Standard Chartered looks to innovation to boost banking in Pakistan

Standard Chartered looks to innovation to boost banking in Pakistan

What has been a unique feature for Standard Chartered in Pakistan is its digitization agenda. The bank has gone one step ahead in its drive to go digital in March 2015 when it opened the country’s first digital branch at Dolmen mall in Karachi. “To us, both on the retail and corporate side, that is the differentiating factor, and we plan to open more digital branches all over the country,” the bank CEO Shazad Dada tells The Asset.

Standard Chartered has been at the forefront in investing in the digital space in Pakistan and it is a market leader in interbank fund transfer transactions through digital channels. At present, 94% of the bank’s corporate payments and 68% of retail transactions are conducted digitally.

“Digital banking has taken off in Pakistan,” says Dada. “First and foremost, we are improving the customer experience. We are also enhancing the controlled environment, which means less human touch and, therefore, mitigates the chances of error and fraud. It likewise reduces our cost per transaction.”

With its digital banking technology, Standard Chartered is rationalizing its branch network, closing outlets in non-core cities and non-core markets. Yet, Dada says its retail deposits have increased despite that. The bank has 101 branches and an even larger number of touch points with 184 ATMs.

Standard Chartered has connected its fully integrated internet banking service Straight2Bank with the State Bank of Pakistan’s payment system called Pakistan Real-time Interbank Settlement Mechanism (PRISM), enabling a customer to make a payment seamless with the touch of a button.

What should also push Standard Chartered’s digitization agenda in Pakistan is the digital tablet-based sales-and-service tool called Retail Workbench. Seamlessly integrated with the bank’s back-end infrastructure, Retail Workbench allows the relationship managers to open an account for a client in any location and makes banking services such as loan approvals and credit card issuance fast, simple and completely paperless. “This is transformational,” Dada points out.

Standard Chartered in March this year announced the global launch of Retail Workbench, marking a milestone in the bank strategy of using digital technology to deliver a better banking experience to clients. It announced in 2015 that it will invest US$1.5 billion in technology over three years.

Indeed, digital banking is crucial for Standard Chartered in Pakistan to sustain its competitiveness and face the headwinds confronting the industry. “One challenge that we face today is too much liquidity in the Pakistan market. It‘s so liquid that the pricing is unbelievably razor-thin,” laments Dada. “So from an asset point of view for the foreign banks, when they applied the risk weighted assets in their international capital rules, they find it difficult to compete with the local banks.”

Another phenomenon in Pakistan in which Standard Chartered is a competitive participant is mobile banking. Its mobile banking application, Breeze Mobile, is one of the leading mobile banking applications in the industry in the country and it has about 200,000 Breeze customers.

Standard Chartered has partnered with Easypaisa, Pakistan’s first and largest branchless banking service, to launch its mobile payments service for corporate clients named Straight2Bank wallet in Pakistan. Using this wallet, the bank’s clients such as non-governmental organizations (NGOs) and fast moving consumer goods companies will be able to make secure payments directly into their beneficiaries.

Easypaisa is a joint venture between Telenor Pakistan and Tameer Microfinance Bank. “We do not consider them as a competitor, but as a partner,” says Dada. Illustrating such partnership, Standard Chartered was able to service the requirement of an NGO client, which wanted to make payments to around 3,500 females in some underprivileged areas that it has identified.

“We do not have a branch in those areas so we used our Straight2Bank wallet connected into Easypaisa and immediately was able to dispense all the cash to the beneficiaries,” Dada notes. “If we do not have that solution, that business could have gone to a competitor. We were able to bank the unbanked.”

The payments on Easypaisa mobile accounts are sent in real-time, allowing the corporate clients to bypass the onerous and risk-prone cash payment processes. Other benefits include improved cash flow for beneficiaries and visibility with certainty in payment date.

Dada says Standard Chartered will continue to have the brick-and-mortar banking concept and will grow its business with more touch points. The bank has forged an arrangement with National Institutional Facilitation Technologies (NIFT) to handle its cash collection. All commercial banks and all of their branches in major branches avail of NIFT’s services and with a presence in 300 cities, it takes away the disadvantage for a bank not having a presence in the far-flung areas.