Professional Documents
Culture Documents
Assignment 1
P140x3701
P 14x03533
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Table of Contents
Abstract...................................................................................................................................... 3
1. Introduction ......................................................................................................................... 4
7. Marketing ............................................................................................................................ 8
7.6. Process:......................................................................................................................12
8. Conclusion .........................................................................................................................12
9. Reference List13
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Abstract
Pakistani financial services and banking sector are most efficient and profitable sector
emerging economy like India and China. Pakistan is country where public sector
institutions going in loss but banking and financial sector sets bench marks for industry.
Banking sector survive during world economic crisis and shows its resilience. Despite of
the fact that, Pakistan facing number of problems, related to politics instability and
governess issues banking and financial services sector showing signs of improvement
day by day. Banks using all medium of service marketing mix to increase its customer
base. State Bank of Pakistans role as regulator and mediator positively increase banks
and financial sector performance. Now banks have diversified portfolios, effective
pricing mechanism, state of the art process, professional work force, and efficient
delivery system and communication tools to generate profits and contribute to the
economy. Still there are enormous opportunities available to grow and financial
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1. Introduction
Financial institutions include wide spectrum of financial institutions like commercial banks,
investment banks, insurance companies, national saving schemes, stock exchanges, micro
finance institutions, brokerages houses and Islamic banks. These institutions facilitate
consumers to use wide range of services to save money, invest in stocks or carryout large to
small business transactions. Similarly, these institutes provide several products and services on
In Pakistani economy, there is major contribution of commercial banks. Commercial banks are
privately own banks that provide personal loans, car leasing, letter of credit facility to
import/export goods, money saving schemes etc. Other financial institutions provide hedging
instruments for future risk. After privatization in 1990s commercial banks performance increase
dramatically and currently 80% of the assets are distributed among private banks. Before going
into detail, we have to understand Pakistani economy and their financial infrastructure.
2. Pakistani Economy
Pakistan is one of the developing countries in south Asia with population of around 20 million
people. Pakistan is 36 largest country in terms of area and 6th largest in term of population.
Pakistans economy placed 26th and 44th in term of purchasing power parity (PPP) and nominal
GDP respectively. Resources wise Pakistan has enormous potential. Pakistan having one of the
largest coal reserve in the world. Agriculture, telecom, textile and banking sector are growing
sectors of Pakistan. Pakistan banking sector has amazingly survive during 2008-2009 world
financial crisis
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3. Financial sector of Pakistan
Banking and financial service sector are always consider as backbone of any economy in the
world. Pakistan has one of the strongest banking systems in the world. It has mechanism to
absorbed shocks like 2007-08 world financial crises. Privatizations, liberalization of private
sector, deregulation and supervision of State Bank of Pakistan (SBP) are major reason for
making it one of the growing sectors in the country where other government institution are going
in loss.
Pakistan has different kinds of banks. It has central bank, commercial banks, agriculture banks,
industrial banks, exchange bank etc. Central bank responsibility includes fiscal policy and
managing financial stability of the country. State bank of Pakistan holds consolidated reserve of
the country. Pakistani banking industry have witness paradigm shift since 2000, when its
With the emergence of new communication, tools and techniques now financial institutions have
access to rural areas of the country. Pakistan is an agriculture country and its GDPs growth
banking support agriculture sector as well. Pakistani economy still has tremendous potential to
grow. Recently 3G and 4G network lunched by telecom sector and mobile communicating is
growing rapidly in Pakistan. Large commercial banks are now focusing on new ways of
branchless banking. Almost all GSM mobile companies have launched fund transfer facility with
the help of commercial banks. ATM one link network and internet banking are facilities
Pakistani banks adopting electronics modes of payment and settlement procedures. Smooth
save and reliable payment system are keys to boost confidence level of consumers. In Pakistan,
system transforming from conventional paper based manual transections to electronics based
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system like ATM, mobile banking, internet banking, real time online banking(RTOB). Currently
ATM transactions are account for 64 % of overall payment transactions. Mobile and internet
banking are accounts for 2% and 4% respectively. Still there is huge potential for mobile and
internet banking.
Pakistan created in 1947 after Long British rule. Initially the banking sector was very poor. State
bank of Pakistan created in July 1948 as central bank and in first two decades Pakistani
banking systems improves drastically. 1970 era was very bad for Pakistani banking and
financial institutions because in 1974 government nationalize all banks and because of
nationalization banks performance decline. Major reason for this Inefficiency of banking sector
was Pakistani bureaucratic culture and political interference. During that crises pressure on
currency was increased and it badly hurt balance of payment. After 1990 privatization of large
public sector banks set basis for todays growth figure. Privatizations liberate banks to take
maximum output from their resources. State bank of Pakistan regulate all foreign and local
1) Scheduled banks
2) Microfinance institutions(MFIs)
5) Insurance companies
In above mention institutions State bank of Pakistan regulate Scheduled banks, Micro finance
institutions (MFIs) and Development finance institutions (DFIs) while other institutions are
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regulate by Securities and Exchange Commission of Pakistan (SECP). Security and exchange
commission of Pakistan regulate stock market and dealing in trading of securities. Banking
sector contribute 70% in contrast from non-banking sector in economy. Pakistan has following
types of banks.
Commercial banks
Specialized bank
Micro finance
Islamic banks
The banking sector embraced 36 commercial banks (25 local private bank, 4 public sector &
7 foreign banks) with four specialized banks with more than 9000 branches throughout
country similarly there are six fully Islamic banks. Two industrial and commercial banks also,
operating in Pakistan. Industrial and commercial bank of China ICBC and Sindh Bank are
Privatization of commercial banks was one of the main reasons for growth. 12 Foreign and
20 commercial banks currently hold 80 percent of the assets among commercial banks.
Private Banks promotes professional services and innovative modes of entry into new
markets make it possible for the country where most of the sectors facing management
State bank (SBP) initiatives during last decade provide solid ground for commercial banks to
increase their consumer base. Introduction of Basic business Account (BBA) for low-income
peoples and strict rule of annual branch policy for commercial banks to open 100 branches
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including 20% out of major cities make it one of the dynamic sectors of economy. State
banks initiates include, setting future vision for the industry, creating more diversified
interest rates and regulations for achieving financial objectives, strengthening accountability
measures
index during world economic report in 2008. Pakistan was ahead of Russian Federation,
6. Islamic banking
Islamic banking in Pakistan is flourishing rapidly. Pakistan is Muslim majority country and
people trust an Islamic bank. Modaraba and Musharakah financing provide consumers
facility to use funds in Islamic way of banking. Modaraba is contract between investor and
manager where both parties mutually agreed to distribute share of the profit earned from
among subscribers and bank on profit and loss basis, bank invest in Islamic securities and
7. Marketing
Marketing plays a very important role in success of banks and financial institutions.
Traditional Marketing mix consist of 4 pillars i.e. product (all services that bank offers to
consumers), price (bank charges and commission receives), placement (branch network,
ATM locations) and promotion (promotional mix, media used). However, services require 3
additional ps called people, physical evidence and processes. Banking provides financial
services according to service marketing services are intangible, inseparable, variable and
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perishable. Now banks are using ATL (above the line) and BTL (blow the line marketing)
Different marketing strategies are applicable to government and private sector. This is
because government backed financial institutions are financial secure as compared to private
sector. However, this does not mean government sector financial institutions do not need to
worry about marketing. The fear of privatization has forced government institutions to
improve their performance. So financial institutions are using marketing as a tool to improve
their performance.
Services require concrete approach to market them because of its intangible nature.
Marketing tools provide it chance to create awareness about product and services offered by
processes but banking industry in Pakistan shows sign of professionalism by provide serves
in standardize manner.
7.1 Products:
Banks are financial intermediaries that buy and sell financial obligations. Bank offer to
consumers debt financing, car leasing, Lockers, Saving schemes and provide LC for
heterogeneous (mean different experience every time), perishable and inseparable. (Means
consumption and production are inseparable). Pakistani bank are providing state of the art
services to consumers facilities like one link ATM facility, Branch network, Internet banking,
mobile banking facilitating consumers in very professional and timely manner. Similarly,
consumer can benefit from financial services like insurance and mortgage to secure their
future.
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Cellular network revolution led Pakistan on the way where banks have opportunity of large
base of consumer using mobile phones. Simple message alert and utility bills and fund
transfer facility are now available with mobile top up centers mean consumer have access to
basic banking facilities close to their home and office reducing barriers. Another profitable
product for banks is car leasing, Car leasing services are encourage by SBP during last
decade that helps banks to make profit. UBL Omni and Easypaisa by Telenor are two very
Although use of credit card reduced over the years but debit card use increased. Banks are
discouraging credit card facility due to low per capita income but debit card facility utilized by
7.2 Price
Pricing in banking and financial sector refer to cost of doing transaction like bank charges,
annual fees and interest charged by bank on loans, fees charged by financial institution from
clients. To attract potential clients bank offering number of facilities freely on current account.
State bank of Pakistan regulate interest rate offered by banks. Depending on circumstances
SBP develop economic and monetary policy to promote business by reducing interest rates
7.3 Placement
Placement refers to number of branches and point of sale facility available in different
locations. SBP set a criteria for larger banks to open 20% branches out of urban cities
promote banking in rural areas as well. Expanding boundaries due to high mobile usage
provides opportunities to major and microfinance banks to operate in mobile locations in the
country. Agriculture banks provide easy loan to formers so that they can cultivate crops. Still
due to low literacy, rate rural public is unaware of the banking services
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Mobile transfer facility enables poor people to send money to without establishing accounts
in bank. These branchless banking concepts are getting popular among low income and rural
public. Major banks providing internet banking but due to low density of internet still there is
long way to go. CRM and telebanking provide boost to banking services now 24/7 telephones
7.4 Promotion
Advertising and promotion are necessary medium to create awareness and increase
visibility. Promotional mix offer chances to persuade and attract consumer. Last Decade
witness a revolution in Pakistani media and number of channels lunched during Musharrafs
Regime open new doors for advertiser to effectively advertise. Different banks adopting
Cricket is popular sports and major banks are associated with cricket. There are teams
managed by banks to compete on national level. Additionally super star players employed as
celebrity endorsement in ads. In 21st century in Pakistan banks are actively participating in
7.5 People:
People are one of the important resources in the context of services. Initially with the creation
of Pakistan there was no skilled human resource available but now professional people are
available to banks. Especially privatization of banks in 1990 effect banks performance and
over the year established skill resource for the industry. Customer care requires trained
people to handle situations. Developed countries even bound to establish call center in
everywhere to reduce their cost. Developing countries like Pakistan have opportunity to use
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7.6 Process:
One of the major issue Service provider face is standardization of processes. It is necessary
to maintain standardize processes so that customer can benefit from efficient delivery of
service. Despite of their innovation major banks like MCB and HBL still have manual systems
to improve. In urban centers, mostly banks have online branches but rural areas are still
suffering from manual system of service delivery. As compared to 1990 era situation of 2000
drastically changed now banks have more branches and more improved system due to
The environment and ambiance played a vital role to satisfy customer. Service marketing
guru In her famous article services capes Bitner, 1992 describe, environment is necessary
ingredient for service success. Banks and financial institution developed state of the art
branches and neat and clean system improved their efficiencies. With compares to other
institutions, commercial banks have developed culture and norm of much improve systems.
Public sector banks still need to improve their services but private banks performing
8 Conclusion
Over the last 20 year Pakistani banking and financial market develop itself for other to bench
mark. After privatization, commercial banks are earning profit and offering innovative
services. Due to SBP initiatives banking sector show resilience. Still there are enormous
opportunities available for domestic and foreign banks to increase their market base by using
new ways of marketing. Social networking sites and mobile devices provide rewarding
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9. References List
'BANKING AND FINANCE SECTOR AT A GLANCE' 2011, Economic Review (05318955), 42,
2, pp. 44-46, Business Source Elite, EBSCOhost, viewed 15 November 2014.
http://www.kpmg.com/PK/en/IssuesAndInsights/ArticlesPublications/Documents/BankingSurvey
http://forum.secp.gov.pk/showthread.php?183-Introduction-1-Pakistan%92s-financial-sector
Rashid Rehman, R, & Waheed, A 2012, 'Individual's Leadership and Decision Making Styles: A
Study of Banking Sector of Pakistan', Journal Of Behavioural Sciences, 22, 3, pp. 70-89,
Academic Search Elite, EBSCOhost, viewed 16 November 2014.
http://www.sbp.org.pk/about/speech/governors/dr.shamshad/2006/Pak-Dinner-25-Jul-06.pdf
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