MARYLOU MCCORMACK: Meezan Bank was recognised as the Best Bank in Pakistan by the Pakistan Banking Awards for 2020. Is it correct to assume that you did well even during the pandemic?
SHARIQ MUBEEN: That is correct; Meezan did well in every area. We excelled in retail banking and the number of accounts opened; our deposit increase was huge. We mobilised Rs 322 billion in deposits in one year; which is more than the total deposits of various smaller banks. This was the result of the expansion in our branch network, good word-of-mouth for Meezan and because Islamic banking is gaining traction among customers. However, primarily it is due to our excellent delivery in terms of our products and services.

MM: Meezan Bank has become synonymous with Islamic banking. How was this achieved?
SM: Previously, customers harboured doubts about Islamic banking products and the way they were constructed. However, with growing awareness, they realised we are offering genuine Shariah-compliant banking and not just another way of doing conventional banking. This is one reason – and it is important to point out that you can compare the quality of our services to any other bank. For example, our mobile app is rated as the best in Pakistan with a rating of 4.9, which is the highest rating any app can get and it is based on over 85,000 reviews. It is not only about Islamic banking, our products and services compete in their own right against conventional banks. Our customers bank with us not only because we are an Islamic bank, but because our products and services are better than those offered by other banks.

MM: What are Meezan’s digital transformation plans and is the pandemic impacting the speed with which you are implementing these plans?
SM: Covid-19 had a big impact on accelerating the adoption of digital banking. For example, if we did half a million interbank fund transfers in January 2020, we are doing over three million transfers in a month now. We already had digital products in place, but when Covid-19 struck, more people turned to digital. As a result of these volumes, the pressure on our systems increased tremendously and when this happens, the systems become slower. A lot of banks struggled during this growth phase because all this happened suddenly. Meezan was very agile and as volumes increased, we were able to strengthen our backend systems to support them. We realised that not only were volumes increasing, new demands were coming in from customers, which is why we began this digital transformation journey; it means implementing new systems from scratch to give us scalability for the next 10 years. We have invested millions of dollars in the last two years to improve our technology infrastructure and this includes changing our middleware system as well as our front-end systems and investing in data analytics platforms and CRM systems. This investment will ensure that Meezan becomes even more agile, especially as we are now competing with fintechs – and they are very agile. Once completed, this transformation will give us a huge competitive edge in terms of how quickly we meet customer demands.

MM: Given the growing importance of e-commerce, how is Meezan facilitating this space?
SM: We are the market leader in e-commerce on debit cards. In 2017, we launched the 3D secure service, which secures e-commerce transactions, which enabled us to open e-commerce transactions across all our debit cards. Previously, to make an e-commerce transaction, customers had to call the bank in order to open up their debit card for such transactions; we were the first bank to open up e-commerce transactions on all of our cards by default. There are over 40 million cards in Pakistan (debit, credit and ATM cards, etc.) and prior to the launch of our 3D secure e-commerce service, only a handful of cards could be used for e-commerce by default in Pakistan. This change has gained us a lot of traction and many customers opened up accounts with Meezan so that they could use e-commerce freely and openly. Today, as the market leaders, we carry out 48% of e-commerce transactions on debit cards in the entire industry, as per the Payment Systems Review published by the State Bank of Pakistan (SBP) for the second quarter of FY 2020-21. We are also in the process of launching an e-commerce payment gateway and this will go a long way in growing e-commerce in Pakistan.

MM: How successful has Meezan been in terms of Roshan Digital Accounts?
SM: The government recently announced that Pakistan has attracted one billion dollars in foreign remittances through Roshan Digital Accounts from the 12 or 13 banks that offer this service and Meezan mobilised 25% of this amount, which is equivalent to $250 million. There are two reasons for this. Firstly, good customer service is part of Meezan’s DNA and Roshan Digital Accounts require a lot of housekeeping in order to provide a smooth experience and we managed to do it. Secondly, if expat Pakistanis want an Islamic option, then Meezan is top of mind.

MM: How will fintechs impact the banking industry?
SM: The SBP is trying to improve financial inclusion in Pakistan by increasing the penetration of banking services as quickly as possible. To achieve this, banks need to up their game, but it is not easy for them to move fast. Fintechs are agile and the SBP has made it possible for them to enter the banking space under the licensing framework of Electronic Money Institutions (EMIs). Fintechs are smaller and have lower overheads and cost structures, which means they can offer digital banking services at economical prices. However, as per the SBP regulations, fintechs have to partner with a bank to provide services. Those partnerships come in two forms. The first is when fintechs can simply open a trust account in the bank and the second is when the bank integrates with the fintech at a technology level – and this requires a robust technological infrastructure and an agile fintech-friendly approach. Meezan is a strong contender for such collaborations and we are assisting fintechs in their rollout and in running their pilot projects under the supervision of the SBP. The SBP has given in-principle approval to eight EMIs in Pakistan and Meezan is already working with five in various capacities.

MM: Do fintechs function as competitors?
SM: It depends on the bank, whether they see them as competitors or work with them as partners. We realised from the beginning that the banking industry will not be able to compete with fintechs in the specific areas they operate in, so we decided to collaborate and partner with them in those areas and come up with a revenue sharing model. The other way of looking at it is that fintechs are expanding Pakistan’s banking ecosystem and as the size of the pie increases, everyone benefits. n

Marylou McCormack is a former member of Aurora’s editorial team. marylouandrew@gmail.com For feedback: aurora@dawn.com