Interview with Nadeem Hussain President, CEO, Tameer Microfinance Bank

Nadeem-Hussain

by khadeeja balkhi
for tbl

Tameer’s fundamental approach to microfinance is centered around a sustainable, commercially viable management system. Please
comment.

The management system at Tameer initially comprised of senior Citi bankers taking up key positions, to ensure that the framework of operations installed, was strictly in line with global best practices of banking, which were a part of Citi and which the management was proficient with due to their Citi experiences. The focus was on getting a quality network and core banking operations up and running, which would spur fast growth while maintaining high service operation levels and portfolio quality. After achieving that, in due course of time, additional management tiers at the senior, middle and front line were established, with control divested from seed management, to empower the new tiers.

Curiously enough we came to understand with time, that management professionals who were not strictly from the banking industry were bringing values and systems from other sectors which were equally applicable to the banking environment, in fact some of the professionals coming from diverse backgrounds brought with them sterling ideas, innovations and new ways of thinking and doing, which have contributed to the core body of knowledge, experience and quality which make up the Tameer personality today.

This has been achieved by investing heavily in Information Technology and integrated management systems, a unified system of monitoring and control, allowing space to experiment, rethink and re-do some of the more traditional and taken for granted approaches in banking and microfinance, while at the same time inculcating this diversity of people, management styles and policies, to be a part of the Tameer core banking system.

A management culture of strategic, tactical and functional forums held, daily, weekly and monthly at the senior, middle and first line tiers of management is an important driver for those systems. It results in diverse value propositions coming together in a formatted and unified approach toward MF growth, which is why the management system at Tameer is considered to be an imperative and defining asset of the Bank.

Given that Tameer’s approach to micro finance is centered around a sustainable, commercially viable model, what is your current financial situation and trends to date? Why is Tameer rumoured to be running into huge losses?

Rumors in the market for a young and growing bank making bold strides are expected. However rumors are hearsay at best, considering that banks are State Bank regulated entities with the standard practice of having accounting systems and financial figures for the year open and on display for all to see the profits and losses.

Tameer’s management recognizes its responsibility to attain profit but at the same time we consider ourselves a “not just for profit” business and the bank is steadily moving everyday towards achieving a complete triple bottom line.

This means continuing to invest in maturing systems and specially soft investments like;customer education other than pure sales, providing for the communities needs in education, health, loans and savings options which are sympathetic in price, cost and terms for the customer’s benefit.

Furthermore to continue business with a no-compromise policy on the quality and modernity of operations, while being multi dimensional in bottom line objectives, does bill its due cost to the system. The average time it normally takes for a bank to break into profits is usually between 3-5 years. I feel that Tameer, a four year old bank, while keeping its quality and service level high will comfortably manage to attain appreciable profit within the normal time frame.

What is the single most significant impediment to the sustainability of microfinance as a sector, in Pakistan? And to your bank?

Sustainability impediments in microfinance as a sector in Pakistan have to do more with the limitations of the MFB’s in innovative thinking and
conviction for new ways of doing things in the markets, rather than any limitation or slow track in the regulatory and policy process.

For instance, the State Bank has been very supportive of MF growth and so has the Pakistan Micro-finance Network (PMN). There is a refreshing service attitude within these bodies for the sector and its players rather than only control and compliance assurance.

Some of the resolutions and policies enacted in the past 2 years have broadened the scope and scale of microfinance in Pakistan, encouraging not only MF organizations but also Telco’s and other industry players to come in and see what they can bring to the value table in terms of partnering with core MF practitioners for empowering the un-banked and making forays in this huge market segment, hitherto largely untapped.

If an impediment must be identified then I would call it the challenge within, which all MFB’s face, which is to encourage and sustain the poor to save for the long term. Savings and deposits especially microfinance segment savings remain the challenge.

What sets Tameer apart from other MFIs?

Tameer’s unique proposition as a Bank is continuous innovation and redefinition of its core product and service offering to the public, keeping in sync with changing and growing customer needs, with the ambition to benchmark and redefine the way banking is done, not just in Pakistan but around the world.

There is a focus in Tameer for financial inclusion and the bank has a product and service dashboard especially designed to cater for the earning needs, cash flows and expansion of microfinance businesses as well as to provide high value banking solutions for the home, especially for females.

The key challenge after launching the dashboard remained however, which was to create low cost distribution access on a mass scale so that the dashboard can reach the mass-market in a secure and easy way in a short time, with wide spread availability, in order to really live up to our ideal of “Empowering the Un-banked”.

In partnership with Telenor, the Easy Paisa mobile banking brand was launched in October. This will be a key channel in increasing the access of structured banking services to the common folk of Pakistan through their mobile sets; a proven channel with the widest touch-point access in the Pakistani population.

The Easy Paisa has been launched in its first phase with a utility bill payment facility and shortly, additional capacity will be added on to the service for customers, to maintain Mobile Wallets, make remittances, peer-to-peer (P2P) transactions and apply for products and services with Tameer bank.

Some of the innovations in core banking products and services that Tameer has brought about, simply by focusing on the needs of the market place without being intimidated too much with the fact that “its not been done before” include being the first bank to offer full 24-hour operations at the Karachi Fisheries to accommodate the 24-hour fishing trade cycle, became the first bank to acquire a branchless banking license in Pakistan from the State Bank of Pakistan, in 2008, offers upfront profit on deposits to customers.

And from the depositors’ point of view? From the borrowers’ PoV?

From a borrower’s as well as a depositor’s point of view our focus groups show that the value perceptions developing within customers (Tameerians) of Tameer as a Brand is a sense of belonging, reliance and expectation from the Tameer brand. Which is now starting to stand out across Pakistan as a banking entity which is different, modern, fast and secure, in line with the best practices of the world, bringing new ways, exciting options and refreshing change to the concept of banking in Pakistan, compared to the same-old traditional options and features being restructured, re-offered and advertised by most commercial banking under different product guises and communication design themes.

We understand that you also take deposits. How common a practice is this? How do you incentivize potential depositors to invest with you?

For a microfinance bank the traditional MF focus is on giving loans, however the big challenge for the majority of banks, especially microfinance banks is to maintain appreciable deposit portfolios to fund loan portfolios.

Central Bank regulations fully allow microfinance Banks to take deposits from all segments of society and very recently MFB’s have also been given the status of “Scheduled” banks by the State Bank, which is an important decision which levels the playing field for MFB’s to compete with commercial banks for customer deposits, especially for institutional deposits where policies usually stipulate that funds must be kept with “Scheduled” banks only.

It is an interesting but little known fact that microfinance banks usually offer the best rates on deposits in the market, compared to commercial banks.

Largely because MFB’s must compete fiercely in the commercial market for deposits, while being built and budgeted as a microfinance bank to incur low cost distribution overheads, especially by being “low key” on certain customer aspects, which have been traditionally portrayed as defining value in commercial banking, such as the “in-store experience”. MFB’s usually don’t maintain outlets which are high profile in decor and interior design and don’t maintain expensive customer services front offices especially for deposits.

However the two distinct value propositions offered to depositors, is a higher rate on deposits than commercial banks with better terms, as well as very personalized customer service, usually door-step service, to high net worth customers for their banking needs, thereby in our opinion; taking the customer experience to the next level from in store to doorstep service providing.

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    Khadeeja Balkhi is a Sustainability Consultant who finds great joy in her work, whether it's strategizing, hands-on implementation, field-based stakeholder engagement or documentation and monitoring.

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