SERVICE PROBLEMS OF

CONSUMER BANKING IN
PAKISTAN
Presented By:
Mubeen Asghar
Roll No: 156
B.B.A (Hons.) 7th Evening
Presented To:
Department of Management sciences
University of Education
Okara Campus

CONSUMER BANKING
 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.”

CONSUMER BANKING
 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

12.55%

16.40% 40.40%

30.36%

Personal loans Auto loans Mortgage loans Credit cards

CONSUMER BANKING
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

CONSUMER BANKING
 Analysis And Findings

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

80%
Self
60% Em ployed
Businessm a
40%
n
20% Slaraied
person
0%

CONSUMER BANKING
 Continued...

2. Is your bank providing any wealth management

services?

50%
40% No Response
30% No Idea
20% No

10% Yes

0%

CONSUMER BANKING
 Continued...

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

introduced by your bank?

No respnose
60.00%
Other
50.00%
40.00%
Online Inter
30.00% bank transfer
20.00%
Money at door
10.00% step
0.00% Internat
Banking

CONSUMER BANKING
 Continued...

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

60%
Previous
40%
New
20%
Existing
0%

CONSUMER BANKING
 Continued...

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

50% No Response
40%
No Idea
30%

20% Up to some
extent
10%
Yes
0%

CONSUMER BANKING
 Continued...

3. Do you frequently update your customer records?

100%

80%

60% No

40% Yes

20%

0%

CONSUMER BANKING
 Continued...

Problems faced By the borrowers:

1.Are you facing any difficulty in getting consumer loans?

Others
35%
30% Bank statem ent
25%
20% Slow processing
15%
10% Im proper
guidance
5%
0% Irrlevant
inform ation

CONSUMER BANKING
 Continued...

2. What is the major problem in Credit Cards?

Low lim it
60%
50% Repaym ent
40% schedule
High Interst
30%
20%
Other
10%
0% No response

CONSUMER BANKING
 Continued...

3. Are you facing any hidden charges problem?

60%
50% Yes

40%
No
30%
20%
No
10% response
0%

CONSUMER BANKING
 Continued...

Problems faced by the lenders:

1. Which category of individuals do you prefer most for
consumer financing?

80%

60% Personal Loans

Credit Cards
40%
Auto Loans

20% Hom e Loans

0%

CONSUMER BANKING
 Continued...

2.How do you measure customer profile?

No response
60%
50% Willingness to
pay
40%
Solvency
30%
20% Liquidity
10%
Repaym ent
0%
ability

CONSUMER BANKING
 Continued...

3. What are the major reasons for defaults on consumer

loans?

Im proper
35
statem ent
30
Consum er
25 w illingness
20 Market scenario
15
10 Internal Policies

5
SBP regulation
0

CONSUMER BANKING
 Continued...

Customer’s preference for Consumer Banking:

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

50%

40%
No response
30% Any

20% Local banks

Foreign banks
10%

0%

CONSUMER BANKING
 Continued...

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

50%

40%
Local bank
30% Foreign bank
20% Any
No respnose
10%

0%

CONSUMER BANKING
 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

CONSUMER BANKING
 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

CONSUMER BANKING
 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