Fintech to dictate future banking: Pubali Bank MD

People's smartphone affordability, a growing mentality to save time and efforts for financial affairs, and tech dominance are going to change the banking landscape further in the future, according to Pubali Bank Managing Director and CEO (CC ) Mohammad Ali.

In a recent interview to The Business Standard, he also mentioned that mobile financial services and mobile-based services by banks are not competitors, rather they are complementary to each other. Apart from sharing his thoughts on how fintech could 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 apps?

Mohammad Ali: Everyone, from the low-income people to the affluent, are now using mobile phones. Earlier, not everyone had a smartphone, but now they have one. Even the elderly citizens are using smartphones to communicate with relatives via video calls. 

As smartphones are in everyone's hands and a lot of financial affairs can be completed through the phones, I think the future of banking depends on mobile app based banking or fintech. Mobile phone-based financial apps are going to get major investments across the globe. Apart from retail transactions, the corporate sector will become mobile dependent soon. 

In the future, bank branches will be facing a gradual decline in physical turnout of clients thanks to their growing tendency to complete transactions with less time and effort. For example, people would queue up to pay electricity bills earlier. But most of them are now paying power bills online. Ultimately the banking and financial sector will convert to mobile apps and device-based platforms like mobile banking.

TBS: Are bank mobile apps and MFS act 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 are the prime task of banks. Bank apps offer many benefits on top of simple money transactions. The more the MFS transactions and integration with banks increases, the less the customer turnout will be at bank branches. The rapid digitalisation will lower the operating cost for banks – enabling us to pay higher interest rates on deposits and provide loans at more affordable rates. I think there should be scopes for paying loan instalments by the MFS. 

TBS: Where does Pubali Bank want to see its mobile app "PI" after the next ten years?

Mohammad Ali: Our app is now mostly for the retail end as we look 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 target is to bring the entire banking solutions of an organisation – from opening import LCs (letter of credits) to personal and corporate transactions in both local and foreign currencies – into the app. 

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 doubling every few months. For example, Tk143 crore was transacted through nearly 98,000 transactions in July this year, which jumped to Tk264 crore through 1.28 lakh transactions in November.   

TBS: How will the apps help the rural customers?

Mohammad Ali: Mobile app-based banking services are very important for the development of the country's rural economy. According to Pubali' experiences, the deposit collection crossed the Tk1,000-mark while loan disbursements reached around Tk300 crore after launching sub-branches in rural areas. This suggests the figures could have performed better if the app was popular in rural areas. The app offers the bankers easy banking in rural Bangladesh including agri loan disbursement.