Retail banking in Bangladesh stands at a critical juncture. With the Bangladesh Bank (BB) set to issue digital banking licences, the rise of mobile financial services, and the growing adoption of AI and platform technologies, traditional banking models are being called into question. What was once a system built around physical branches, account openings, and loans, now finds itself in an era where customer expectations evolve faster than infrastructure can keep up. The challenge for banks is not whether digital banks will replace traditional ones, but whether legacy banks can adapt and evolve to meet the demands of today’s tech-savvy consumers.
Digital Banks to Appeal to Younger Populations
Digital banks are expected to attract the younger, mobile-first demographic, but their rise will serve more as a catalyst for change than a complete takeover of the banking sector. The real pressure will fall on legacy retail banks that still rely on extensive brick-and-mortar networks, which come with high operational costs and narrow profit margins. Maintaining large branch networks, particularly for routine transactions, is becoming harder to justify. Rather than operating hundreds of transactional counters, banks could repurpose branches into advisory hubs, experience zones, or acquisition centres for higher-value products, such as wealth management, SME services, housing finance, and cross-border solutions. The physical branch, instead of being a hub for routine transactions, could become a space where trust is built, and complex services are explained, while everyday banking is conducted through apps and ATMs.
From Transactional to Transformational
Globally, banks that are seeing growth in retail income are no longer relying solely on traditional interest-based revenue. They are expanding their offerings by introducing fee-based and lifestyle-linked services within a single ecosystem. Bangladesh’s banks have the opportunity to do the same. A mobile banking app should not be limited to basic balance inquiries; it should allow customers to purchase insurance, manage small investments, track tax obligations, make travel payments, or even access curated property listings. This is how a bank can move from a transactional business to a transformational one, ensuring that its growing middle-class and affluent customers remain within its ecosystem, rather than losing them to foreign platforms or informal financial agents.
Technology Modernisation is Key
To achieve this transformation, technology modernisation must be at the core of a bank’s strategy, not treated as a secondary project. Cloud-ready systems, open APIs, and AI-powered analytics will provide banks with the ability to personalise offers, assess risks more efficiently, integrate fintech partners, and reduce the cost of serving customers. Without these technological advancements, retail banking transformation will remain an abstract idea. With them, banks can serve the mass market digitally while reserving physical spaces for higher-value interactions.
Regulatory Framework Must Evolve
For this transformation to succeed, regulation must evolve alongside technological advancements. Certain asset and investment products are underused due to regulatory ambiguity. A regulatory sandbox and clearer guidelines could unlock new services while ensuring consumer protection. The greatest risk to traditional banks is not digital competition, but inertia. The winners will be those who maintain the trust and financial strength associated with a bank but redesign the retail experience for a customer who now lives on a screen, not in a queue.
A Shift in Perspective
This shift is not a new one. Nearly a decade ago, JPMorgan’s leadership declared that they were a technology company that happened to provide banking services. This was not simply a marketing message; it was a statement about the future direction of banking, where the infrastructure, data, and software layers would create value, and financial products would sit on top of that foundation. Banks such as Capital One and DBS Bank in Singapore have already followed this path.
Bangladeshi Banks at a Crossroads
Bangladeshi banks now find themselves at a similar crossroads. If they continue to focus on maintaining branch networks, they risk losing customer relationships to digital banks and mobile financial service providers. However, if they start thinking like technology companies that deliver regulated financial services, they can transform their branches into high-value experience hubs, positioning themselves at the centre of their customers’ financial lives. Additionally, banks can optimise costs by relocating branches from expensive avenues to more customer-friendly locations. They can also diversify their offerings, addressing gaps in clients’ lives, from healthcare financing to capital gains management.
The future of retail banking in Bangladesh will depend on whether banks are willing to embrace technology, adapt to the changing demands of consumers, and redefine their roles in the financial ecosystem. The shift from traditional to digital-first banking is inevitable—those that evolve will thrive, while those that don’t may fade into irrelevance.