Keep innovating is the only option of banking sector survival
Interview with Mr Hamad Rasool Bhullar — a freelance consultant in Business and Financial Advisory
PAGE: Tell me something about yourself and your organization, please:
Hamad Rasool Bhullar: I am a freelance consultant in Business and Financial Advisory with special reference to ethical and Islamic financial system, for almost 20 years, both in public and private sectors in addition to being a passionate trainer on management and motivation to change the lives of the youth.
I have a strong belief that we can shape our Pakistani community into a very efficient and productive community just through the right mix of training and motivation, while preserving the natural ethics and morality in our society. I am running my own institution named as DOMES Consulting as its Chief Executive Officer (CEO).
PAGE: Could you tell us about the personal finance options for consumers?
Hamad Rasool Bhullar: Personal finance is a tricky matter and varies from person to person which is seriously uncommon in our society. We in Pakistani society have two-fold barriers in it. Firstly we are shy to discuss our personal finance with anyone for advice even and secondly there is a shortage of professional learning and advisory in this area with ethics and care for the common citizens. This causes huge shocks in the form of trust and social behaviors leading to effective economic efficiency. Our society has not yet got that level of maturity which could bring a reliable and scientific system of personal finance.
In the advanced nations, they have established scientifically calculated credit scoring system for every individual, through which they are able to assess the personal financial strength or weakness while making credit and financing contracts.
Although State Bank of Pakistan has established an Electronic Credit Information Bureau (eCIB) database used for credit assessment, credit scoring and credit risk management is in limited use and costly only available to limited number of institutions and banks. Although some private level credit database have also been established and used by their respective institutions.
PAGE: Do you think the boom in credit would affect the economy owing to unprecedented levels of consumer credit?
Hamad Rasool Bhullar: Sure, as it is very important to have a transparent reliable and cheaper credit system for consumers is very important which can boost the markets and growth of the economy. We have seen it happening in the past, but after the Global Financial Crisis of 2007-08 the credit system has become very strict, which has led to slowing down the economy, but simultaneously that unprecedented levels of credit actually boosted the greed for more and thereby the entire system of credit collapsed.
We need to develop a more reliable but controlled system of personal finance. Our taxation system and the threats of the tax collection mechanism is also a major hurdle as most of the people have left the banks and opted for cash based dealings out of the banking system causing the drainage of cash from the system making it more difficult and costly for the banks and DFIs to operate in personal finance, which has resulted much higher cost of credit to the consumers.
PAGE: How would you describe the traditional borrowing options vis-a-vis the use of disruptive technologies to access on spot approvals and finances?
Hamad Rasool Bhullar: Traditional systems are more of human decision based systems which can make errors on the other hand use of disruptive technology in the credit and personal borrowings systems can also be exposed to certain levels of risk as it has also shown in some businesses.
Recently a large number of mobile Apps are being used in this aspect thereby causing spot approvals and financing systems, which is a healthy sign. On the other hand the anti-forces are always active in causing dents to the systems leading to frauds and flaws being discovered, which go side by side.
We have to use technology with innovative style in order to achieve the economic growth and credit system will expand accordingly. This innovation in the system is also cost effective and dynamic in nature as it has created more business and led to decline in cost of operations in business as well.
PAGE: What are your views about the current state of the banking sector?
Hamad Rasool Bhullar: The banking system all over the world is changing so quickly and this rapid innovation is leading it towards more system controls and lesser human controls, as the volume of transactions is rising and bringing more web-based businesses to the surface, enabling more technology being used in the system. Unless and until we use more technology in our banking system, we cannot compete in the global markets.
The largest market in the world these days is for currency exchange and money transfer, which is mainly based on digital technology. We can no more remain content with traditional styles of doing business but continuous improvements and innovations is the need of time otherwise we will be left behind becoming redundant or ineffective, so the only option for survival is to keep innovating.