TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
Aug 18 - 24, 2008

When government of Pakistan started disinvesting its stakes in state-owned entities almost two decades ago and hammered a financial institution on privatization anvil to raise the curtain, there were very few who could foresee massive inflows of capital in the country particularly in the financial and banking sector. But it happened in reality and financial sector turned out to be a main concentration of foreign as well as local investments.

Blessed with the financial astuteness or sharp observation the few who would have predetermined affects of prospective-enterprising financial sector on the national economy could not share tip-offs with concerned stakeholders, thereby pre-emptive measures to meet the next overarching demand remained not in place. Basically the institutional setup that is responsible for guiding investment lines is not ever up to the mark in Pakistan, resulting in to rebirth of ordinary or transitory tactics to harness current market situation. Altogether, the importance of these guidelines to build up enduring industrial structure on long term basis can not be denied; however, in the context of low outreach of financial intermediation this becomes relatively crucial to strategize expansion of financial sector nationwide.

In recent years banking and financial sector of Pakistan has evolved in to profitable business option for foreign and local investors. Being an emerging financial market where total bank accounts comprise of mere 30 million-17% of the population- and borrowers 5.5 million, Pakistan has promising returns for investments. The main discouraging point financial sector players face with here is the unavailability of authentic market intelligence that helps in determining course of action and devising compatible products. There are small numbers of institutions in the country conducting research and market surveys on banking and finance. The outcomes of researches have been workable for individual use of the financial organization, but lack of institutionally prepared data for the development of overall financial sector is foremost an obstacle to emergence.

However, few researchers are making headways in Pakistan to develop consolidated source of bankable market information which financial institutions can refer to while planning. AcNielsen Pakistan, which is a financial research company presently analysing intelligence about banking sector of Pakistan, has completed with the patronage of ministry of finance and federal bureau of statistics first phase of the World Bank funded "Access to Finance" project that has underlying objective of finding ways to capture underserved bankable populace through researches.

"Informal sector of Pakistan has huge latent potential to propel growth in the banking sector, therefore, we are devising ways so that can be enlivened," said Arslan Ashraf, Managing Director, AcNielsen Pakistan during an interview with PAGE. He said rural areas have highest portion of such underserved customers who can be covered under the banking network through contemporary modes of financing.

In the first phase of the research, 10,000 randomly selected samples out of 260,000 households were reviewed about, for instance, how many financial risks they have in their life and how much they are prepared to meet the eventuality. The purpose was clear to collect the data about the frequency of needs in which they may require facilitation by financial intermediation process. In this relation, the field work for collecting data has already been completed and second phase of compilation is in the process that would finish after one month, he underscored. He said the results would greatly be instrumental for local and foreign banks in giving tailor made financial solutions to unexplored target markets in remote localities as well as in informal sector.

Access to Finance project is aimed especially at to bring informal sector into the bracket of formal financial transactions. He said people who prefer informal modes of financing for fulfilling their financial needs are potential target market of tactics to be formulated on the bases of research findings. Elaborating the prospective marketing strategy, he said, mobile banking would become a futuristic mode of expanding banking network in the country. "Mobile banking will play crucial role in banking sector of Pakistan in future," he stressed. It is worthwhile to note the claim of 80 million cellular SIMs across the nation, he says, adding that the numeral does not match with the collective figure of persons availing banking services at present. It means there is a huge market to be encompassed in mobile banking network. This solution is getting rapid popularity in African region, he hinted.

He says for banks to operate effectively in our region updated marketing strategies are essential. Research improves the making of strategies and the applicability of tactics. I believe that exact recognition of target market can augur well with performance of banking sector, he emphasized, added this would also help in detecting workable models. It is important too in the view that formal sector is evolving at a slow pace and there is a need to broaden the horizon of banking services from traditional market to informal sector.

"Our organization has also been tasked to prepare market segmentation study in which various groups would be categorized on the bases of standard of living, purchasing power etc.," he said. Also funded by the World Bank, this study is relevant to the growth of banking sector of Pakistan. Replying to a question, he said, so far no local institution had conducted such an across-the-board market segmentation study.

He attributed defaults in consumer financing to availing of loan facility by people over their debt servicing abilities. As professional banks are appearing in the financial scene, he said, misconducts would be died down. Realization of customer value is emerging in banking and financial sector as well. He consents with the idea that the financial sector of Pakistan is passing through an evolutionary stage. The challenges would be defied as soon as it would enter into next stage. Windfalls of growing banking and financial sector will pass down to public at large hopefully, he concluded.