The new generation conducts most of their daily activities digitally, especially shopping. Now they also want to take their banking services online, said Md Arfan Ali, president and managing director of Bank Asia Ltd, in an interview with Dhaka Tribune's Mehedi Hasan. He also talked about banking amid the Covid-19 pandemic, cyber security, success of agent banking and other issues.
We know that Bank Asia has taken an initiative to form a new digital bank. Can you tell us about it?
We see a digital transformation in the banking sector as most of our services have digitized. Now clients, especially the new generation, want to avoid visiting bank branches physically, which has increased due to the Covid-19 pandemic. This encouraged us to try it out.
The new generation conducts most of their daily activities digitally, especially shopping. Now they also want to take their banking services online.
We have already applied to the Bangladesh Bank for permission to launch a digital bank. The digital bank will be a subsidiary company of Bank Asia, in partnership with the Fintech companies.
The bank will be attached with the National Payment Switch of Bangladesh (NPSB). The customers of this bank will be able to open an account from home, from where they can deposit money in another bank account, pay for online shopping, and apply for loans digitally.
Customers can then avail services like an online marketplace. We now await the central banks' approval.
Cyber security is very important in digital banking. Have the country's banks taken adequate measures to mitigate the risk of hacking?
Cyber risk is proportional to digitization. We cannot prevent cyber crimes but we have to prepare to deal with the risk. We have to take measures to mitigate these risks, which is why investment in the IT sector has to be increased, in both physical infrastructure and software upgrades. Bankers should be more aware and receive IT training.
In many cases, cyber hacking has occurred due to the ignorance of the clients, so they should also be more aware when taking digital services.
Agent banking was introduced for the unbanked people, where Bank Asia was the pioneer. How successful is it?
Agent banking is gaining popularity in the rural areas of the country. At present, the total accounts generated from agent banking in the country stands at 7.36 million and the deposits stand at Tk10,220 crore until June this year. Now it is an acceptable mode of banking.
The use of agent banking has increased amid the pandemic as clients have taken banking services from near their homes. It will be more popular in the coming days.
We have been operating agent banking activities for six years, which inspired other banks.
Agent banking still focuses on deposit mobilization instead of lending. Why?
Deposit mobilization was easier than lending for an agent banker, as they are not so interested in lending. Banks should take effective measures to increase lending to the SME entrepreneurs in rural areas through agent banking.
We are trying to increase our lending in rural areas. Bank Asia secured the top position in lending through agent banking. As of June this year, we disbursed Tk280 crore, or 38.98% of our total lending.
Bangladesh Bank also should take the initiative to increase banks’ lending to rural areas through agent banking.
Why are banks so reluctant to disburse stimulus funds to the cottage, micro, small, and medium enterprises (CMSMEs)?
It is easy to disburse funds to the large corporate borrowers as they are based in Dhaka and Chittagong. But the CMSMEs are all over the country. As a result, it takes more time to disburse funds to them.
We hope that the process of disbursement will be completed within the given deadline set by the central bank.