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According to the OF,CD Oslo Manual from 2005, “bank product development” is the presentation of a service or administration that is brand-new or significantly improved in terms of its characteristics or intended uses.

It frequently entails significant improvements for specialised details, components, and materials, consolidated programming, usability, and other practical qualities.

For the banking industry and the general public at large, the effect of product development on the financial presentation of business banks in both bank- and non-bank-based economies is crucial.

As a result, this study reviews relevant work on bank development and its usefulness in an economy without banks.


Determine the degree of advancement associated with a product development to determine whether it is radical or gradual. Radical innovations result in significant adjustments to how an association, industry, or society conducts its business and speak to clear departures from customary methods.

On the other hand, steady advancements mostly bolster associations’ existing capacities, necessitating little deviation from current practises. The importance of economies of scale and extension in manufacturing and the growth of mass markets is highlighted by gradual advancements.

In order to create all the more aggressively promoted items, gradual improvements to existing products can improve execution (Batiz and Woidesenbet, 2016).

Markets and times have evolved. Even five years ago, many commercial banks no longer enjoy the near-monopoly status they formerly did. Commercial banks are now held to account by both their own internal controls and the non-bank based economy.

In order to effectively serve their markets in this new environment of competition, commercial banks must adapt their ever-evolving products and services to better meet the demands of their customers while also fending off threats from other businesses.

This will help them win over their customers’ loyalty, which is essential for their long-term survival. Retail, business, corporate, and mortgage categories are separated into the primary financial products that commercial banks offer under both conventional and Islamic banking.

Product Development’s Impact on Financial Performance

Developments can significantly improve the way a company operates from a number of angles. By providing a stronger market position that transfers advantage and dominant execution, development significantly influences corporate execution (Walker, 2004).

Similar studies were conducted for the effects of product and method changes on financial execution by Wolff and Pett (2004) and Walker (2004). They demonstrated how certain product improvements are unmistakably linked to financial growth.

Cost is viewed by price theory as a factor that delivers first mover advantages. Trend-setters can recover the cost of investing in advancements by accruing considerable costs before the segment of imitators. However, these syndications are merely temporary and disband as soon as impersonation appears.

This is the illustrative, imposing business model argument that Van Home (2014) used to explain how to portray financial trend-setters.

According to Berger (2003), the important aspects of mechanical change include advancements that reduce the costs associated with data collection, storage, management, and transmission,

as well as advancements that alter how customers access banking services. According to Humphery et al. (2016), among the significant advancements affecting the banking dispersion framework that fundamentally affect banking execution are ATMs, phone banking, web banking, and e-cash.

Customer connection the board frameworks, bank the executives advancements, and other innovations are among the main modifications in internal banking frameworks that have also had a positive impact on banking performance and advantage, according to Goddard et al. (2007).

Because of the exorbitant prices they charge or the larger market shares they win, the first institutions to adopt successful new products make exceptional profits.

To avoid losing market share, other commercial banks imitate them. Innovative commercial banks can continue to make significant profits from the different new or better products if the development process continues.

However, when innovations are broadly implemented, remarkable earnings will diminish (Berger and Mester 2003). The investigation by Dos Santos and Peffers (2015) of the introduction of ATMs by American commercial banks demonstrated that the competitive advantage and performance that are associated with it were not realised by those who subsequently adopted the technology,

which is consistent with the findings of other studies that support the hypothesis that the first mover advantage offers the enterprise better performance. Batiz-Lazo and Woldesenbet (2016) stipulated that product developments have a market focus and are effectiveness driven in their analysis of the dynamic of product development in the banking industry in the U.K.

In the banking industry, new products like Islamic banking, ATMs, plastic money, and electronic money (e-money) emerged during the period of financial development and emerging financial instruments. ‘

Because ATMs make cash more accessible to individuals who have them and because the use of debit and credit cards has grown steadily since the late 2010s, there is less demand for cash on hand. This is indicated by the fact that the number of ATMs has constantly climbed.

The cards have made it easier to employ electronic payment methods, which have occasionally taken the place of actual cash. More significantly, payment cards have made it possible to issue electronic money (commonly known as e-money),

which not only directly competes with physical currency in small value transactions but also allows users to keep bank deposits in the form of e-money balances. As a result, a person might hold less cash on hand at any given time, which affects the demand for cash (Misati et al., 2010).

In the development of diffusion products, top-line performance of new items has been thoroughly investigated (Mahajan and Wind 1991). The success of new products (1) may take a long time to manifest and (2) depends on a number of variables, including the development characteristics, are two key conclusions.

Contrary to price promotions, which typically only result in temporary benefits, recent studies using persistence modelling have found that new product introductions are a key driver of long-term sales and profit benefits (Nijs et al. 2011, Pauwels et al. 2002, Srinivasan et al. 2000).

As a result, any evaluation of the success of a new product must take into account the possibility of both short-term (immediate) and long-term consequences, which may be transient (dust settling) or persistent (permanent).

New product launches may have various positive effects on overall financial performance (Bayus et al. 2011). Beyond rising demand, businesses may boost their profit margins by focusing on high-margin niches and cut expenses by offering “new and improved” items to their present customers rather than acquiring new ones.

The impact of new product releases on revenue has recently been the subject of empirical research (Geroski et al. 1993; Bayus et al. 2011). Two conclusions can be drawn.

First, new product introductions greatly improve profitability right away, albeit in a modest way. The impacts of new product introductions on company profits have not been shown to endure, which is the second conclusive finding.

According to Bayus et al. (2011), the introduction of new products increases firm profit rate for the first two years but not after that. They also have no effect on “profit rate persistence,” which is defined as the first-order autoregressive coefficient of profit rate.

Persistence suggests that profit rates have a unit root in an environment that is changing, however the authors do not examine this. According to Geroski et al. (1993), a development may have a short-term impact on a company’s financial situation owing to a specific product development or it may have a long-term impact because it changes competitive capabilities.

empirical analysis

Despite the fact that there is a wealth of descriptive literature on product development,

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