LAHORE: Mudassar Aqil, chief executive officer at Finca Microfinance Bank Ltd. talks about microfinance sector’s role in increasing financial inclusion in the country during an interview.
Q: There are 40 banks operating in Pakistan and they have so far managed to make only 15 percent of the adult populations bankable. What are the reasons?
A: Unfortunately, the financial sector has not focused on converting population en masse towards financial services. Banks in the country have lent to the government and corporations, enjoying decent revenue margins. With the advent of technology and a growing realisation that low income segment of Pakistan is not only addressable for the banks but also can be a profitable segment, banks are now focusing on developing solutions to cater to the low income individuals. MFBs are leading this revolution in Pakistan so far.
Q: How’s the future?
A: The change in direction is already in motion. The SBP has set itself a target of providing 50 percent of the adult population with formal financial services by the year 2020. Banks have to work towards offering micro products and services, and addressing product needs client segments identify. They also have to work towards eliminating the hurdles that people pointed out in a national level survey conducted back in 2015. In the survey, lack of awareness (36 percent), service not matching needs (26 percent), and lack of trust (21 percent) are the major reasons pointed out by people for not using banking or mobile money services.
Q: Mobile revolution accelerates expansion in outreach of financial solutions globally. Do you see its impact in Pakistan?
A: Finca has set its tunnel vision on riding this growth wave of smart phones too. In Pakistan, there are already 40 million 3G/4G users in a matter of a few years, and the growth is showing no signs of slowing down. There is a plethora of Fintech(s) abroad and here in Pakistan who, in partnership with banks of course, are working to harness the power of smart phones and building financial ecosystems over it. I think this transition to mobile devices is not a matter of choice but of survival. The financial players, who do not adapt to this change that technology is bringing, will struggle to make their traditional revenue streams work in the near future. Look how technology revolutionised communications; our emails instead of letters, Skype calls etc. The same is going to happen in banking as transactions become digital.
Q: How has been the response to Finca’s mobile wallet?
A: Finca’s mobile wallet SimSim is a telco agnostic model meaning that anyone with a smartphone and an internet connection can open a bank account on their phone in 1 minute. The registration process is quick and seamless, and we’re connected to all banks so you can instantly transfer in your money to the SimSim wallet. You can use this wallet, which is not in your pocket but in your smartphone, to pay your bills, send and receive money, dine and shop at your favourite places in Lahore and Karachi through our expanding pool of merchants. We were in a pilot phase for a while, and got an approval from the SBP for commercial launch from July 26. The response is encouraging, more than 50,000 SimSim wallets are opened and 1,000 merchants are registered.
Q: How has been Finca’s progress as a financial institution since its inception?
A: Finca has a rich history in serving the low income households, having worked in 21 countries across 5 continents for the past 30 years, serving nearly 2 million clients in the process. In Pakistan, we’ve been working since 2008, providing unsecured credit facilities to low income entrepreneurs, building a network of sustainable and scalable microenterprises.
Till date, we have provided 500,000 loans, without holding any collateral, all over Pakistan. Through these loans, micro entrepreneurs invested Rs40 billion in their enterprises for working capital requirements. These loans also generated estimated 98,000 new jobs in the process, supporting a total of 1.40 million households. We also have extremely attractive deposit options for savings and investment backed by latest payment solutions.
A depositor of Finca earns handsome profit for his investment through any of our deposit products. Furthermore, investment principal has a direct impact on the earnings, employment and livelihoods of low income households, to which Finca lends. These core products and services are woven together by our focus on providing our customers the best customer experience possible.
