ENSURING THE EXCELLENCE
Syed Mahbubur Rahman is the Managing Director and CEO of Dhaka Bank Limited. He holds over 30 years of experience in the Banking and Credit related service arena. Over the course of his career, Mahbubur has worked in various roles with some of the biggest names in the financial sector in the country such as BRAC Bank Limited, Prime Bank Limited, Citibank NA, Standard Chartered Bank, and IDLC Finance Limited.
He started his career in Saudi-Bangladesh Agricultural & Industrial Investment Co. (SABINCO) and has also served as a Director of BRAC EPL Investments Ltd, BRAC EPL Stock Brokerage Ltd, BRAC Saajan Exchange Ltd, bKash Ltd, BRAC IT Services Ltd, and IIDFC Securities Ltd. Mahbubur is the Vice President of the Association of Bankers, Bangladesh Limited. He was accorded with the prestigious ‘Asian Banker Leadership Achievement Award’ for Bangladesh for the period 2011-2013. On the 24th anniversary of Dhaka Bank Ltd., this chequered banker shares with IBT about his vision with the bank and how he is planning to achieve those with the help of his esteemed team.
Is there a trust gap between the banks and the general population?
I don’t think there is a trust gap between the bank and the customers. It is something entirely different. People are speculating on the way we (banks) are conducting our operations. As far as trust is concerned, I don’t believe there has been any dilution of it among the customers of Dhaka Bank during its decade long journey.
You have always given great impetus on innovation. What kind of innovation can we expect in the future?
If you look at the global trend, innovation is taking over the financial industry. From that perspective, banks also have to keep up. Innovation is impossible without proper research to understand the needs of the clients., Efficient innovation comes from understanding the problem. Each and every bank should have a proper R&D department, which should be dedicated to finding out ways to meet the needs of different segments of society. For example, in Bangladesh, the median age of the country is 26 years; this segment of the country will play a huge role in our economy. Therefore, it is very important they are given all the support they require to compete globally. Banking solutions should be designed in a way that caters to their taste.
From that perspective, we require constant innovation. For example, our current generation is tech savvy, they prefer digital solutions. They prioritize digital interaction; we have to keep up with that by understanding their mindset. Young people of our country no longer consider banking as a 9 to 5 affair. They want the freedom to do transactions in the middle of the night. To facilitate that we have to have mobile applications. We have our own app called “Dhaka Bank Go” which in my opinion is the best in the country. In terms of functionality and friendliness, our app has its nose in front compared to its peers. We have also integrated bKash in our app that empowers users by enabling to top up their account without having to go to an agent. Also, it can be done at any time of the day–it has proven very helpful in time of emergencies. Similarly, we have also introduced loan applications.
To start with, we have introduced this service for the account holders of Dhaka Bank, they can apply through the web-based service. Customers can apply for a loan without even setting their foot into a branch and they will get a decision on their loan within 72 hours. After a decision is made, you can go ahead with the required paper works. Otherwise, it can be very frustrating to be denied a loan after you have completed all the paper works and waited for weeks already. While designing the software, we have taken this out of the equation for our customers.
We have also initiated programs to support the SMEs. Our country is growing at more than 7% but we are failing to create enough jobs. That means our growth is not inclusive, which can be counterproductive. As a primary source of employment, SME is an extremely important sector. Challenges that we (banks) face regarding this sector is getting the correct financial information from them. Many of them do not maintain any proper ledger; they mostly rely on manual record keeping. Through a third party, we helped them design an app called ‘iKhata’. With enough data, this app can produce an income statement, balance sheet, stock holding and other necessary documents that banks might require. It makes the bank’s job very easy during renewals and SMEs can easily keep track of their business. We have made this app universal, not just specific to Dhaka Bank. So, other banks and SMEs can use this app for documentation. Our initiative is also heavily praised by Bangladesh Bank. We also have another app through which, we get back within 24 hours from the submission of documentation. In addition, we have Dhaka Bank C Solution; it is a cash management solution. It is a web-based solution for all your payments. It eliminates the need for writing checks, even your presence during making payments.
Our security system went through a massive upgrade with two-factor authentication and One Time Password (OTP). Whatever we did for our customers, we always wanted to ensure two things, convenience, and safety.
What’s your take on an alarming rise of cybertheft and cybersecurity as a whole in the banking sector. Where are we lacking in? Are banks not taking things seriously enough or is there a lack of consciousness among the consumers?
I think it’s both. It is true that our (banks) measures have fallen short, more importantly, the perpetrators are becoming much smarter; their methods are continuously evolving. On average, banks are facing hacking attempts 10-15 times a second. This is a global epidemic. We are doing everything in our power to keep our client’s money safe, it’s worth mentioning that it takes a lot of investment to do so.
The incident that you are referring, the banks could not have stopped even if they had 24-hour surveillance. The customer accounts that were hacked did not get debited, somebody took control from a remote place and no transactions were recorded. They only way incidents like this can be stopped is to put a ceiling on the number of transactions that can be done through a remote transaction. Had there been such restrictions, the banks would not have lost such a large amount of money.
On the other hand, consumer awareness is very important. We have had incidents where a customer shared their password with office clerks because he didn’t want to go to the ATM to draw money. Frequently client’s money is stolen by their own family members who have access to all his(clients) details. Most of the time, victims hide this fact and we later find these out through CCTV footage. Sometimes clients ignore SMS notifications about any transactions, which they can stop by calling the bank. So, customer awareness is very important. We have seen that customers do not like PPI. We call them whenever there is a transaction of more than 100,000Tk, to confirm if a cheque was issued. Customers treat this as an inconvenience. I have a humble request to our valuable customers, not to treat these protective measures as an inconvenience.
What has been the biggest achievement of Dhaka Bank according to you in its 24 years journey?
I have been working with this bank for more than 3 years. I think, one of the most important achievements is the trust of our customers and we know we have done a lot for some of the big players in the market, who had a humble beginning. Throughout its journey, Dhaka Bank has been the largest supporter of entrepreneurs and SMEs. According to Bangladesh Bank, among all the SMEs, 25% started their banking with Dhaka Bank.
We were the first bank in Bangladesh to start with modern consumers banking tools and online banking platform. And also, the first bank to introduce lounge card and bKash integration. Our payment solution is the best in the market. We are the first bank in the history of this country to introduce blockchain technology for trade, the most talked about technology in the financial world and is extremely sophisticated–we are very proud of that. At the same time, we haven’t faced any major reputational or ethical issues. Our employee turnover is very low and we are very thankful for our directors who are insightful leaders. We have been awarded as the best bank in 2018 by the Banker Award.
What has been the biggest challenge that you faced during your tenure at Dhaka Bank?
The first and foremost thing is improving the capacity of human resources. For any institution, you need two resources, one is capital and the other is human resources. Capital can come from anywhere but the most important thing is running the institution. For that, you need good quality employees.
Dhaka bank has a deposit of 20,000 crore taka from customers. Therefore, we need to ensure that we have enough liquidity to pay off our depositors. You need people who have a good understanding of risk and a good understanding of the system. Not everybody can do it, so getting the right kind of people has been a problem for each and every bank. So, making employees perform to a level for delivering good services to a customer is a challenge.
Another challenge is to diversify our portfolio. You need to have more small-sized loans for your portfolio. From the beginning, the bank dolled out big chunks of loans, which needed to be changed with evolving time. One more thing is improving the quality of the book; it is a major issue. Recovering bad loans and restructuring and recovering some accounts have been pretty challenging. If you can improve your asset quality, immediately it has a positive effect on your business and profitability. Also, bringing the latest innovations to our customers has been both a challenge and a rewarding factor. Fortunately, I have been blessed with very capable colleagues and have been a great support.
Next year Dhaka bank is going to celebrate its 25th year of establishment, it is also an important year for our nation as well. What’s your plan for this grand occasion?
We will keep on innovating to provide services that our customers need. We will help the youth of our country. We want to contribute to the development of our country in the long term.
Will there be any new innovative product?
For us, CSR is also very important, because we want to give back to the society we benefit from. We have worked with Holy Family Hospital earlier and at present, we are helping Sandani, the biggest blood donation organization led by volunteers to create a website which will make requisition easier. Moreover, we are trying to make the trade even easier for our clients, so that they can continue trading from the comfort of their office. We are also working on tap banking which will make opening accounts from home possible. Improvement of our call center services is on the works. We will look into increasing the number of booths available. Dhaka bank is also facilitating supply chain funding; for example, PRAN as a lot of suppliers who often face funding issues. We are running a pilot program that makes payments immediately after their goods are received by PRAN. Distributive financing is also on the works. Therefore, our focus is primarily on SMEs and at the same time, we will try to get involved with the retail sector as much as possible.
Some experts say that the banking sector is overpopulated and are suggesting mergers to improve the banking sector. What is your take on that?
I have been saying this for quite a while. As an individual, I personally believe the number of banks is much higher than what we need. It is true that the government has its own reason and access to information that I don’t possess, on the basis of which the government has allowed the number of banks to grow. This has created stiff competition in the banking sector. Competition is good as long as it remains healthy because the unhealthy competition will deteriorate the standard of the banking sector down. So, from my perspective, I think the number of banks should be lower. Honorable Finance Minister has said in his budget speech that he was going to increase the capital requirement of the banks, which is a laudable step. For example, if the capital requirement is raised to 1000cr taka, many of the banks will not be able to comply with that. But we need higher capital required as our banking industry is very fragmented. Since we are formally going to be recognized as a middle-income country, we have to ensure that we have banks with adequate capital. Banks with enough liquidity and strength to sustain any kind of shock are a must for any thriving economy. To achieve that we might require some mergers and acquisitions, with which things are bound to improve. At the same, I would also like to add, we need a strong judiciary system, we need fast disposal of the pending cases. I want to see some exemplary punishment to some willful defaulters. These people are hurting our banking sector, NPR has gone to 8.7%. Unless there is stern action taken against willful defaulters, I don’t see an end to this trend.
Last question, what is the most rewarding factor as a banker?
I have been in this sector for more than three decades now. I have also worked with multinational banks and before joining here, I worked for BRAC bank. I won the Asia Pacific Award for Best Banker in the Country while I was working in BRAC, a few people from our country have achieved that. When I took over BRAC bank in 2010, it was very small. Over the course of seven years, with the help of the great team I had, we made BRAC Bank one of the best in the country. Also, during my time BKash was launched. Over the last three years, I have tried to make Dhaka Bank more efficient and reliable and tried to enhance the brand image of the bank. This was not possible without the great team I have; I have also been made the chairman of ABB. The love and respect that I get from people, employees, stakeholders, and the central bank are very important for me as a banker. Also, my two daughters are the greatest gifts life has given me. My wife and I try our best to give them the best life we can afford.