Telecom microfinance banking versus commercial banking: a battle in the financial services sector

Abstract

The purpose of the study is to compare the growth rate of commercial banks with microfinance banks, under the shadow of financial exclusion, and to provide a way forward for commercial banks. As we are living in the age of transformation, businesses cannot survive without evolution and necessary transformation. The Telecom sector of Pakistan suffered at the hands of Over-The-Top services, so is happening with the commercial banking. Telecom companies have chosen microfinance banking as their alternative revenue stream which is affecting commercial banks. Microfinance banks, typically mobile phone banking, are showing more growth in deposits and loans than commercial banks. Along with the analysis of industry reports, commercial banks’ managers are also interviewed to perform an accurate analysis of the situation. It has been concluded that commercial banks are suffering due to financial exclusion and their deposits and lending rates are also decreasing due to microfinance banks. It is important for commercial banks to formulate their strategies and introduce new services according to the needs and preferences of their customers and they also need to increase banking awareness of their potential customers.