image Factor
When all is said and done, banks still have to concentrate on continuous product development to retain their customers. The logic is simple: While advertising helps to build the image, it is the product that sustains that particular image. Banks also need to remember that while advertising works big time to attract both old and new customers, word-of-mouth remains the most effective way of communication for their products and offerings. So while big names continue to spend their huge advertising budget to promote their products, they also face competition from smaller banks (with less advertising budget) whose terms and conditions may turn out to be more attractive especially for consumers with less money. At the end of the day, however, it is the quality of service and quick turnaround time that will make the consumer an ardent customer of any bank’s products and services.
It has been nearly five years since banks started emphasizing on consumer financing and although majority of our population do not have the means to cash in on this development, there are many and especially the rising middle class who have started utilizing their services for improving their lifestyle. Currently, the default rate is low. For instance, in the auto-financing sector, the recovery rate is around 97% and even if the customer is unable to pay up, with a mortgage the bank can always foreclose one’s property. Some industry experts, however, say that the real test of default will come once the products started ageing and people will start getting tired of long loan repayments.
Now what does the future hold for consumer financing? Have the banks done enough homework to create awareness about their products through right strategies? Some top notch banks continue to hire professionals who have worked laboriously on brand development and building identities for their products. And to a great extent they have succeeded, although the sky remains the limit when it comes to exploring the full potential of consumer banking because a large portion of urban Pakistan still remains untapped. Aggressive marketing along with an effective and innovative mix of ATL and BTL has to continue at an impressive enough pace. The best, however, is yet to come.