He is a prominent Pakistani businessman and the chairman of Nishat Group. Mansha has a diverse portfolio; his businesses range from textile, banking, insurance, cement, power, hospitality and real estate to dairy, retail commerce and aviation. He also heads Muslim Commercial Bank – one of the oldest banks in Pakistan. In 2010, Mansha featured in The World’s Billionaires list compiled by Forbes Magazine for his entrepreneurial achievements. He envisages greater financial inclusion through fintech and also sees the ever-growing technological landscape in financial service as a challenge for stakeholders. He terms China-Pakistan Economic Corridor (CPEC) an opportunity for banks to introduce innovative lending products. He spoke to MIT Technology Review Pakistan’s chief correspondent Jawad Ali.
Considering the number of bank account holders in Pakistan is just 15-16 percent of the population, and is considerably below the regional average of around 40 percent, what policy-level reforms including any in the regulatory regime do you suggest to expand this population share?
Pakistan has a large population base but we are very lucky that most of the population is young and below the age of 30.
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The traditional banking focus has been on metropolitan and two-tier cities where access to customers was easy. The Government of Pakistan and State Bank of Pakistan (SBP) have taken a few policy initiatives and have undertaken regulatory interventions that are focused towards increasing the banking population of Pakistan.
Among others, the National Financial Inclusion Strategy (NFIS) and Branchless Banking Regulations are the two notable policy moves to ensure financial inclusion and participation of population in formal banking system.
In my view, the focus of the present government and other stakeholders has been on enhancing financial inclusion. Also the fact that Pakistan is using the National Citizens Database to provide the general public access to financial services will go a long way in improving the density of banked population in the country.
Since profitability has a key role in determining customer base, currently skewed towards the public sector and established businesses in the private sector Ω how do you see fintech playing a positive role in expansion of the customer base?
We, in Pakistan, are very excited at the prospect of the fintech space playing a positive role in the provision of innovative and customer focused payment services.
We strongly feel that fintech firms will create new customer experiences and drive customer convenience to new heights. Once a customer experiences this type of service and the associated convenience, he/she shall be more engaged in the financial services space.
This engagement can then be monitored in various ways and create profitable business models for fintech service providers.
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The future looks bright and we feel that many unmet customer needs shall be addressed in turn, resulting in the expansion of customer base, both for fintech firms and traditional financial service providers.
How do you see provision of technology-aided financial services like branchless banking, mobile wallets and greater inter-bank connectivity?
Pakistan has been at the forefront in branchless banking services through the provision of technology that has brought about great social change.
The branchless banking service providers through their tech platforms and mobile wallets have touched the lives of citizens in a very positive way.
The big change that we see is the speed with which value can exchange hands through these financial services aided by technology.
Pakistan has been lucky in more ways than one when it comes to interbank connectivity. SBP has been proactively pursuing it and has ensured that almost all services available to citizens are interconnected, and that the customer has a choice while using these services.
Like all technologies old and new, the fast changing technological landscape in financial service continues to be a challenge for all stakeholders.
There are always bottlenecks while adapting innovative technologies; (such as lack of infrastructure) accessibility, affordability of such services, and related cultural issues.
MCB has recently invested in technology upgrades. What difference do you see in the Bank’s operations after rolling out these initiatives, like the electronic payment solutions?
MCB has always been embracing technological advancements and using the same for the convenience of its customers.
Our aim has been to ensure that whatever technology decision is taken by the bank it must be focused around ensuring customer centricity, security and stability.
As one of the largest retail banks of Pakistan, we have never shied away from investing in the best solutions to serve our customers in a better way.
MCB has been among the leaders vis-à-vis electronic payments for its customers. We have an array of services that revolve around digital payments.
Are there plans for partnerships with other fintech startups, like Innov8 and MCB Islamic Banking, in the short to medium term?
We at MCB believe in the power of partnerships. Our digital bank is already collaborating with service providers, global payment schemes, and local startups.
We have also partnered with domestic payment schemes to ensure that financial inclusion goals of the Government of Pakistan are met.
We are talking to a few fintech companies in the country to see how we can collaborate with them to improve customer experience and also create value for the fintech.
Even though we are in an initial discussion phase, we are very hopeful that we shall be able to add value through such initiatives.
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Since the demand for commercial loans and other banking services is likely to go up with implementation of CPEC-related power and infrastructure projects, does the commercial banking sector of the country have the capacity to meet that demand?
CPEC is a game-changer for Pakistan in terms of infrastructure and power related projects.
As you rightly pointed out that the demand for commercial loans and other branching service will go up, we feel that the commercial banking sector has a lot of appetite in terms of commercial loans. Since the current lending portfolio is not very large and it is also not very diverse, we see no reason for commercial banks not being able to meet the demand created by CPEC-related projects.
If we take a look at the advances-to-deposit ratio of the banking sector, we shall clearly be able to grab the opportunity that is available for commercial lending to grow.
This opportunity shall also bring out more innovative lending products and hence fulfill the demand for commercial loans.
What licensing or regulatory issues does the industry face in promotion of modern banking solutions?
The financial services industry in Pakistan has always been a highly regulated industry. Pakistan has been lucky in terms of the progressive nature of its regulator – the State Bank of Pakistan (SBP). The central bank in Pakistan has been introducing continuous improvements in the regulator’s regime as dictated by global and local needs.
The SBP, in conjunction with other stakeholders, including the banking industry, has been proactively seeking and incorporating feedback over the years.
We do not see too many issues associated with the licensing regime in the country, but there is always room for improvement in terms of the implementation of the policy across the industry.
The industry itself has been progressive in terms of creating and providing modern banking solutions to all segments of the society with the support and guidance of SBP.