Fintech to dictate future banking: Pubali Bank MD

People’s smartphone affordability, a growing mentality to save time and effort for financial matters, and technology dominance will further change the banking landscape in the future, according to Pubali Bank’s managing director and chief executive officer (CEO), Mohammad Ali.

In a recent interview to The Business Standard, he also mentioned that mobile financial services and mobile phone-based services by banks are not competitors, rather complementary to each other. Besides sharing his thoughts on how fintech can make deposits more profitable and loans cheaper, the top banker pointed out why mobile banking is important for the development of the rural economy.

TBS: How do you see the future of mobile financial services (MFS) and mobile banking applications?

Mohammad Ali: Everyone, from the low-income people to the affluent, now uses cell phones. Earlier, not everyone had a smartphone, but now they do. Even the elderly citizens use smartphones to communicate with family via video calls.

Since smartphones are in everyone’s hands and many financial matters can be done through the phones, I think the future of banking depends on mobile application based banking or fintech. Mobile based financial applications are going to get huge investments around the world. Apart from retail transactions, the corporate sector will soon become mobile dependent.

In the future, bank branches will face a gradual decline in physical presence of customers thanks to their growing tendency to complete transactions with less time and effort. For example, people used to queue up to pay electricity bills. But most of them now pay power bills online. Ultimately, the banking and financial sector will transition to mobile applications and device-based platforms such as mobile banking.

TBS: Do banking mobile apps and MFS behave like business competitors?

Mohammad Ali: No, these two are actually complementary to each other. Mobile financial services basically provide transaction support, while making deposits and investments is the main task of banks. Banking apps offer many benefits beyond simple money transactions. The more the MFS transactions and integration with banks increase, the less will be the customer turnout at bank branches. The rapid digitization will lower the operating costs for banks – enabling us to pay higher interest rates on deposits and provide loans at more affordable rates. I think there should be room for the payment of loan installments by the MFS.

TBS: Where does Pubali Bank want to see its mobile application “PI” after the next ten years?

Mohammad Ali: Our app is now mostly for retail as we want to add other features in phases. We have joined the government’s new initiative “Binimoy” (a platform to transfer money from one MFS or mobile bank to another MFS or mobile bank). Our ultimate goal is to bring the entire banking solutions of an organization – from opening import LCs (Letter of Credit) to personal and corporate transactions in both local and foreign currencies – into the application.

TBS: How are customers responding to the app?

Mohammad Ali: Customer responses have been very good so far. I see “PI” subscribers and transactions almost double every few months. For example, Tk143 crore was transacted in July this year through nearly 98,000 transactions, which rose to Tk264 crore in November through 1.28 lakh transactions.

TBS: How will the applications help the rural customers?

Mohammad Ali: Mobile application-based banking services are very important for the development of the country’s rural economy. According to Pubali’s experiences, the deposit collection crossed the Tk1,000 mark while loan disbursements reached about Tk300 crore after sub-branches were launched in rural areas. This suggests that the numbers could have performed better if the app had been popular in rural areas. The app provides the bankers with easy banking services in rural Bangladesh, including disbursement of agricultural loans.