Midland Bank riding on digital tech for steady growth

Eight years ago, Midland Bank Ltd set out with a vision to become a bank for the masses riding on technology and reaching the unbanked in the hinterland.

The private commercial lender focused on digital banking and has set up brick-and-mortar branches only at strategic locations.

"We have always put emphasis on online banking," said Md Ahsan-uz Zaman, managing director and chief executive officer of the bank, during an interview recently.

The bank's focus was vindicated by the steadily growing tech-savvy population. 

As the coronavirus pandemic disrupted traditional banking and turbocharged the need for digital banking, Midland Bank, which celebrates its eighth anniversary today, could draw satisfaction from its strategy.

Now, it is confident to deliver stronger services than others as it has already established a robust digital footprint.

"The young generation is tech-savvy, and people are very busy.

So, the tendency of visiting branches is on the decline," Zaman said.

Midland Bank has introduced the internet banking application Midland Online, which enables customers to have a bank in their pocket.

"Customers will find everything in it," said Zaman, who worked at Grindlays Bank, Bank of America, JPMorgan and Mutual Trust Bank before taking the helm of Midland in 2014.

Midland was one of the first few banks to embrace the National Payment Switch Bangladesh, an electronic platform of the central bank that allows interoperability among lenders for card-based or online retail transactions through automated teller machines, point of sales and internet banking system.

It participates in the Bangladesh Electronic Funds Transfer Network, which facilitates both credit and debit transactions as a lead over cheque clearing system.

In the beginning of 2021, Bangladesh Bank took the initiative called Interoperable Digital Transaction Platform (IDTP) to make all accounts of banks, mobile financial services (MFS), and payment system providers (PSPs) interoperable by this year.

Eleven banks, two PSPs and one MFS are involved in the process, and Midland Bank is one of them.

"We have already invested in acquiring hardware and software for the IDTP," Zaman said. As a sole banking entity, Midland Bank is also connected to EkPay, a payment processor that offers bill payment services to customers and merchants.

"You might find us not doing traditional banking aggressively.

But our digital footprint can reach everyone, everywhere," he added.

Under the slogan of "Bank for inclusive growth", the bank has put importance on providing simple, convenient and secure banking services to its customers.

It has a network of 112 distribution points -- 34 branches, eight sub-branches and 70 agent outlets -- across the country. Most of the branches are located in rural areas.

While setting up a branch, booth or agent outlet, Midland always chooses an area where banking services are not widely available.

"If you want to do good for the people by providing banking services, you have to establish outlets in the regions where there are not many banks," Zaman said.

The bank has also struck a balance between traditional banking and digital banking to ensure profitability at this point of time.

Despite the pandemic, which brought the economy to a screeching halt, Midland's deposit base widened to Tk 4,506 crore in 2020, from Tk 3,950 crore in 2019.

Loans increased to Tk 3,786 crore from Tk 3,174 crore during the period. It raked in a profit of Tk 65 crore in 2020, up from Tk 55 crore a year ago.

Midland Bank has one of the lowest non-performing loan ratios in Bangladesh: bad loans accounted for 1.16 per cent of the outstanding loans last year, down from 2.64 per cent a year earlier.

"Because of the maintenance of a lower cost-to-income ratio and internal efficiency in terms of expenses, our profit has continued to grow. Our capital adequacy ratio is very strong," Zaman said.

The bank has participated in government stimulus programmes for large corporations and small and medium enterprises (SMEs).

"We have met our goal for the large entities fully. For the SMEs, we have almost achieved our disbursement target," Zaman said.

Midland Bank disbursed Tk 100 crore under the Investment Promotion and Financing Facility project to government-approved infrastructure projects at a low cost as a participating financial institution of the central bank. Another Tk 150 crore is under the process of disbursement.

The bank runs a centralised business model for corporate loans from its Gulshan branch in Dhaka and Agrabad branch in Chattogram.

No corporate loan is disbursed from branches and sub-branches, which can only provide retail and SME loans. They, however, can refer big corporations to Gulshan or Agrabad branches for large loans.

"Retail and SMEs are our main focus," Zaman said, adding that SME lending was growing at a good pace.

According to Zaman, the biggest challenge is when customers want higher rates for deposits and lower rates for loans.

The bank is accepting deposits at a rate of 5.2 per cent. It sometimes goes up to 6 per cent. "Deposits are increasing and customers from many big banks are coming to us," he said, attributing the feat to efficiency and better liquidity management.

As Shariah-based banking is gaining traction, Midland introduced Midland Bank Salam last year.

Products such as MDB Super Saver and MDB Family Support have already won the hearts of customers, said Zaman.

The agent banking service has offered a great opportunity to Midland Bank as it had wanted to avoid reliance on brick-and-mortar branches. It rolled out the service in 2016.

The bank makes the most of agent banking to onboard rural customers who are not used to internet banking.

"It is tech-based, yet customers can carry out the banking with a physical presence," Zaman said.

Last year, Midland Bank introduced a digital account opening based on the central bank's e-KYC (electronic know your customer) guideline, helping users avail financial services without visiting branches during the coronavirus pandemic.

It has rolled out an e-saver account to allow customers to open it from any branch, sub-branch, and agent banking outlet.

"It may seem that Midland is a small bank. But we have all sorts of windows to meet every need of clients."

To the noted banker, customers' trust and satisfaction are of the utmost importance.

"At the end of the day, the questions remain: have we been able to achieve the trust and satisfaction of our customers fully?"

"We want to provide the service with efficiency, due diligence and care so that a customer can feel it when they come to us. We have made all the arrangements so that they can feel the difference in the quality of service compared to other banks."

"We are not willing to make a hefty profit all of a sudden. We believe in sustainability. From inception, our main effort has been to establish a bank for the general people."