Midland Bank strengthening digital banking
Midland Bank has focused on further strengthening its digital banking means instead of expanding its network of branches aggressively so as to attract more tech-savvy clients, said Managing Director Md Ahsan-uz Zaman.
Since starting out on its journey in 2013, the bank has been laying emphasis on digital banking given the potentialities of the mode.
The lender, as a part of its 9th anniversary celebrations today, now plans on bringing the unbanked population under the formal channel, Zaman said in an interview with The Daily Star last week.
"There are many banks in the country but the number of lenders is still not enough if we consider some zones where the commoners are still in an unbanked condition," he said.
"There are many banks in the country but the number of lenders is still not enough if we consider some zones where the commoners are still in an unbanked condition."
The bank adopted its banking operations in a conservative manner since the inception with a view to ensuring sustainable business growth.
The number of branches of the lender now stands at 35, one of the lowest among the fourth-generation banks, as it is always focusing on digital banking instead of the physical one.
The number of branches in rural areas is higher than in the urban zones in order to materialise the bank's slogan, which is "Bank for Inclusive Growth".
However, there are around 150 distribution points, including the branches of the bank. The distribution points are largely agent outlets.
"We are trying to go to the arenas where banking activities are not adequate to serve the people," said Zaman, who joined the bank as the managing director in 2014. He was previously working for Mutual Trust Bank as additional managing director.
Midland Bank rolled out a product named "Digital Savings Account" four years ago. The product is run digitally and no cheque book is issued to clients. They are allowed to open the account through the bank's website.
If an accountholder of the product stays within 25 kilometres of one of the bank's branches, representative contact him/her to fill up its "know your customer" form.
"We are trying to capture clients through the digital means as the bank's physical existence is not too large," said Zaman who obtained an MBA degree from the Institute of Business Administration of the University of Dhaka.
If clients go to the bank's website, they will find an icon named "Jhotpot" that helps clients open accounts through the digital means in the easiest of manners.
The bank is one of the first issuers of prepaid cards in the country. The dual currency card, which is accepted at home and abroad, has gained popularity by a huge extent.
The bank is a type of a digital bank as it is running its operations giving more importance on digital modes than physical ones.
Midland Bank joined the operations of the National Payment Switch of Bangladesh (NPSB) since its inception. Under the platform, clients can transfer funds from one bank to another instantly.
"We introduced the banking application in 2014 soon after it had started its journey," he said.
Some 1.17 lakh clients are now using the app named "midland online".
The bank also set up customer care centre in the second half of 2014 to run digital banking in a full-fledged manner.
Client can now opt out of going to branches when depositing fund into their fixed deposit schemes (FDRs) and deposit pension schemes (DPS) as the digital platforms are now providing all types of support to clients to do so.
"We have partnerships with the country's three large mobile financial services – bKash, Rocket and Nagad – through which clients can send money to their accounts with Midland Bank," he said.
The central bank also gave the approval to run an Islamic banking window in 2020.
Clients are able to enjoy the Shariah-based banking, which runs a product named Mdland Bank Saalam, through any distribution point of the bank.
It comprises a wide range of deposit and investment products which are designed and ensured in such a way that they are in line with Shariah principles on Islamic banking.
The bank disbursed loans amounting to Tk 5,073 crore as of December 2021, up 12.55 per cent year-on-year when its deposit grew 13 per cent to Tk 4,269 crore.
The bank logged a net profit of Tk 51.41 crore in 2021, a decrease of 21.67 per cent from that a year ago.
The net profit of the bank decreased as its ratio of non-performing loans had increased to 3.17 per cent in 2021 in contrast to 1.16 per cent a year ago.
It is not unusual for any bank to face default loans and Midland Bank is no exception. But the bank has managed marketable securities against the loans on which clients have recently defaulted on making repayments.
But the bank has maintained a hefty amount of provisioning against its classified loans to absorb shocks, said Zaman who started his banking career at ANZ Grindlays Bank as a management trainee in 1982.
The lender did not take any deferral support from the central bank to keep provisioning in phases, he said.
It is also expanding its foreign exchange businesses steadily.
The bank imported goods and services for businesses worth Tk 1,177 crore last year, up 53.6 per cent year-on-year when exports increased 95 per cent to Tk 1,532 crore.
This has helped to manage a remarkable profit from the business segment, said Zaman, who also gained diversified banking experiences having worked at JPMorgan Chase Bank, Morgan Stanley and BNP Paribas.
The bank is set to start its journey in the capital market within this year as the central bank has already given permission to issue its initial public offering (IPO).
The bank is waiting for the final permission from the Bangladesh Securities and Exchange Commission.
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