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Telenor Microfinance Bank embarks upon delivering innovative banking solutions and streamlining digital ecosystem

Telenor Microfinance Bank embarks upon delivering innovative banking solutions and streamlining digital ecosystem

Interview with Mr Aslam Hayat — Acting Chief Executive Officer, Telenor Microfinance Bank

Agriculture is the backbone of Pakistan’s economy. Analysts have the consensus that production of major crops can be doubled without bringing additional area under cultivation. The major impediments identified are lack deployment of modern technologies, failure in balanced use of nutrients and huge post harvest losses. All these problems cannot be overcome without boosting lending to farmers for the purchase of inputs, deployment of technology and appropriate use of nutrients and water. For boosting lending to farmers outreach of financial institutions have to be increased. Telenor Microfinance Bank has embarked upon a program leveraging technology to deliver innovative banking solutions and streamlining on digital ecosystem. Following are the excerpts from an exclusive interview with Aslam Hayat, Acting Chief Executive Officer of Telenor Microfinance Bank.

PAGE: Can you please share your bank’s future plans?

Aslam Hayat: Looking ahead, our focus will be on continued value creation. The bank’s strategy, going forward, is based on driving and capturing growth and becoming even more efficient in how it operates, delivers services and how customers experience the relationship with the bank. As a leading microfinance bank of Pakistan, we are consistently working towards transforming the financial landscape of the country through the provision of instant access to convenient digital financial services.

Easypaisa has evolved over time to more than just a digital payments platform to a consumers’ digital lifestyle partner. In the future the app will continue to offer users the ability to send and receive money, purchase mobile top ups and bundles, pay bills, avail discounts, and do much more.

We have integrated QR functionality to make payments quicker and easier. We will continue to build on our digital nano loans to provide small, short term loans to SME’s who lack access to formal banking channels. Our international remittance service will continue to be a game changer for cross border remittances. The digital services platform will be integrated with Easypaisa for its agent network for disbursement and repayment transactions with the latter acting as an aggregator for 40 different microfinance institutions.

PAGE: Is it necessary for microfinance banks to embrace financial technology as a serious solution to meet the demand of their customers?

Aslam Hayat: We at Telenor Microfinance Bank strive to incorporate technology not only in the way we work but also in the services we offer, and since the strategic alliance between Telenor Group and Ant Financial Services Group (Ant Financial), this practice has gained a lot of momentum. In early 2019, we launched the country’s first blockchain based cross-border inward remittance service. Powered by Alipay technology, the online payment platform of Ant Financial, the service allows Valyou users in Malaysia to digitally remit money to Easypaisa mobile wallet in Pakistan within a blink of an eye.

Similarly, the bank launched Pakistan’s first ‘Digital Nano Loan’, which is easily accessible, as the customers are not required to visit a branch or fill out any paperwork. The customers can access the loan amount within two minutes of applying through their Easypaisa M-Wallet.

Telenor Microfinance Bank has always remained technology-centric. We also have the largest Biometric Verification System (BVS) enabled agent network in Pakistan, through which we are able to provide secure services to our customers. This network also allowed us to partner with Benazir Income Support Program (BISP), the government’s targeted unconditional cash transfer program. It is through our network that BISP ensures that its beneficiaries receive their grant amounts in a reliable and secure manner.

PAGE: Does the bank provide digital loans to its customers?

Aslam Hayat: Digital credit can play a very important role in increasing financial inclusion, which is a key objective of Government of Pakistan’s National Financial Inclusion Strategy and the Strategic Goals of State Bank of Pakistan vision for 2020. Telenor Microfinance Bank launched Pakistan’s first ‘Digital Nano Loan’. The loan amount for this product ranges between Rs1,000 and Rs10,000 and it is delivered to the customer’s mobile account within two minutes without requiring the customer to visit a branch or fill out any paperwork.

This innovative service is aimed at providing easy access to working capital requirements to the common man who has no access to formal finance due to the absence of a credit history. Small value credit allows a formal footprint for these people who can broaden the present universe of 30 million microfinance customers through a loan graduation process of manageable credit. We feel that this product can promote real financial inclusion by reaching a large customer base, as in less than a year into operation; it has served more than 270,000 clients, which include farmers, self-employed individuals, street hawkers, and home-based workers.

PAGE: What about your bank’s portfolios in agriculture credit and low cost housing finance?

Aslam Hayat: We believe microfinance banks are the key to future of agriculture credit. In the last few years the contribution of microfinance has been central to growth in agriculture credit in Pakistan. It is important to realize that without the contribution of microfinance banks’ to ‘farm’ and ‘non-farm’ credit it would not be on a growth trajectory in Pakistan. According to data of the Pakistan bureau of statistics, our economy has a heavy reliance on agriculture: about 24 percent of the country’s Gross Domestic Product (GDP) is provided by the sector and it also employs almost half of the total employed labor force. Farmers rarely have access to formal finance and often borrow money through informal and exploitative means.

Telenor Microfinance Bank plays a role in supporting agriculture through its products such as ‘Agri Group Loan’ and ‘Livestock Financing’. Agri Group Loan offers credit to groups of small farmers for the purchase of agricultural inputs or to provide for working capital.

Similarly, ‘Livestock Financing’ gives loans to farmers for purchase of livestock, including both dairy and sacrificial animals.

We also offer housing finance to self-employed and salaried individuals. The potential customers of this product are individuals who are not catered to by commercial banks due to a lack of banking history or those who want to construct or renovate houses in inexpensive localities.

PAGE: Has the government announced any relief measures for the microfinance banks in the budget 2019-20?

Aslam Hayat: I believe that microfinance is a growing sector so may be not seen as entitled to any relief. This sector is providing financial inclusion to the previously unbanked population of Pakistan in line with financial inclusion strategy of the government. Any support from government for the sector will help the population we serve and the financial ecosystem we are developing.

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