Arif Khan, CEO and Managing Director, IDLC

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Venturing Forward

IDLC partners with Exotix Capital

Tell us about IDLC partnering with Exotix Capital? What does this partnership mean in terms of Bangladesh receiving international capital and foreign direct investments?
Over the years, we have maintained our legacy of being the pioneer in many areas of the financial industry of Bangladesh. We continuously strive to do something new to serve our clients better. This partnership is the latest addition to our legacy. We are now the knowledge partner of Exotix Capital for Bangladesh Research. For the first time in Bangladesh, a local Bangladeshi brokerage firm is joining hands with a leading UK-based investment platform to produce co-branded Bangladesh research for global investors.

As you might know, during the last 5 years, Bangladesh received USD 70 million per year on average as net foreign portfolio investment in Dhaka Stock Exchange. Foreign ownership in Bangladesh stock market is only 6.3% whereas it is much higher for countries like India (21%), Vietnam (23%) and Malaysia (26%); so we still have much scope to attract more foreign investment. This is possible only when investors around the world become more aware of investment opportunities in Bangladesh.

Exotix Capital is a leading frontier and emerging markets investment platform that provides unrivaled access, knowledge and execution to global investors across the USA, Europe, Asia, and the Middle East. They have covered a total of 56 countries, generating investment ideas across debt and equities. On the other hand, insightful research and corporate access give IDLC Securities unique local expertise. The synergy of both companies will let international clients make better investment decisions in the Bangladesh market.

Data analytics is a toolkit allowing businesses to better understand the markets they operate in. How important is the incorporation of data analytics in financial institutions? Is IDLC beginning to move into digital spaces? How will digitization shape the way financial institutions operate?
Incorporation of data analytics will certainly add new dimensions to the financial sector. In order to grow and sustain, it is necessary to maintain a quality portfolio and use of data analytics can undoubtedly act as an enabler in that regard. Depending on different parameters, data analytics will allow institutions to segment customers effectively and accordingly offer customized products to each segment.

In line with this, we at IDLC are now working to incorporate the use of data analytics into our business through installing Business Intelligence (BI) and Customer Relationship Management (CRM) tools and have been laying some groundwork accordingly.

Speaking of digitization, it will undoubtedly have a significant impact on the way financial institutions operate. Not only will it allow better customer segmentation and targeting, but will also enable the institutions to operate more efficiently and achieve economies of scale. Resultantly, the financial institutions will be able to offer better pricing compared to the scenario with limited or no digitization.

With Exotix Capital’s stellar Research & Analytics within reach, how will this allow IDLC to enhance the value they bring to their clients? What can clients look forward to in terms of delivery of products and services?
As I already mentioned, our local research expertise will blend with Exotix’s international research experience to let global investors explore unique investment opportunities in Bangladesh. The partnership will help us adopt global best practices from Exotix.

Exotix has vast outreach to the global investor-base, much larger than any local institution of Bangladesh. They distribute co-branded research via their innovative research platform to their global subscriber base. Hence, our access to the network of global investors has expanded substantially. In addition, the new research platform ensures a smooth distribution of research reports to all international clients and provides a user-friendly interface to them.

You talked about IDLC reducing its Cost to Income ratio to less than 40% by adopting process efficiency measures. Can you tell us about these process efficiency measures?
In 2018, the portfolio of IDLC’s core business alone grew by 17.4%. Despite achieving such growth, we were able to maintain our cost to income ratio below 40% thanks to the different initiatives and measures we have taken all across the board. These include assessing and redesigning processes in order to reduce redundancies and streamline the processes. Additionally, we have enhanced our business operational models where necessary by leveraging appropriate technology. In our effort to increase efficiency, we have also ensured proper training for our employees. While operating expenses’ growth is expected to catch up in short-term, we expect that such ongoing initiatives will unlock greater efficiency levels which will, in turn, help us maintain our cost to income ratio in the days to come.

IDLC Finance Limited won the First/Gold award consecutively for the third time for Corporate Governance Excellence. What is the recipe for financial institutions success?
Good governance and transparency are two major pillars of our success. Practicing sustainable business approach through our focus on process-centric growth and maintaining quality portfolio has enabled us to continue our success throughout the years. Furthermore, it is the ability to be able to identify key trends and make timely choices that empower us to stay ahead of the curve.

How is IDLC helping out the SMEs and Start-ups?
SME sector has remained one of our main focused sectors and evidently, it constitutes the highest portion of our portfolio. Besides providing fast loans in easy and affordable terms, IDLC also helps SME clients by providing basic financial literacy and guiding them through different aspects of their businesses. We have launched an SME product, Purnota, designed for women entrepreneurs who can avail non-financial services alongside financial ones. Through our partnerships and strong distribution networks, we are trying to reach as many SMEs as possible to bring about positive changes in their businesses.

The start-up ecosystem is still at its nascent stage. In order to help the start-ups, our private equity team under IDLC Asset Management Limited is currently working towards raising a venture capital fund. Furthermore, we are actively working with different stakeholders to improve the start-up ecosystem of the country that will encourage the youth with innovative ideas to come forward.

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