৪৯তম বিসিএস ⎯ ফিন্যান্স ও ব্যাংকিং [৭১১]

Market research for financial products involves understanding customer behavior, market trends, and competitors.

It ensures that the new product meets customer expectations and complies with regulatory standards. 

Office interior design is part of branding and aesthetics but not a direct element of market research.

Customer Needs: For example, in digital banking, customers may seek mobile-friendly and 24/7 accessible services.

Competitor Analysis: Banks study rivals to identify gaps like low retirement plan offerings or high fees.

Regulatory Compliance: Necessary to avoid legal issues and penalties.

Source:
Kotler, P., Keller, K. L. (2016). Marketing Management, 15th Edition, Pearson.
Bangladesh Bank Guidelines on Product Development (2024).

Identifying unmet needs is a critical step in idea generation. In this case, the bank observed a demand for Islamic finance products, which are not widely available in rural areas.

By developing such products, the bank can attract new customers, gain a competitive advantage, and promote financial inclusion.

Example: Introducing Murabaha-based savings plans or Shariah-compliant microloans.

Idea generation sources include customer surveys, feedback analysis, and competitor reviews.

Source:
Omar, M., Abduh, M., Sukmana, R. (2013). Fundamentals of Islamic Banking.
Bangladesh Bank Islamic Banking Guidelines (2023).

The product design stage defines the features, benefits, and pricing of the new financial service.

For insurance products, risk coverage and clear terms & conditions are crucial to build trust and regulatory compliance.

Without a solid product design, marketing and launch efforts will fail because the product will not meet customer needs or legal standards.

Example: A life insurance plan may include death benefit clauses, premium amounts, and maturity terms.

Risk Analysis: Helps identify possible liabilities and financial exposure for the institution.

Source:
Rejda, G. E., McNamara, M. J. (2021). Principles of Risk Management and Insurance, Pearson.
Insurance Development & Regulatory Authority (IDRA), Bangladesh – Circular 2024.

Before introducing a financial product, institutions must assess:

Profitability – Can it generate sustainable returns?

Risk Factors – Cybersecurity threats, market volatility, regulatory risks.

Compliance – Adherence to data privacy and banking laws.

For a digital banking app, cybersecurity compliance (like PCI DSS or local data protection laws) is crucial.
Failure to conduct this analysis may lead to data breaches, financial loss, and reputational damage.

Source:
Bangladesh Bank Cybersecurity Guidelines (2024).
Kapoor, J., Dlabay, L., Hughes, R. (2021). Personal Finance, McGraw-Hill Education.

A pilot launch introduces a product on a limited scale to test:

Customer reactions and feedback

Operational challenges

Technical performance

For instance, a bank may launch a mobile wallet only in Dhaka city before expanding nationwide.
This step reduces the risk of large-scale failure and allows the company to refine features before full deployment.

Source:
Kotler, P., Keller, K. L. (2016). Marketing Management, Pearson.
McKinsey & Company, "Best Practices in Financial Product Launch" (2023).

During the full launch, a company must:

Promote through various channels such as TV ads, social media, email campaigns, and branch networks.

Educate customers about product benefits and usage guidelines.

Continuously monitor performance metrics like sales growth and customer retention.

Example: A new retirement plan can be promoted through bank branches, insurance agents, and online platforms to target different customer segments.

Source:
Bangladesh Bank – Financial Inclusion Strategy Report (2024).
American Marketing Association (AMA), "Product Lifecycle Strategies".

The logical flow for financial product development is:

Market Research – Identify customer needs and competitor strategies.

Idea Generation – Brainstorm solutions for unmet needs.

Product Design – Develop structure, benefits, and pricing.

Feasibility & Risk Analysis – Assess profitability and compliance.

Pilot Launch – Test on a small scale to gather feedback.

Full Launch – Nationwide rollout with marketing support.

Source:
Kotler, P., Keller, K. L. (2016). Marketing Management, Pearson.
Bangladesh Bank Financial Product Guidelines (2024).

The Financial Product Life Cycle (FPLC) describes the four sequential stages a financial product experiences:

Introduction – product launch with low sales.

Growth – rapid increase in demand and popularity.

Maturity – sales peak and market saturation occurs.

Decline – sales and profitability decrease as newer alternatives replace the product.

Understanding this cycle allows financial institutions to strategically plan marketing, product innovation, and withdrawal decisions.

Source: 
Kotler, P. & Keller, K. L. (2016). Marketing Management, Pearson. 
McKinsey & Company, "Financial Services Product Lifecycle" (2024).

During the Introduction Stage, a financial product is newly launched. Customers are not fully aware of its benefits, leading to low sales.
The institution must invest heavily in advertising, promotions, and customer education. Profits are often negative or minimal due to high initial costs.

Example:
When a bank launches a new digital wallet, it offers free sign-ups, cashback, and advertising to gain initial traction.

Source: 
Armstrong, G. & Kotler, P. (2022). Principles of Marketing, Pearson. 
Bangladesh Bank, "Digital Banking Product Guidelines" (2024).

The Growth Stage marks the period where the product gains market acceptance, leading to rapidly increasing sales and profits.
This growth attracts competitors who launch similar products, increasing market rivalry.
The financial institution focuses on market expansion, feature improvements, and brand building to maintain leadership.

Example:
Mobile banking apps gained huge popularity after initial launch, encouraging multiple banks to introduce similar services.

Source: 
McKinsey Global Banking Report (2024). 
Harvard Business Review, "Growth Strategies for Financial Products".

The Maturity Stage is characterized by:

Sales and profits at their peak, but growth slows.

Market saturation, as most target customers already use the product.

Intense competition, leading to price reductions and feature differentiation.

Companies focus on retaining customers and finding new segments.

Example:
Credit card issuers now add cashback, air miles, and zero-fee offers to stand out in a crowded market.

Source:

Kotler, P. (2016). Marketing Management, Pearson.

American Marketing Association (AMA), "Product Lifecycle Theory".

During the Decline Stage, sales and profits decrease sharply due to:

Technological advancements that replace old services.

Newer, more efficient products introduced by competitors.

Shifts in consumer behavior and preferences.

Example:
Traditional passbook savings accounts declined in popularity as digital banking and mobile apps became dominant.
Companies may choose to discontinue, discount, or reposition the product.

Source:

McKinsey & Company, "Financial Product Lifecycle Management Report" (2023).

Bangladesh Bank Annual Report (2024).

The correct order is:

Introduction – Product launch with high promotion and low sales.

Growth – Sales and profits rise as acceptance increases.

Maturity – Sales peak and market saturation occurs.

Decline – Sales and profits fall due to competition or market changes.

Example:
A new mobile payment app may move from introduction to growth, mature with wide adoption, and eventually decline as newer technologies emerge.

Source:

Philip Kotler’s Product Lifecycle Model, Marketing Management, Pearson.

Journal of Financial Services Marketing (2024).

In the Introduction Stage, financial institutions invest heavily in:

Advertising

Promotional offers

Infrastructure and technology setup
Since sales are still low, profits are often negative or near zero.
This phase focuses on building awareness and customer trust, not immediate profitability.

Example:
Launching a new retirement plan may require high upfront marketing and training costs before attracting significant deposits.

Source:

McKinsey Quarterly, "Early-Stage Financial Product Strategies" (2023).

Bangladesh Bank Guidelines for Financial Product Launch (2024).

At the Maturity Stage, competition is very high, and the market is nearly saturated.
The best strategy is to stand out by:

Improving features (e.g., loyalty programs, cashback).

Entering new customer segments or geographical markets.

Enhancing customer experience through service quality.

This approach maintains profitability and extends the product's lifecycle.

Source:

Harvard Business Review, "Competitive Strategies in Mature Markets" (2024).

Armstrong & Kotler, Principles of Marketing.

This scenario fits the Maturity Stage because:

The market is saturated, with most potential users already onboarded.

Competition is intense, with rivals offering cashback and bonuses.

Companies focus on retention strategies instead of just new customer acquisition.

Source:

Bangladesh Bank, "Mobile Financial Services Report" (2024).

GSMA Mobile Money Annual Report (2024).

At the Decline Stage, sales and profits are falling due to newer products, changing preferences, or technology shifts.
The company must evaluate its options:

Discontinue the product entirely.

Discount to clear remaining demand.

Reposition for a niche market segment.

Example:
Some traditional fixed-deposit schemes are repositioned for senior citizens with special interest rates rather than being completely discontinued.

Source:

McKinsey & Company, "Lifecycle Management in Financial Services" (2023).

Journal of Banking & Finance, "Declining Product Strategies" (2024).

Predictive analytics uses big data and algorithms to analyze customer activity and forecast future needs.
It helps banks to:

Offer personalized products at the right time.

Predict credit risk and default probabilities.

Improve cross-selling efficiency.

Example:
A bank uses predictive analytics to offer a car loan pre-approval when a customer begins researching vehicle purchases online.

Source:

McKinsey Global Banking Report (2024).

Uploaded file, Slide: Identifying and Targeting Financial Prospects

Consumer protection is most effective when there is a dual approach:

Disclosure requirements ensure clear and transparent communication about fees, risks, and terms.

Financial literacy programs empower consumers to make informed decisions, reducing fraud and mis-selling.

Heavy penalties alone do not work without education and transparency.

Source:

OECD, Principles on Financial Consumer Protection (2023).

World Bank, Financial Literacy Global Report (2024).

Sukuk is an Islamic financial instrument that complies with Shariah law:

Instead of paying interest, Sukuk holders earn a share of profit from underlying assets.

Investors have partial ownership of the project funded by Sukuk.

This makes Sukuk asset-backed and ethically compliant.

Example: A government issues Sukuk to fund a solar power project, and profits from electricity sales are distributed to Sukuk holders.

Source: Bangladesh Bank, Sukuk Guidelines (2024).

Murabaha is a Shariah-compliant financing method where:

The bank purchases an asset and sells it to the client at a pre-agreed profit margin.

Both the cost price and profit are disclosed transparently.

It avoids interest (riba) and is commonly used for asset purchases like cars or machinery.

Example:
A bank buys machinery for BDT 10,00,000 and sells it to a client for BDT 11,00,000, payable in installments.

Source: Investopedia (2025), Islamic Banking Principles.

Value-based pricing sets prices according to how much customers perceive a product is worth, not just its production cost.
This approach is common in wealth management, insurance, and premium digital services.

If a financial service offers unique benefits (e.g., priority banking or advanced digital security), customers are willing to pay a higher price.

It helps capture maximum customer willingness to pay, but incorrect valuation may lead to overpricing or customer churn.

Source:

Armstrong & Kotler (2022), Principles of Marketing.

Bangladesh Bank Circular on Service Pricing, 2024.

Islamic banking is based on Shariah (Islamic law), which emphasizes justice, fairness, and social welfare.
Key features include:

No interest (Riba) – Lending or borrowing with interest is prohibited.

Profit and loss sharing – Both bank and customer share risks and rewards.

Ethical practices – Prohibits investments in harmful industries like gambling or alcohol.

Transparency – Clear, honest communication in all transactions.

This ensures that financial activities are socially responsible and sustainable for all parties, including Muslims and non-Muslims.

Source:

Investopedia (2025). Islamic Banking Explained.

Bangladesh Bank, Islamic Banking Guidelines (2024)

Riba (interest) is strictly prohibited because it is considered exploitative and creates inequality between rich and poor.

Instead of charging fixed interest, Islamic banks use profit-sharing contracts like Mudarabah and Musharakah, where both parties share risks and rewards.

Allowed:

Profit-sharing investments (Mudarabah).

Asset-backed financing like Murabaha or Ijara.

Prohibited:

Lending money purely for interest without engaging in productive activities.

Source: Khan, F. (2019). Islamic Banking and Finance, Routledge.

The main goal of Islamic banking is to create a just and ethical financial system that benefits society.

It prevents harm by avoiding exploitative practices like interest and excessive risk-taking.

Promotes fair distribution of wealth through risk-sharing and transparent agreements.

Encourages productive investments in industries that support societal well-being.

Example:
Financing low-income housing projects or renewable energy through Islamic contracts like Mudarabah.

Source: OECD, Principles of Ethical Finance (2023).

Islamic banking is not limited to Muslims.

It provides ethical, transparent, and interest-free financial services that appeal to all individuals and organizations, regardless of religion.

Non-Muslims can benefit from profit-sharing models, low-risk asset financing, and ethical investment opportunities.

Example: Non-Muslim companies may use Islamic banks for project financing or sukuk (Islamic bonds).

Source:

Islamic Development Bank (2024), Global Outreach Report.

Investopedia, Who Can Use Islamic Banking (2025).

Islamic banking promotes risk-sharing, which aligns with Shariah principles of fairness.

Instead of charging fixed interest, both parties contribute to the project and share profits or losses.

This encourages responsible lending and discourages reckless borrowing.

It contrasts with conventional banking, where customers bear most of the risk through interest payments.

Example: In a Musharakah partnership, both the bank and client invest capital in a business and share outcomes.

Source: Khan, M. & Mirakhor, A. (2022). Islamic Finance: Theory and Practice.

Islamic finance forbids investment in "haram" (prohibited) industries, such as:

Gambling, alcohol, weaponry, and adult entertainment.

These industries are considered harmful to society.

Permitted investments (halal) include sectors like agriculture, clean energy, healthcare, and education.

Source: Islamic Financial Services Board (IFSB), Ethical Investment Standards (2024).

Speculation or Gharar involves excessive uncertainty and gambling-like behavior, which can destabilize markets.
Islamic banking encourages transparent, asset-backed transactions instead of risky bets on price movements.

Example: Trading derivatives purely for speculation is not allowed, while financing actual asset purchases through Murabaha is permissible.

Source: Iqbal, Z. & Mirakhor, A. (2023). An Introduction to Islamic Finance Theory and Practice.

Islamic banking operates on a partnership model:

Depositors and the bank are partners, not creditor-debtors.

Profits and losses are distributed according to pre-agreed ratios.

This aligns financial incentives and discourages exploitative practices like charging interest regardless of outcomes.

Example: In a Mudarabah contract, the bank provides capital, while the entrepreneur provides expertise. If the business succeeds, profits are shared, and if it fails, losses are borne by the bank.

Source:

Islamic Development Bank (2024), Risk-Sharing in Finance.

Khan, F. (2019). Islamic Banking and Finance

Transparency is a core value in Islamic finance.

Clear communication of terms, profit-sharing ratios, and risks prevents exploitation.

It enhances customer trust and ensures compliance with Shariah law.

Hidden charges or unclear contracts violate ethical standards.

Source:

IFSB, Shariah Governance Framework (2024).

OECD, Financial Transparency Guidelines (2023).

Islamic banking is gaining global popularity because it:

Offers ethical, transparent, and socially responsible financial services.

Attracts non-Muslims seeking interest-free loans or sustainable investments.

Aligns with global trends toward responsible banking and ESG (Environmental, Social, Governance) finance.

Example: Non-Muslim investors often buy Sukuk bonds for infrastructure projects due to their asset-backed, low-risk nature.

Source:

World Bank, Global Islamic Finance Report (2024).

Investopedia, Why Non-Muslims Use Islamic Banking (2025).

The Bank Resolution Ordinance 2025 was introduced to strengthen the Islamic banking sector by merging five weaker Shariah-based banks into one strong institution.
The newly formed bank will:

Focus on financing SMEs (Small and Medium Enterprises).

Operate under Shariah-compliant principles.

Enhance financial stability and customer trust in Islamic banking.

This move addresses issues like liquidity shortages, non-performing assets, and mismanagement in the current fragmented system.

Source: Bangladesh Bank Circular, Bank Resolution Ordinance 2025

The five banks identified for merger are:

Social Islami Bank Limited (SIBL)

Global Islami Bank

First Security Islami Bank (FSIBL)

Union Bank

EXIM Bank

Shahjalal Islami Bank is not part of this merger and continues to operate independently.

Source: Bangladesh Bank, Islamic Banking Reform Report 2025.

Bangladesh Bank plays the central regulatory role in this merger.

It will issue a fresh license for the new entity.

Oversee the transfer of deposits, assets, and liabilities from the five existing banks to the merged bank.

Ensure compliance with Shariah principles, capital adequacy norms, and customer protection guidelines.

This direct involvement ensures a smooth transition and financial stability.

Source:

Bangladesh Bank, Bank Resolution Ordinance 2025

IMF Report, Central Bank Role in Bank Mergers (2024

During the merger, shareholders of the five banks will receive new shares proportionately.

The average of market price and face value will determine the exchange ratio.

This ensures fair treatment to investors holding shares in stronger or weaker banks.

Example:
If Bank A’s market value is low and Bank B’s is higher, the average prevents unfair loss to either group of shareholders.

Source:
Bangladesh Bank Circular, January 2025.

The newly formed Islamic bank will focus on financing small and medium enterprises (SMEs), which are the backbone of Bangladesh’s economy.

Strengthening Islamic banking capital will increase credit availability.

Provide Shariah-compliant products to underserved markets.

Improve financial inclusion and economic growth.

Source:

Bangladesh Bank, SME Development Strategy (2024).

OECD, Islamic Banking for Development (2023).

Several Shariah-based banks were facing liquidity shortages, poor governance, and high default rates.
By merging them:

Liquidity resources are pooled, reducing the chance of failure.

Creates a systemically strong institution, lowering risks of widespread banking crises.

Protects depositors by maintaining public confidence.

Source: IMF, Global Bank Resolution Practices (2024).

Step-by-step calculation:

Investor A's total market value = 100 × 2 = 200

Investor B's total market value = 200 × 3 = 600

Ratio = 200 : 600 = 1:3

Thus, for every share Investor A receives, Investor B will receive three shares in the new bank.

In 2021, Standard Bank and NRB Global Bank transitioned from conventional interest-based operations to full-fledged Shariah-based banking systems.

This conversion aimed to meet the growing demand for Islamic banking products in Bangladesh.

It also aligned these banks with Shariah-compliant financial principles, such as profit-loss sharing and interest-free transactions.

Source: The Daily Star, Standard Bank, NRB Global Convert to Islamic Banks (2021).

Bangladesh currently has 10 full-fledged Islamic banks, including:

Islami Bank Bangladesh

Shahjalal Islami Bank

Social Islami Bank

EXIM Bank

Al-Arafah Islami Bank

First Security Islami Bank

Union Bank

ICB Islamic Bank

Standard Bank (converted in 2021)

Global Islami Bank (converted in 2021)

These banks collectively operate around 1,700 branches nationwide.

Source:
Prothom Alo Business News, April 2024.

Bangladesh Bank, the country's central bank, is the regulatory authority for both conventional and Islamic banks.

It grants official licenses for:

Converting conventional banks to full-fledged Islamic banks.

Establishing Islamic banking branches and windows.

The central bank also monitors compliance with Shariah standards and banking laws.

Source: IMF, Role of Central Banks in Islamic Finance (2023).

Sukuk bonds are Shariah-compliant, asset-backed financial instruments.

Instead of paying interest, Sukuk distributes profit from project revenues to investors.

In Bangladesh, both government and corporations issue Sukuk to fund large-scale infrastructure and development projects, such as power plants or transportation systems.

Example: The government issued Sukuk to finance a solar power plant project, with profits shared among investors.

Source: Islamic Development Bank Report, 2023.

Takaful is the Islamic alternative to conventional insurance:

Operates on the principle of mutual assistance and risk-sharing.
Policyholders contribute to a common pool, which is used to compensate members in case of loss.
Unlike conventional insurance, Takaful avoids interest, gambling, and uncertainty (gharar).

Source:

IFSB, Islamic Insurance Standards, 2024.
Bangladesh Bank, Takaful Operations Guidelines, 2023.

The growth of Islamic banking branches and windows has brought Shariah-compliant financial services to a broader population:

Attracted customers who avoided conventional banking due to religious reasons.

Enhanced financial inclusion, particularly in rural and semi-urban areas.

Supported Bangladesh’s vision for inclusive economic growth.

Source:

Bangladesh Bank Financial Inclusion Report, 2024.

OECD, Islamic Banking and Inclusive Growth, 2023.

Non-bank Islamic financial institutions in Bangladesh offer a variety of Shariah-compliant financial services, including:

Sukuk bonds – asset-backed bonds for infrastructure projects.

Takaful insurance – cooperative insurance based on risk-sharing.

Islamic microfinance – providing interest-free small loans to low-income entrepreneurs.

This diversification ensures that customers have holistic financial solutions aligned with Islamic principles.

Source:

Bangladesh Bank Non-Bank Financial Institutions Report, 2024.

Islamic Development Bank, Microfinance and Takaful Models, 2023.

Islamic banking in Bangladesh began in the early 1980s due to increasing religious demand for interest-free financial services.

This system gradually became a significant sector as customers who avoided conventional banking for religious reasons started participating.

The first full-fledged Islamic bank, Islami Bank Bangladesh Limited (IBBL), was established in 1983, marking the formal beginning of the sector.

Source:

Bangladesh Bank Islamic Banking Report, 2024.

World Bank, Islamic Finance and Growth in South Asia, 2023.

IBBL was founded in 1983 as Bangladesh’s first Islamic bank, operating under Shariah principles.

It introduced two unique services:

Mudarabah (Profit-Sharing Investment Accounts): Depositors share in the bank’s profits instead of earning fixed interest.

Musharakah (Joint Financing): Bank and clients jointly invest and share risks and profits.

This laid the foundation for the growth of Islamic banking in the country.

Source:

Islami Bank Bangladesh Limited Annual Report, 2024.

Bangladesh Bank Ci

SLR is the minimum percentage of deposits that banks must keep in approved liquid assets, such as cash, gold, or government securities.

Conventional banks: 13% SLR requirement.

Islamic banks: Only 5.5%, because they cannot invest in interest-bearing government securities.

This lower requirement ensures Islamic banks can comply without violating Shariah principles.

Source: Bangladesh Bank Circular on SLR Requirements, 2024.

Islamic banks follow Shariah law, which prohibits interest-based investments (Riba).

Conventional SLR instruments like government treasury bills generate fixed interest, making them non-compliant.

To accommodate Islamic banks, Bangladesh Bank reduced their SLR to 5.5%, allowing them to hold cash and Shariah-compliant assets instead.

Source:

Bangladesh Bank Circular on Islamic SLR Policy, 2024.

IFSB, Islamic Banking Standards, 2023.