"It was the best of times, it was the worst of times?" So begins Charles Dickens' A Tale of Two Cities. While banking and investment companies have some ways to go, and thus this quote may not be true in the literal sense, Muhammad Shafiq Bin Abdullah, the CEO of ICB Islamic Bank is looking forward to a better time ahead with financial inclusion.
"But it needs a clear mind set, cultural and attitudinal changes at grass roots and cutting edge but cost effective technology. One should not force the banks to implement financial inclusion as all are not ready to cope the changing situation", Abdullah, the Malysian banker working in Bangladesh told The Daily Observer addressing the ongoing dialogue on financial inclusion.
Financial inclusion has gained growing attention in development circles, when the competitive environment continues to be brutal in the banking industry. As country after country experiences crises of client over-indebtedness, microfinance institutions are facing unprecedented criticism.
"Now the top priorities for banks are regulatory compliance, improving asset quality, enhancing customer centricity, focusing on digital convergence, and tackling competition from non-banks. Extreme margins pressure, and cost cutting are the big hurt burn for the banks", Shafiq Bin Abdullah observed.
"Each bank has its own strategy to survive in the competition. Here, regulators should not impose any thing which will hit the profitability of banks", he told the Economic editor of the daily.
Meanwhile, the CEO of ICB Islami bank observed, the microfinance industry is re-examining its role. Central banks and finance ministries throughout the developing world are putting national financial inclusion policies in place. As a result, industry players are questioning prior assumptions about the laser focus on growth and credit that has dominated microfinance.
"If we are able to scale up and sustain our efforts, I am quite hopeful that the targets set by the banks and our objective of achieving universal financial inclusion is attainable. But, it is not automatic and cannot be taken for granted. There are a number of issues and challenges that have to be surmounted", he said.
He raised the question: Why are so many bankable people unbanked despite the rural policy-push? He observed three big challenges- cost, lack of robust technology, lack of awareness are the main barriers.
Some of these challenges are clearly being exaggerated and others can be easily redressed. But one thing we must remind that all banks are not ready to address these challenges right now, he noted.
Muhammad Shafiq Bin Abdullah joined the ICB Islami bank on Nov 2013 with his advanced banking knowledge, diverse skills and experience in developing innovative solutions and 22 years of banking industry experience in leading banks in Malaysia.
He played significant role in Business Process Re-engineering, bank merger, IT system transformation and core banking projects across ASEAN region and NASA Account Opening - first bank in Malaysia to introduce paperless account opening process.
Replying to a question, Abdullah said, his country Malaysia, Southeast Asia's third-largest economy, is outperforming its neighbors with robust economic growth driven by financial inclusion.
"Malaysia's central bank, Bank Negara Malaysia, is not only promoting financial inclusion efforts for its own citizens, it is supporting other countries and sharing lessons learned. Malaysia is leading through action - a true champion for the unbanked," the Malaysian born bank CEO told the daily.
In Bangladesh, Abdullah observed, Dr. Atiur Rahman, Governor of Bangladesh Bank has made a big effort in increasing availability of the highest quality banking services to the farmers and allocated a Tk 200 crore refinance scheme for these farmers so that these bank accounts will remain active.
The marginal and landless farmers, small shop owners, hawkers and people affected by river erosion having the Tk 10 accounts will get loans under the refinance scheme with a 9.5 per cent interest rate, he continued.
"We have progressed a lot in access to finance in the last several years. The number of bank branches (nearly 9000), accounts and products have increased significantly over the years", he said.
The CEO of ICB Islami Bank also lauded the government and the BB for their efforts to distribute subsidies through bank accounts, otherwise the accounts (one crore Tk 10 farmers' accounts) will remain dormant. But time has come for the BB to assess how far these accounts are being utilised, he observed.
"10 crore accounts do not mean that 10 crore people have accounts," said Shafiq Bin Abdullah. "Still, many people are ignored by the current financial system for being too poor."
An inclusive growth will act as a source of empowerment and allow people to participate more effectively in the economic and social process, he noted. Technology is a great enabler and has to act as a ladder to achieve the ultimate goal of providing financial services to the financially excluded, he mentioned.
"What we need is "Technology with a human touch". Banks should, therefore, take extra care to ensure that the poor are not driven away from banking because the technology interface is unfriendly", Abdullah said.
"But we must consider the concern of rising IT cost, security of data and physical delivery of cash. Many banks are yet fighting to find a niche market and policy makers should not force them to adopt high cost IT infrastructure", the CEO of ICB Islami Bank told the daily.