We know, BRAC Bank has become the largest retail bank in the country. How did you achieve this and what is your core strategy in retail banking?
We have introduced retail banking mainly for three reasons. Firstly, retail banking ensures consistent and regular flow of deposit, which plays an important role in funding SME, corporate and consumer credit.
Secondly, we have to maintain a standard of asset advance and deposit ratio as per the central bank’s direction, while deposits collected through retail banking helps us to maintain the ratio.
Lastly, retail bank gives financial support to the individuals of a corporate body, as an end to end financial solution, called as ‘employee banking’.
What are your new initiatives in retail banking?
We want to ensure sustainable growth in retail banking. We are eager to automatize our loan origination system. We are highlighting customer-centric business. We will also start working on the wealth management system of our customers.
However, most of the beneficiaries of retail banking are from Dhaka and Chittagong metropolitan areas. But, we would like to take the service to rural areas to help with their financial dealing.
What is the main challenge and prospect of retail banking?
I would say skilled workers is the main issue in this field. Aiming to resolve the crisis, we have employed 29 management trainees from reputed universities. We will try to make them our future leaders. We are also arranging training for our new recruits. Compared to a neighbouring country, we do not get enough skilled programmers, product developers and managers, and even portfolio managers.
If you succeed in this case, what kind of value will it add to your bank?
Currently, our retail banking portfolio of Tk4000 crore is one of the top among all local commercial banks. We want to be the number one bank in the country by next five years.
What is your plan for the next five years?
Upgrading the core banking system is our main target, which we hope to do so by the first quarter of 2018. We are also upgrading our e-commerce, call centre and card systems. We are targeting 15% annual growth in retail banking by 2020.
What is the reason of introducing loans to doctors and the response to it?
We introduced the specialised loan scheme for doctors last year, because doctors have a stable income and they usually do not default on loans. We physically verify doctors’ income and then assess confirm their capability to repay them. It is actually a personal loan geared towards doctors. They can use the loan on any personal purposes.
Has there been any problems regarding the doctor loan scheme?
The loan default rate in this case is very low, which is the biggest advantage of the loan scheme. The doctors’non-performing loan (NPL) 0.7% while NPL 0.1%, which will clearly depict how good the portfolio is. We get Tk18-20 crore monthly on return. We provide them with a loan in just two days.
Tell us about credit card market in Bangladesh
I have been in the credit industry for the last 20 years. The situation of credit cards in the country is actually all about the outstanding amount of card users.
For instance, one spent Tk110,000 a month and owe the bank Tk15,000, including interest. We have some 130,000 customers with credit cards. At the end of June, the total outstanding amount is Tk368 crore.
In 2012 the outstanding amount was Tk283 crore, it dropped to Tk289 crore in 2013, Tk269 crore in 2014 and Tk270 crore in 2015. The sum jumped to Tk325 crore last year, posting a Tk55 crore growth in just a year. Since then, the outstanding amount spiked by Tk43 crore.
What is the reason behind the growth?
Retail money is detailed. We have to start business of details and work in details. We have to increase our segmentation. We had some vanilla features in our credit cards and We did a lot of campaigning.
We previously had concentration on gold and silver cards, which used to cover 90% of the total credit cards in use. We reduced the ratio to 72% recently, focusing on platinum (20%) and signature (8%) cards.
How did you increase credit card use?
A gradual decline on cash dependency is one of the major reasons, causing a “less cash” transaction, not a “cashless” one. In the past, people used to depend solely on cash, but the situation is changing in course of time with a rise in the use of credit cards almost everywhere.
The government is also promoting the use of credit cards in many fields. Can you imagine that the Land Ministry is even thinking of introducing credit card payment in land mutation fess and land tax, which was unthinkable in the past! So, we are heading towards a “cashless” society. Currently, we are in a “less cash” stage, advancing to a “cashless” one.
What is the real challenge for recovery of money from credit card users and the distribution of cards?
Our credit bureau is offline now. It will be more beneficial to us once it goes online. We would be able to know a card holder or an applicant well. If the information on inter-bank fraudulent activities and defaults were shared and there was a credit scoring among all clients, it could have been better.
What is your plan to help in increasing the remittance flow into Bangladesh?
Bangladesh’s remittance flow is going through a sluggish period mainly because of Brexit and tensions in the Middle East. We are now working with bKash to help improve the situation. People working or staying abroad will send their money to through a money exchange which will end up being deposited to a bKash wallet.
Other than, Western Union, which also provides the same service in association with bKash, there are Trans Fast, Moneygram and UAE Exchange among other remittance houses and we have found a way to launch our new service through them.
What’s your plan on digital banking?
We do believe that the entire banking system will become digital in future. And, that is why we have hired a Bangladeshi banker, who used to work for Standard Chartered India, to help build our digital banking platform. We are actually working on digitising our services, making everything paperless. We are upgrading our internet banking service, investing more on technology and building another e-commerce platform.
Are the customers ready to cope with a fully digital system?
Well, our internet banking is basic in its kind, but sees Tk220cr monthly fund transfer, mostly in urban areas. This is a large amount, but it is still possible to double the figure if we re-package the process. We will focus on rural areas for digital banking, where the prevalence of formal banking is lagging behind.
What is the status of other banks fully digitising or inter-banking connection in this regard?
There have been several platforms for digital banking such as BFTN. The ATM channel has already been developed and mobile banking is also advancing towards that way. Now, we have RTGS in place. All of these are actually our backbone.