CONSUMER BANKING

Presented By:

Mubeen Asghar

Roll No: 156

B.B.A (Hons.) 7th Evening

Presented To:

Department of Management sciences

University of Education

Okara Campus

SERVICE PROBLEMS OF

CONSUMER BANKING IN

PAKISTAN

Outline

Purpose of Research

Objectives of Research

Consumer Banking in Pakistan

Products of Consumer Banks

Consumer Financing and economic growth

Research Methodology

Analysis And Findings

Conclusion & Recommendations

CONSUMER BANKING

Purpose

Purpose of this research is to find out the service

problems faced by both borrowers and lenders

way to solve these problems, to improve this

sector of business.

CONSUMER BANKING

Objectives of Research

Problems in current system of consumer banking

Solution of problems faced by borrowers and lenders

Exploration of opportunities in future

Role of consumer banking in economic development

CONSUMER BANKING

What is “Consumer Financing”?

“Any financing allowed to individuals for

meeting their personal, family or household

needs.”

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Consumer Banking in Pakistan

Consumer banking which is one of the fastest

growing sectors of Pakistan Banking Industry is

also now major interest point for the banks.

Initially the consumer banking sector was only

focused by the foreign banks but its efficiency &

profitability attracted others to come towards this

business but still the major share of consumer

banking in Pakistan is in the hands of foreign

banks.

CONSUMER BANKING

Continued...

Category wise consumer finance

CONSUMER BANKING

40.40%

30.36%

16.40%

12.55%

Personal loans Auto loans Mortgage loans Credit cards

Products of Consumer Banks

Home Loan

Auto Loan

Personal Loan

Debit-Credits cards

Deposit Accounts

Wealth Management

E-Banking

CONSUMER BANKING

Consumer Financing & Economic Growth

Increased consumption > increased output / Inflationary Pressure (Demand-Pull Inflation)

Increased dependence on foreign loans

Lack of infrastructure to absorb and manage the increased number of cars on the road due to easy auto financing

Increasing Inflationary impact

Negative Saving-Investment gap as a result of spend now, save later behavior in developing nations

It’s beneficial for those who have the prerequisite responsibility, maturity and financial literacy to manage their finances.

CONSUMER BANKING

Research Methodology

Secondary Data

Primary Data

Survey

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Analysis And Findings

Opportunities: 1. Which category of individuals do you prefer most for

consumer financing?

CONSUMER BANKING

0%

20%

40%

60%

80%Self

Employed

Businessma

n

Slaraied

person

Continued...

2. Is your bank providing any wealth management

services?

0%

10%

20%

30%

40%

50%

No Response

No Idea

No

Yes

CONSUMER BANKING

Continued...

3. Which of the following new service would you want to be

introduced by your bank?

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

No respnose

Other

Online Inter

bank transfer

Money at door

step

Internat

Banking

CONSUMER BANKING

Continued...

Challenges: 1. Which type of customer do you prefer most for

consumer financing?

CONSUMER BANKING

0%

20%

40%

60%

Previous

New

Existing

Continued...

2. Are you satisfied by the tenure for consumer loans?

0%

10%

20%

30%

40%

50% No Response

No Idea

Up to some

extent

Yes

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Continued...

3. Do you frequently update your customer records?

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0%

20%

40%

60%

80%

100%

No

Yes

Continued...

Problems faced By the borrowers: 1.Are you facing any difficulty in getting consumer loans?

0%

5%

10%

15%

20%

25%

30%

35%

Others

Bank statement

Slow processing

Improper

guidance

Irrlevant

information

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Continued...

2. What is the major problem in Credit Cards?

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0%

10%

20%

30%

40%

50%

60%Low limit

Repayment

schedule

High Interst

Other

No response

Continued...

3. Are you facing any hidden charges problem?

CONSUMER BANKING

0%

10%

20%

30%

40%

50%

60%Yes

No

No

response

Continued...

Problems faced by the lenders:

1. Which category of individuals do you prefer most for

consumer financing?

0%

20%

40%

60%

80%

Personal Loans

Credit Cards

Auto Loans

Home Loans

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Continued...

2.How do you measure customer profile?

0%

10%

20%

30%

40%

50%

60%No response

Willingness to

pay

Solvency

Liquidity

Repayment

ability

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Continued...

3. What are the major reasons for defaults on consumer

loans?

0

5

10

15

20

25

30

35Improper

statement

Consumer

willingness

Market scenario

Internal Policies

SBP regulation

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Continued...

Customer’s preference for Consumer Banking:

1. Which type of bank do you prefer for consumer banking?

0%

10%

20%

30%

40%

50%

No response

Any

Local banks

Foreign banks

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Continued...

2.How will you rate your bank schedule of charges?

CONSUMER BANKING

0%

10%

20%

30%

40%

50%

Local bank

Foreign bank

Any

No respnose

Conclusion

Improper guidance, slow processing and bank statement

are the major problems faced by bank’s customers in

getting consumer loans.

Improper assessment and consumer willingness to pay

the loan

hidden charges

Customer satisfaction is not preferred

Narrow range of services by local banks

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Recommendations

PIN-based credit cards should be issued that would

provided additional security.

Markup charged on consumer financing should be

reduced to a substantial level so the spread between

bank loans and deposit could be reduced and customer

could easily pay off the loans

Better returns should be provided on deposit accounts

To facilitate the customer’s new products and services

should be introduced continuously

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Continued...

SBP should continuously update its regulations according to need of people and economic situations of the country

Increase consumer awareness, give clear instructions and guidance

Make customer friendly policies but it should also cover the risk factor

Markup charge on loans & interest given on deposits should be regularly monitored and guided by SBP

CONSUMER BANKING