Standard Chartered eyes expansion in Pakistan

KARACHI: Philip Panaino, Head of Transaction Banking in Middle East and Africa at Standard Chartered hopes to expand the bank’s footprint in Pakistan through a mix of organic growth and investment in products and technology. 

Q. How do you see the state of transaction banking and payment system in the Middle East, Africa and Pakistan?

 A. Payments and transaction banking business has grown quickly, and achieving profits on investment banking can now only be imagined of. It has become one of the hottest growth areas in the banking sector globally. It is interesting to see evaluation of transaction banking business throughout the global markets where it accounts for nearly 30 percent of total banking revenue growth. The cocktail of digital technology advancement, migration from cash to electronic payments, delivering innovative value-adding services and growing cash management needs of the corporate provide immense opportunity to grow for this segment of banking in future. Given present trend of growth trajectory, revenues are estimated to be doubled to reach nearly $2 trillion by 2024. 

It’s a key strategic focus for the Standard Chartered Bank. We are seeing a lot opportunities in transaction banking capabilities across the global markets and an important part of business and synergy to Pakistani market as well. Through a range of products from cash management, trade finance to card payments, we try to deliver more efficient and more advanced technological features of solutions to our customers. 

Q. How much have you invested in the transaction banking?

A. We have been aggressively investing in our businesses because technology is really the future of our business. We structured cash management solutions for our clients by leveraging our investments in products and technology. We strategically combined these with our deep understanding of our client’s businesses to up tier and upgrade client systems and processes. In addition, our footprint in the local market and presence in the retail, commercial and corporate segments (unlike any other foreign bank) helps us cater to the client’s local cash management needs end-to-end.

From an Africa, Middle East and Pakistan perspective, we have done considerable investments into mobile capabilities and most notably the best examples of mobile investments are really coming in the region, including Pakistan. We have had tremendous amount of success in East Africa, Nigeria and recently we got an approval from the central bank to move into the next phase of integration with large mobile network operators in Pakistan. The very significant thing about Pakistan’s community is that the adult bankable population is almost one fifth of that of mobile subscribers. This is a tremendous opportunity to leverage.

We have recently gone live with real time gross settlement systems (RTGS) automation drastically improving the turnaround time for incoming and outgoing RTGS (first bank in Pakistan to integrate with central bank’s system).

Moreover, we have also obtained a special approval from the State Bank of Pakistan for a strategic tie-up with the central clearing house National Clearing House for collections in non-presence locations at a reduced turnaround time.

We are also rolling out mobile money collections, which will facilitate unprecedented coverage all over the country even in the most remote areas where there are no physical branches.

In line with our drive towards digitisation and continuous innovation, we launched liquidity management solutions to provide flexibility to implement scalable sweep structures in order for the client to enjoy better control and visibility on its liquidity position.

We have partnerships with some of the largest local banks in the country and have recently added HBL (Habib Bank Ltd. as a collections partner) increasing our footprint by more than 1500 branches. 

Q. Which are your upcoming solutions?

A. We are rolling out direct debit initiation capability, which will give clients the option of collecting from their distributors by directly debiting their accounts held with other banks. Upcoming rollouts also include electronic fund transfer to beneficiaries, who do not hold a bank account or a mobile account, by using their national identity card number as an identifier. Beneficiaries will be able to withdraw funds from any EasyPaisa outlet.

Q. What are the challenges?

A. In my point of view, the deterioration in economic environment fuelled by falling commodity prices has affected businesses throughout the world markets. However, payments markets continue to boom in most of the regions. From the perspective of Pakistan, we are elevating our presence here as regulatory measures are supportive and technological solutions are going to be more integrated.  

Q. How do you view the ecosystem?

A. We have received phenomenal support from the State Bank of Pakistan in growing our business. I would say its vision and leadership is absolutely remarkable. Pakistan’s government stands out for its considerable initiatives to promote financial inclusion in support of the SBP, which is also very keen to spur digital innovation in the payment system as well.  

Q. Digital transformation is posing a threat the conventional model. What do you say?

A. This is the piece for the banks to solve. Evolution and adoption of new emerging technology, mobile phones, whether it is digital documentation is the future of the banks. 

We need to balance out the branch network. What do we need a branch network for? It is often the last resort of service or for complex problem or facilitation of complex structure for which the branch network would need to be used for. The end result is going to be a complementary model.

We can make small ticket transactions through digital banking. In Pakistan, if you are a small and medium enterprise and second generation entrepreneur you have the capability to do all of your transaction banking online.

Q. Do the China-Pakistan Economic Corridor projects present any opportunity?

A. Yes. The economic corridor will bring trade and investment opportunities to the region. It’s going to boost infrastructure, imports of goods and development of infrastructure between the two countries.

With the initiation of the second phase of the economic corridor, a number of industrial and economic zones will be established, creating opportunities for trade finance transactions. Our bank by leveraging CPEC can connect the Pakistani companies into China. That’s the beauty of SC which strengthens network and connectivity to the emerging markets.

Apart from the economic corridor, we will continue to finance this market not only for large companies, but also for small and medium enterprises and commercial banking clients. Moreover, the second generation companies have great potential to grow as tomorrow’s champions.