Consumer Finance.pdf 6t392g

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

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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.

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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

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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.

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Continued... Category wise consumer finance

12.55%

40.40%

16.40%

30.36% Personal loans

Auto loans

Mortgage loans

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Credit cards

Products of Consumer Banks Home Loan Auto Loan Personal Loan Debit-Credits cards Deposit s Wealth Management E-Banking

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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.

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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? 80% Self Em ployed

60%

Businessm a n

40% 20%

Slaraied person

0%

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Continued... 2. Is your bank providing any wealth management services?

50% 40%

No Response

30%

No Idea

20%

No

10%

Yes

0%

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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 bank transfer

30.00% 20.00%

Money at door step

10.00% 0.00%

Internat Banking

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Continued... Challenges: 1.

Which type of customer do you prefer most for consumer financing?

60% 40%

Previous New

20%

Existing

0%

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

50%

No Response

40% No Idea 30% Up to some extent

20% 10%

Yes

0%

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Continued... 3. Do you frequently update your customer records?

100% 80% 60%

No

40%

Yes

20% 0%

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Continued... Problems faced By the borrowers: 1.Are you facing any difficulty in getting consumer loans? Others 35% 30%

Bank statem ent

25% Slow processing

20% 15%

Im proper guidance

10% 5%

Irrlevant inform ation

0%

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Continued... 2. What is the major problem in Credit Cards? Low lim it 60% 50% 40% 30% 20%

Repaym ent schedule High Interst Other

10% 0%

No response

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Continued... 3. Are you facing any hidden charges problem?

60% 50% 40% 30% 20% 10%

Yes No No response

0%

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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 Hom e Loans

20% 0%

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Continued... 2.How do you measure customer profile?

60% 50% 40% 30% 20%

No response Willingness to pay Solvency Liquidity

10% 0%

Repaym ent ability

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Continued... 3. What are the major reasons for defaults on consumer loans? Im proper statem ent

35 30 25

Consum er w illingness

20

Market scenario

15 Internal Policies

10 5

SBP regulation

0

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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%

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

50% 40%

Local bank

30%

Foreign bank

20%

Any No respnose

10% 0%

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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 s  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

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