A customer may no longer need to visit a bank branch for many routine banking services. But this is not entirely new for Bangladesh. Traditional banks have already brought services such as fund transfers, bill payments, account management and other retail banking facilities to mobile apps and online platforms.
What, then, is different about a digital bank?
The difference is not simply that banking services will be available through a smartphone. Instead, digital banks are built on a branchless, technology-driven model. The entire customer journey—from opening an account and making payments to accessing services and getting support—is designed to be digital from the beginning. This also means digital banks will not compete only with one another. They will increasingly overlap with the retail banking services of traditional banks while operating in a market where mobile financial services (MFS) companies have already raised customer expectations for speed and convenience. That shift is now moving from an emerging concept to a new reality in Bangladesh.
On 24 September, Bangladesh Bank issued letters of intent (LoIs) to five proposed digital banks—DK Digital Bank, bKash Digital Bank, Nova Digital Bank, Boost Digital Bank and Kori Digital Bank. An LoI, however, is not a final banking licence. The institutions will have to fulfil regulatory and other requirements before starting full banking operations. This raises a bigger question: when many banking services are already available digitally, what will make a digital bank successful? The answer may not be technology alone. It will be quality service.
Convenience will become the new branch
For digital banks, convenience will be central to the customer experience. There will be no traditional branch where customers can walk in with a problem. The app, website and digital support channels will effectively become the new points of contact. Customers will expect to open accounts remotely, make payments, transfer funds, manage their finances and access services quickly and securely. A complicated process, a slow response or a poorly designed interface can therefore become the digital equivalent of a long queue at a branch. The winning proposition will not simply be “banking through an app”, but making banking easier.
Personalisation could become another important area of competition. Traditional banks already have valuable customer information through their relationships and transaction histories. Digital banks, however, will be designed from the ground up to use technology and data to understand customer behaviour and offer more relevant products and services. A customer who regularly receives a salary, pays utility bills, shops online or makes merchant payments may have very different financial needs from a small business owner or a freelancer. The ability to recognise such differences and provide relevant services at the right time could improve both customer experience and financial inclusion. But personalisation must be supported by responsible use of customer data, transparency and strong privacy protections. Trust will remain essential.
Digital lending is fast but responsible
Lending is likely to be one of the most important areas where digital banks can introduce new approaches. Technology can help analyse transaction patterns and other permitted data to assess customers who may have limited formal credit histories. Alternative credit scoring, including AI-based approaches where permitted, could expand access to appropriate forms of credit. However, faster lending should not mean careless lending. Digital banks will need strong credit controls, responsible lending practices and effective measures to prevent fraud and over-indebtedness.
Competition will be broader
Digital banks will enter a market where customers already have several choices. Traditional banks have established relationships and trust, while MFS providers have made digital payments and money transfers part of everyday life. The five proposed digital banks also reflect this changing landscape, with sponsors and investors coming from areas including MFS, telecommunications, technology and banking. This means future competition may extend beyond banks to fintech, MFS and technology-driven financial platforms. Digital banks may benefit from a branchless model, but technology, cybersecurity, compliance, skilled employees and operational resilience also require significant investment. Lower operating costs, therefore, should not be taken for granted.
Service will be the differentiator
Technology can make a banking service available, but service determines how customers experience it. A digital bank must respond quickly when something goes wrong, communicate clearly, protect customer funds and data and make its services easy to understand. Customer feedback should also play a continuous role in improving products and processes. Not every customer is equally comfortable with technology. A successful digital bank must therefore be not only technologically advanced but also simple and accessible to customers with different levels of digital literacy.
As Bangladesh enters a new phase of digital banking, the question should not be whether digital banks will replace traditional banks. Both are likely to coexist and compete, while customers increasingly choose services based on convenience, trust, value and experience. Technology may open the door to digital banking. But customer service will be the true test of whether customers choose to stay.
The writer is a Bangladeshi banker.
