Anis A. Khan, a Fellow of the Institute of Bankers Bangladesh (IBB), has had 35 years of experience and training in banking, capital markets, management, and leadership practices. Anis currently serves as the Vice Chairman of the Industrial & Infrastructure Development Finance Company Limited (IIDFC), Director of BD Ventures Limited, Independent Director and Chairman of the Board Audit Committee of Berger Paints Bangladesh Limited (BPBL) and Vice President of Bangladesh Association of Publicly Listed Companies (BAPLC). He is the recipient of numerous accolades including the ‘Business & Entrepreneur Excellence Award 2016’. He was recognized as the ‘Inspirational Business Leader of the Year,’ at a ceremony held in London, United Kingdom and which was organized by the UK Bangladesh Catalysts of Commerce & Industry (UKBCCI) on 20 November 2016. He is the Immediate Past Chairman of the Association of Bankers, Bangladesh Limited (ABB) and a former Chairman of Primary Dealers Bangladesh Limited (PDBL). He also served as the Chairperson of the SWIFT Member & User Group of Bangladesh. A regular speaker in the global circuit, he has demonstrated his international quality competency in the field of finance, banking, and management.
“When the infrastructure is in place, private investment will get a fillip, with a consequent increase in the banking sector’s contribution to the country’s GDP. This dynamic has the potential to grow by 4% to 5% within the next ten years.”
There are 57 banks in the country which include PoCBs, Specialized Banks, Islami Banks, Privately owned Commercial Banks and Foreign Banks. Although we have a huge unbanked population, what are the prospects of the banking industry?
Investment to GDP ratio has a direct correlation to the contribution of the banking sector to GDP. To be more precise, the growth of private investment is the key to the contribution of the sector to GDP. As of now, the growth of private investment is behind the growth of public investment due to recent public investments in large infrastructure projects. When the infrastructure is in place, private investment will get a fillip, with a consequent increase in the banking sector’s contribution to the country’s GDP. This dynamic has the potential to grow by 4% to 5% within the next ten years.
The point is you cannot take a large aircraft to your doorstep. You land at an airport, and then take a bus or car to reach your destination. You will use the best possible option for this purpose. Similarly, banks have to spread their branches all over the country, but the last mile to the doorstep needs a different solution. Here comes Agent Banking and Mobile Banking. Regarding financial inclusion, banks have started to reach out. However, they still have miles to go.
With the expansion of IT in the banking sector, the risk of cyber heist has increased. How significant is the threat of cybersecurity? How is your bank dealing with cybersecurity issues?
The amazing and mind-boggling metamorphosis of computers to smart handheld devices has revolutionized nearly every step of our everyday life and made our lives more convenient and super-connected. Side by side, hackers are extremely on the prowl in their diabolical attempts to breach into systems of the virtual world through malware, ransomware, etc. This is a continuous and vicious process, and, in this case, the enemy is invisible and unknown, and we have no idea where in the world they are operating. The smarter the hackers grow, the harder the security standards are heightened, thereby increasing the cost of doing business.
Cybersecurity is a serious threat even to Google, the global tech giant. According to news reports, BankBot Android banking Trojan, a malware that can avoid Google’s security scans, has been downloaded, unknowingly, by many users from Google Play, however, later on, Google was able to remove these BankBots. There are always chances of the cyber heist in banks, and they must build tightened security systems against any such breach to protect their customers and themselves from harm.
I am pleased to reveal that quite recently, we have been able to set up an IT Security Department and appointed a Group Chief IT Security Officer (GCITSO) for the first time. The GCITSO, who is adept in computer systems in banks, and has himself served as a Chief Information Technology Officer, earlier, is working hard to ensure the most impenetrable security system for the bank. For this, we are supporting the department with the latest hardware, software, training and consultancy services from experts of the region.
What is your core banking policy and at this stage of globalization how do you plan on coping with changing banking policies?
We all are interconnected, 24/7, in the global village we now inhabit. From citizens, we are very quickly becoming netizens of the world. Economic activity in any part of the world may have an adverse impact on another part, instantaneously. Therefore, it is imperative to use technology to ensure the safety of all transactions of our bank. Following are the highlights of the priority areas to cope the changing global landscape and up-gradation of systems:
* Quality of assets
* Quality of service
* Continuous innovation of processes
* Security against cyber heist
* Continuous up-gradation of Human Resources through modern training
Word has it that in time plastic money along with other transactional methods will entirely replace cash transactions. What are your thoughts in this regard?
Global non-cash transaction volumes grew 11.2% during 2014-2015 to reach $433.1 billion, the highest growth achieved over the past decade. Despite the increased adoption of digital payments, cash continues to be in the mainstream, mainly, for low-value transactions, as stated in the World Payments Report 2017. The rise of the Bitcoin, especially this year, has brought a big question mark to the forefront, and that is how the regulators of existing monetary systems will adapt to this new era. Change, there undoubtedly will be, however, in the light of current knowledge and regulatory framework relating to money supply, it can only be said that full replacement of hard currency and plastic money will be difficult to achieve in the foreseeable future.
What is your Corporate Social Responsibility policy? How do you contribute through CSR in respect to Global Social Responsibility?
We have our own Green Banking Policy, in light of the instructions received from the central bank. According to the policy, projects are thoroughly inspected to ensure that they do not have any environmental impact. Furthermore, we have set up a “Sustainable Finance Unit” to ensure proper implementation of the policy above. MTB is a participant of the UN Global Compact, and each year, the bank publishes a Sustainability Report as part of GRI guidelines, which discloses all the impacts that the bank may have on the society and environment as a whole.
Disaster Management continues to receive top priority from us. Health takes second place, as we believe we must care for the sick people who are unable to afford proper medical care. We also devote a significant part of our available resources to education-related programs, especially for the meritorious but underserved children living in remote areas of the country, like chars and enclaves. We also provide bicycles to students, especially girls, who live far from their schools, under our ‘Swapno Sharathi’ CSR program. Since the launch of this unique program in 2015, more than 1,500 bicycles have been presented to school-going children of the country.
There is an increase of Non-Performing Loans, and, at the same time, the interest cap is very high. How will this affect the competition?
NPLs call for making provisions, as an allowance for bad loans, which in turn squeezes the bank’s hard-earned profits. On top of that, this provision amount is fully taxed adding to our burden and cost of doing business. On the other hand, as a business grows (this year, the banks have so far achieved 18% growth in private sector credit), there is a spiraling demand for deposits, and with so many banks competing in the marketplace, interest rates for deposits will inch upward resulting in narrower spreads and lesser profits. Fewer profits may lead to aggressive lending, which then creates an over-banked environment with its inherent risks. However, maintaining strict discipline and close and constant monitoring of loans and advances by all banks will help control over-financing and reduce NPLs. The competition will get tougher with some more new banks expected to arrive in 2018, and only the compliant and best service providing banks will flourish with high-quality assets and a stable stream of profits.
What is the portion of retail banking in your revenue? What are your plans for proceeding in this regard?
In consideration to the growing middle class, we can now offer more retail loans to meet their emerging needs. The total retail loan portfolio in the industry ranges from 8% to 9%. In general, the growth of retail loans is not encouraged by the regulators and economists because, in their opinion, it creates inflation and consumerism. A careful balance must be struck on how much can be lent to individuals, keeping in mind their ability to repay. We wish to grow our retail portfolio in tandem with the pace of the country’s economic growth, and, precisely, with the rise in per capita income, while keeping an eye on price inflation in the economy.
The marketing and access to commercial banks from the agro-based industries and SMEs are still not enough. Do you have any plans in this regard?
I think under Bangladesh Bank’s policy-making efforts, awareness programs and agro and SME friendly stance, most banks have launched many attractive programs in this arena. The central bank fixes the annual target for disbursements of loans in these two vital sectors each year, which banks have to meet or pay the penalty. Also, banks do have access to these sectors via linkages with NGOs operating in the rural and remote areas. Our bank has special products, such as MTB Krishi for farmers, MTB Light Engineering, MTB Green Finance, MTB Mousumi for shopkeepers, MTB Bhagyaboti and MTB Gunabati for women entrepreneurs, which are all highly successful and led to a 70% increase in our portfolio, year on year.
Also, and most excitingly, the bank has by now opened 50 Agent Banking Centres in remote parts of the country, and we have already commenced disbursing these sort of loans through them, most conveniently and quickly.
“MTB is a participant of the UN Global Compact, and each year, the bank publishes a Sustainability Report as part of GRI guidelines, which discloses all the impacts that the bank may have on the society and environment as a whole.”
What are your thoughts regarding risk management? What are the challenges in this respect?
In light of the Sibos Toronto 2017, which is the premier annual conference for bankers and technology support organizations of the world, I want to share a changing dynamic. Speakers at its various forums and plenary sessions recognized that a shift to a more targeted, risk-based approach to financial crime compliance demanded greater information-sharing between banks, regulators and law enforcement agencies. Financial crime compliance experts call for a smarter approach, built on technology innovation, information sharing, risk-based policies and common sense, which they call Intelligent Compliance. Panelists discussed the potential offered by an emerging form of public-private sector collaboration: financial information-sharing partnerships (FISPs), currently deployed in six countries.
The future of risk management lies how intelligently we can use information shared by the banks, regulators and government agencies. Quality and speed of the information shared by them will ease the risk management task. The challenges are connecting the banks, regulators and government agencies on a single platform and ensuring quality and speed of the data.
How can you enhance the skill development of your employees? Do you think that you are getting proper workforce from the existing talent pool?
We recruit highly talented young boys and girls and train them hard so that they become equipped to becoming world-class bankers. The MTB Training Institute (MTBTI) is a state-of-the-art facility, which conducts induction and orientation courses for new entrants and appropriate and practical training courses, workshops, seminars, appreciation courses, etc. We invite foreign trainers, as well as local experts, to share their knowledge and experiences with our MTBians. We also conduct online quizzes on the bank’s MNet – its intranet and cutting-edge communication tool. Continuous learning and developing skills are vital for developing quality human resources.
What are your plans regarding improving Financial Inclusion and Green Banking?
Agent Banking Centres will become increasingly crucial for wider financial inclusion. These centers allow us to reach unbanked people at a fraction of the cost required for operating a full bank branch. We look forward to increasing the number of MTB Agent Banking Centres to more than 100 by the end of 2018.
We have already stated earlier that we are publishing MTB Sustainability Reports since 2014, which has been appreciated by the regulators and other stakeholders. Also, a dedicated team, manning the Sustainable Finance Unit looks after Green Banking initiatives.