Ways to Develop Retail Services of Commercial Banks

Uzbekistan has gone through major reforms in the banking sector which are mainly related to the increase of financial services and the increase of transparency and trust in commercial banks. The retail banking sector continues to face numerous challenges, including overcentralization of decision-making, overly complicated loan procedures, insufficiently developed retail services, low availability of microloans, poorly developed ATM networks, and limitations on foreign currency transactions, despite these reforms. Although cross-country examples illustrate with compelling evidence why innovations in retail services remain advantageous, little research has examined their local applicability to suit Uzbekistan’s unique socioeconomic, institutional, regulatory settings. The aim of this paper is to provide an assessment of the state of retail banking services provided by commercial banks of Uzbekistan; reveal systemic problems, and opportunities for development by means of digital transformation and customer orientation. The research indicates an increase in banking service centers, non-bank credit institutions broaden, and greater adoption of digital forms of banking including mobile banking and online services. Still, profitability measures are unstable, as deeper current returns on assets and equity have contracted–regardless of improving net interest edge. By utilizing such theoretical perspectives on retail banking alongside empirical evidence derived from Uzbekistan's financial environment this study appraises customer requirements in conjunction with institutional performance comprehensively. Results indicate that potential sustainable development of retail banking services to the customers directly is focusing on strengthening and protecting customers, reducing bureaucratic barriers, increasing financial inclusion, in the course of adapting and implementing the international best practices to local environment, all of which may lead to intensified competition and better citizens' confidence in the banking system.