Interview with Mr. M. Mudassar Adil – CEO, FINCA Microfinance Bank Limited
M. Mudassar Aqil is the CEO of FINCA Microfinance Bank Ltd, since 2011. He has overseen the bank’s turnaround which has seen FINCA becoming one of the fastest growing microfinance banks in the country. FINCA is also a global network of microfinance institutions across 21 countries and is considered as an innovation leader in serving low income entrepreneurs globally. Since its inception 8 years ago in Pakistan, FINCA has given600,000 small loans to micro enterprises to grow their businesses and disbursed nearly 50 billion rupees and helped create thousands of new jobs. FINCA is considered the pioneer of cash flow based unsecured lending in Pakistan and has the distinction of highest average loan ticket size in unsecured lending in the Pakistan microfinance sector. Mudassar is a banking industry veteran. Prior to joining FINCA, he worked for 14 years at leading commercial banks in Pakistan and the United States. He holds an MBA from Salisbury University, Maryland.
PAGE: FINCA IS A GLOBAL LEADING MICRO-FINANCE INSTITUTION, WITH BRANCHES SPREAD WORLDWIDE. HOW DO YOU PEOPLE INTEND TO SERVE THE MASSES IN PAKISTAN ESPECIALLY THE UNBANKED POPULACE?
MUDASSAR AQIL: FINCA has been working for the betterment of the financially underserved across 5 continents for the last 30 years. FINCA is leading the way, worldwide, in expanding access to socially responsible financial services in underserved and low-income communities. Access to credit, savings accounts and money transfer services allow people to be more productive in their small businesses and consequently to have more control over their lives. Globally, FINCA has expertise in credit facilities ranging from as low as $200 to as high as $100,000. We are bringing this experience to Pakistan, putting our efforts into introducing innovative products to meet the needs of the financially excluded people in the country, especially the MSMEs who contribute a major share in Pakistan’s economic growth.
PAGE: FINANCIAL INCLUSION IS ONE OF THE ASPECTS OF MICRO-FINANCE INSTITUTIONS, HOW DOES FINCA INTEND TO TAP ON THAT ALONG WITH THE USE OF TECHNOLOGY?
MUDASSAR AQIL: Financial inclusion is definitely the aspect of the micro-finance institutions. The financial services offered by microfinance institutions are typically taken up by the lower spectrum of our population that hasn’t had access to financial services like middle and upper classes have. The microfinance loans usually do not require collateral, which has been one of the main hurdle in acquiring funds from mainstream commercial banks. Similar is the case with the savings that we offer; we have diverse set of deposit instruments backed by high rates of return, payment solutions and value added services.
Despite offering a set of services tailored to the needs of low income households, boosting financial inclusion has its fair share of challenges too. Chief of them is increasing access and convenience to the financially excluded at a greater rate than the increase in population; something that is not possible with the traditional brick and mortar branch model. That’s where technology has already come in, witnessed through the growth of Fintech(s) within the banking industry worldwide and chiefly in underdeveloped areas such as Africa etc. That’s where our branchless banking solution, SimSim, derives its need to exist. We firmly believe that SimSim is the future, as it brings significant convenience and accessibility that cannot be matched by hard cash, once the idea is embraced En masse. That’s something we have to work towards too, spreading the awareness and the benefits of mobile money.
Through SimSim, you can open a bank account in 1 min directly from your Smartphone. The ease of on boarding has attracted nearly 100,000 people to SimSim after our formal launch a few months ago. These power users have collectively conducted over 500,000 transactions worth PKR 2.5 billion in this short span of time!
PAGE: THERE HAS BEEN INCREASED COMPETITIVENESS IN THE MICRO-FINANCE SECTOR, HOW HAS THAT RAISED CHALLENGES IN TERMS OF THE OUTREACH TO PROSPECTIVE CLIENTS AND HAS IT IMPACTED YOUR PROFITABILITY?
MUDASSAR AQIL: I would always welcome increased competition, as that means consumers end up benefitting the most. However, I feel Pakistan’s market competitiveness isn’t at a point where this competition could impact any MFBs’ outreach or profitability. PMN estimates that Pakistan has a potential of about 20 million microfinance customers, whereby as of Q2 2017 only 25% of the market has been tapped. So there’s plenty of room to grow, and plenty of financially excluded population to bring into the fold.
PAGE: MFB’S OBJECTIVE IS TO EMPOWER SOCIETIES FROM A SOCIAL AND ECONOMIC PERSPECTIVE, HOW SUCCESSFUL HAS FINCA BEEN IN PAKISTAN IN THAT REGARD?
MUDASSAR AQIL: FINCA has definitely played its bit in the economic empowerment in Pakistan. Till date in Pakistan, FINCA has disbursed 600,000 micro loans worth PKR 50 billion, that micro and small entrepreneurs have invested in their businesses to meet their working capital requirements. Through primary research, we also know that these loans have helped support 10 Million employments and their households. Furthermore, we have a Financial Literacy Program that organizes community sessions around the areas where FINCA operates and educates them about the benefits of financial services. As an organization, we also firmly believe in social responsibility, which is why they actively participate in community programs such as blood donation camps, awareness about clean cities and waste management, visits to engage the children at Shaukat Khanum Hospital in Lahore, etc.
PAGE: SMALL MEDIUM ENTERPRISES REMAIN UNDERSERVED IN THE MICRO-FINANCE SECTOR OF PAKISTAN, HOW DOES FINCA INTEND TO CATER TO THIS SEGMENT?
MUDASSAR AQIL: I feel the best way to improve the MSME sector is through tailored products and services that are aligned with their needs, are convenient to use and easily accessible through a brand or an organization that the customers consider trustworthy. FINCA has a broad range of products and services, with tailored specifications, backed by easy repayment solutions. We also have our mobile money solution, SimSim to gel these services together, making some of the financial services very convenient to use, as convenient as using your Smartphone.