BRAC Bank has undertaken a number of projects aiming to become the best bank in Bangladesh using modern and world-class digital technologies by 2020, the bank's top executive has said.
"We're now working with some leading financial technology (FinTech) solution providers to make our bank fully digital within the next two years," Selim R. F. Hussain, managing director (MD) and chief executive officer (CEO) of BRAC Bank Limited, said while sharing his future plans in an exclusive interview with the Financial Express (FE) recently.
In partnership with different Fintech companies, BRAC Bank is aiming to replace the traditional platforms for service delivery though digital solutions based on the use of smartphones and laptops. These solutions are expected make financial services more accessible and convenient to the general public.
He said the bank is committed to strengthen financial and digital ecosystem.
The career banker also said technology-enabled services give the customers the convenience to do banking from wherever they are at their convenience.
"The crowd that we today see at the branches will decline as more and more people avail banking services 24/7 via digital devices," he explained.
As part of initiatives, the third generation tech-savvy bank has launched digital agent banking to bring unbanked people under the financial network.
With real time transaction facilities and the full array of banking services that are available at the branches, BRAC Bank's Agent Banking is different from that of other banks, according to the CEO.
"Our customers will not have to come to our branches for basic banking once the digitalisation is completed." Mr. Hussain explained that the customers will be able to access and receive most banking services using secure plastic chip enabled cards, internet and mobile phones from their homes.
"We're now reinforcing our focus on digital banking to provide the convenience of 'anytime anywhere' banking," the CEO disclosed.
Mentioning Indian experiences, the senior banker said customers usually prefer not to come to bank branches in India mainly due to the digitization in the banking system.
"Moving to digital solutions will both improve our customer reach and service and at the same time, reduce operational costs." the CEO added.
The senior banker also emphasised the importance of good governance in this third-generation private commercial bank (PCB) and confirmed that BRAC Bank is fully committed to adopting the best corporate governance practices.
"As a values-based organization, corporate governance, compliance, ethics and transparency are the cornerstones of our business model." the CEO said while replying to a query.
He further said that the objectives of corporate governance are to enhance stakeholders' value by pursuing ethical and sustainable business practices while maintaining a high standard of disclosure, transparency and accountability.
Mr. Hussain highlighted the independence and professionalism of the bank as its Board of Directors set policy, guidelines and monitor bank management but do not interfere in day to day execution.
At BRAC Bank, more than 8,000 employees, work for a common goal - to be the best bank in the country. "The power of unity gives us the energy to overcome any odds".
In line with its commitment to a values-based philosophy, BRAC Bank does not finance environmentally degrading or socially harmful industries such as the Chattogram based ship breaking industry or tobacco manufacturers.
Currently, BRAC Bank is maintaining a portfolio mix of 40 per cent in corporate and SME banking each while the remaining 20 per cent in retail banking, he added.
"We've, for the last three years, maintained a selective portfolio growth momentum with a judicious blend of funded and non-funded businesses," Mr. Hussain explained.
He also said: "We're also promoting the culture of cross-selling to achieve a balanced asset and liability mix and are focused on better utilising our distribution network."
Since its inception in 2001, BRAC Bank has prioritized the SME sector. The PCB also believes that SMEs drive inclusive economic growth through the creation of many employment opportunities across the country.
With consistent focus in SME financing over 17 years, BRAC Bank is now the highest collateral free financier in the SME segment in the country, the CEO added.
"We've grown the portfolio contribution of BRAC
Bank's SME segment from 32 per cent to 40 per cent in the last three years and now plan to increase this to 50 per cent within the next five years," the CEO disclosed.
He also said: "Our profile with almost every stakeholder has grown significantly in the last three years.
"We're now investing in systems and processes and new businesses so that the Bank can scale up and reach even newer heights over the next three years," he added.
In the last three years, BRAC Bank has already emerged as the leading private sector bank in Bangladesh with the highest market capitalization of around US$1.0 billion and financial metrics which are unmatched in the industry, according to Mr. Hussain.
The bank operates 186 branches, 457 SME Unit Offices with 8,700 plus staff and 447 ATMs across the country.
BRAC Bank shares have already been able to attract around $0.5 billion portfolio investment from different parts of the world in the country's capital market, the CEO added.
He also spoke on different issues including increasing trend of classified loans, sluggish growth of deposit and future liquidity situation in the country's banking system.
"The gradual increase of default loans is a concern for the banking industry in Bangladesh as non-performing loans (NPLs) have risen over the last few years, exposing weaknesses in the banking sector's due diligence and the risk assessment practices," the banker said while replying to another query.
The amount of NPLs in the country's banking sector jumped by more than 20 per cent to Tk 893.40 billion as on June 30, 2018 from Tk 743.03 billion as on December 31 last year. The amount of classified loans was Tk 741.48 billion a year before.
"Coordinated efforts among entrepreneurs, regulators and bankers are needed to reduce the volume of classified loans in the country's banking," the CEO added.
The senior banker also believes active judiciary support is needed to speed up the recovery process of classified loans, saying that it would definitely help improve the financial health of the banks.
He referred to recent proactive policies undertaken by regulators in India and China against bank defaulters for reducing the volume of NPLs in the banking sector of Bangladesh.
Mr. Hussain suggested that the extremely high interest rates on the government savings instruments and presence of a large number of 57 banks in the country - have all contributed to the sluggish deposit growth in the recent months.
Considering the growing need for prudent liquidity management, the widening gap in the country's balance of payments situation, the rising pressure on the forex market and revised regulatory framework will be challenging for everyone, he hinted.