Wednesday May 29, 2024

How a bank was born

By Dr Abid Qaiyum Suleri
March 26, 2023

Pakistan has been passing through difficult times in its recent history. The polycrisis originating from political and economic uncertainties has engulfed the country and its people. To counter the commentators painting a doom and gloom scenario, this is an apposite time for someone to explain through real-life experience why we should have faith in Pakistan and how to find opportunities for societal betterment among disruptions.

A successful Citibanker of Pakistani origin has done so through his autobiography in a compelling manner. With 27 years of experience, having worked in several countries, including Saudi Arabia, Bahrain, Greece, the UK, the US, Hong Kong, Pakistan and Iraq (out of Dubai), he returned to Pakistan at the peak of his career. He came back not to join another corporate entity or take a high-flying position in the government but to invest his hard-earned money (around $2 million) in his dream – to do something significant for his country. He wanted to enhance financial inclusion and serve the financial needs of people at the grassroots level through micro-financing.

Except for his wife who encouraged him to pursue his dream, he was cautioned by most of his friends and well-wishers against the ‘risks’ and ‘uncertainties’ of investing his lifetime earnings in Pakistan. He had faith in Pakistan and trusted his abilities to convert crisis into opportunity. Putting his skin in the game, he was able to convince a few others to invest in his idea and successfully launched a microfinance bank. He walked the talk and built a team of dedicated and committed individuals.

His bank progressed well, and in a few years, its operations expanded nationwide. The success of the microfinance bank convinced a major telecom company (telco) to join hands, leading the way to the first telco-owned bank in Pakistan. This joint venture proved to be the pioneer of many innovative initiatives. The telco’s airtime selling agents became his branchless bankers. Even at an initial stage, in 2010, these branchless bankers (30,000 agents) were 2.5 times more than the existing commercial bank branches (12700 branches).

During those days biometric verification of phone sims was made compulsory to control increasing incidents of terrorism. Ninety million mobile phone sim holders were biometrically verified through the NADRA database. It helped revolutionize digital payments, especially domestic remittance transfers, without investing in any physical infrastructure. His idea of using a biometric verification system decreased fraud and removed the hassle of CNIC collection for domestic remittances.

To serve the unbanked population, he introduced the concept of hassle-free account opening. Every biometrically verified sim holder could send a mobile text message to open an M-wallet account within a minute. With the help of his team, this Citibanker created miniatures of customer banking operations at a micro level, especially for those who had never imagined entering a bank building. Besides obtaining micro-loans and sending domestic remittances, his customers could deposit their savings in branchless banks. They could pay their utility bills in a dignified way and avail themselves of life insurance on maintaining a minimum balance threshold.

By 2016, his microfinance bank, ‘Tameer’, had 18 million M-wallet accounts in the market compared to the 22 million bank accounts with commercial banks since the inception of Pakistan. He started as a novice in the microfinance market and became the major provider to the unbanked in Pakistan.

You might have guessed I am referring to Nadeem Hussain’s autobiography, ‘A bank is born’. Nadeem is the founder of Tameer Bank and Easy Paisa. The concept of digital transfer of domestic remittances became so popular that the noun ‘Easy Paisa’ became a verb.

Highlighting his success story, Nadeem explains that the number of active borrowers from either the commercial banking industry or the microfinance industry is only about 10 million in a country of 225 million. Of that, 1.5 million is for commercial banks comprising credit cards, car loans, personal loans and mortgages, and 8.5 million is for microfinance. It shows serious financial exclusion but provides a serious opportunity for someone like him to serve the unbanked population.

After turning Tameer Bank and Easypaisa into a success, Nadeem sold his share to Telenor and moved on to implement his other ideas. In eleven years, at the time of his exit, Tameer Bank was valued at $100 million. A year after his exit ANT financial services (Ali Baba group, China) valued Tameer bank at 410 million dollars and became its 45 per cent owner.

Besides materializing his dream of paying back to Pakistan, Nadeem earned a handsome profit from his initiative. However, he is not among those whose only aim is to run after profit. Whatever profit he earned, he invested in his next endeavour: ‘Planet-N’.

The potential of digital connectivity and data and his faith in a younger generation with brilliant ideas but not necessarily the execution experience/ability to create a platform which could be the first billion-dollar tech company motivated Nadeem to invest his capital in the dream of youngsters through Planet-N. You must be thinking he is insane. However, he has a very rational explanation for his optimism, digitalized railroad, demographic factors, emerging middle class, and infrastructure for biometrically verifying 90 million people in Pakistan in real-time through NADRA.

To him, 95 per cent of Pakistan is covered by 3G and/or 4G, and there are 100 million plus smartphone users in Pakistan. Once connected, their phones no longer remain a phone. They can be a bank, hospital, pharmacy, school and/or entertainment centre. He calls this a “digitalized railroad” to find disruptive solutions. He believes that 64 per cent of Pakistanis under 30 are major change agents, whereas the emerging middle class is looking for choices.

Nadeem’s philosophy is that digitally connected and biometrically verified smartphones can help develop the persona of users – such as category ‘A’ individuals with income above ‘X’, living in ‘Y’, and having a buying pattern of ‘Z’ – through artificial intelligence and machine learning. The idea is to take an industry, whether financial services, health, entertainment or education, to understand the pain points, and remove them to expedite the process with more convenience and more value for money.

Nadeem is open to supporting any startup that delivers hassle-free, efficient services in an effective manner, matching different personas. Pi-Pakistan streaming services is one of the start-ups that he financed. Another one is ‘Tez finance’ which instantly gives loans without paperwork, serves the bottom of the pyramid, and does not ask them for proof of income. Providing loan decisions is based on things that exist on their biometrically verified SIM and smartphone. In 2019 it was first in Pakistan. Now around 15 companies offer this service. To him, his next big initiative is establishing a Shariah-compliant digital bank. It will lend through alternative data points for its credit decisions.

With engaging anecdotes, personal experiences, and stories of his early years, Nadeem has made his autobiography an interesting read. He has generously given credit to his mentors, colleagues, team members, investors and family members and has graciously admitted where he made errors of judgement or where he failed. The cherry on the cake is the chapter ‘Life with Sherry Rehman’. How Sherry supported Nadeem in taking difficult professional decisions, how she joined politics, and how bravely she stood with Benazir Bhutto when BB was facing multiple life threats is a must-read.

There are many reasons in Pakistan to get depressed. However, if one is looking for reasons to have faith in this country, feel inspired and motivated, and get ideas on improving the lives of people in Pakistan, one should try going through something like ‘A bank is born’. I could not leave the book until I had finished reading it.

The writer heads the Sustainable Development Policy Institute. He tweets @abidsuleri