Banks to Intensify Competition for Retail Deposits

Competition for retail deposits is expected to be intensified across the banking industry this year as competitive frontier shifts to efficiency and margin, a report has shown.

In addition, the report titled: "The Year Ahead-2016," by Diamond Bank Plc, pointed out that banks that create quality risk assets would be most competitive. Furthermore, it forecasted another stress test for the banking industry in the first half of 2016, should oil price and economic/business outlook remain depressed.
Also, the 10-page report predicted that interest income from investment securities would be muted year-on-year, stating that emerging markets’ capital markets would remain bearish in 2016.
"Banks will compete aggressively in the retail front in 2016 in a bid to optimise net interest margin with cheaper retail deposits. Product development and marketing campaigns strategies will be more of “customer orientation”, rather than “product orientation”. Emphasis will be placed largely on value-chain marketing and customer experience, particularly for the middle class market segment.
"The integration of Bank Verification Number with other databases, coupled with the expected asset registry infrastructure should stimulate appetite for retail lending across the banking industry," it added.
Continuing, it stated that the operating environment in 2016 would be defined by weak global growth, which it estimated to be at about 3.6 per cent; depressed crude oil price outlook, predicted to remain around $30pb); flat economic growth outlook (estimated at 4%), further naira depreciation ( predicted to be around 15%), improved systemic liquidity, expansionary fiscal policy and a more stable monetary policy.



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