- Attaining Islamic products are best and beneficial
Interview with Mr Abdul Rasheed — Regional Sales Head, Karachi & Balochistan National Bank
PAGE:Â Tell me something about yourself, please:
Abdul Rasheed:Â Currently, I am Regional Sales Head Karachi & Balochistan in National Bank. Prior to that, I was associated with Askari Bank and Standard Chartered Bank.
I have diversified experience as I have worked in the areas of sales, product development, collections & credits.
I started my career from Coca Cola International back in 2000 as salesman and worked on different positions and when I left I was Assistant Sales Manager and this hardcore sales experience was great for me and I have learned a lot and this has really shaped my career.
I moved to banking in 2005 during the boom of consumer banking in Pakistan and I am in banking ever since. Consumer banking boom changed the banking dramatically and there was paucity of human resource at that time and whole new generation found careers in banking and this also changed the banking practices as we were more customer centric.
My career is blend of FMCG & Banking and in banking I have primarily worked in consumer banking. As far as educational background is concerned I have Master’s degree in Economics from University of Karachi and during my job I did MBA in marketing as well.
PAGE: What is your perspective about buying power and consumer financing?
Abdul Rasheed:Â There are two ways to obtain goods. First is a classic practice that says save money and then buy product but problem is that till the time you have some money prices increase due to the ever- rising inflation and you have to save more to counter that and thus customer gets stuck in this cat and mouse game.
Consumer financing is a wonderful tool which improves your buying capacity and gives you the luxury to buy now pay later and you can avail any goods with minimum down payment or through your credit card and you can pay in easy installments without any waiting period and you can enjoy your product without much wait.
There is unique example in Pakistani customers who avail auto finance and later sell their old cars for more price compared to the money they pay to bank within the span of their loan term and practically they pay nothing for these cars and even earn money in some cases.
As consumer financing has improved the buying power of customers so demand has also increased and it creates the economic activity in a country which eventually results in new investment and creates boom in economy.
In my opinion consumer financing is very important to improve the lifestyle of common man by improving their buying power and also attracts the new investment to cater to this demand. For me consumer financing is catalyst in the development of any country if it is used the way it is supposed to be used.
PAGE:Â What is your take on credit cards?
Abdul Rasheed: To me, credit card is a wonderful product if it is used the way it is supposed to be used. It is a life style product since you don’t need to carry cash all the time and you can purchase most expensive things with that without any hassle of handling cash and after 45 days you can payback this money without any mark up and service charges.
Just assume, if you have any medical emergency and you don’t have any cash and ATMs also have certain limits for cash withdrawal what will you do? Will you call any friend who may be asleep and might not answer your call or he might not have money. Here comes your wonderful friend Mr. Credit Card. It can pay your bill and you can pay it later.
To me, credit card is your best friend if you use it smartly but it can be your worst enemy if you don’t use it wisely. We have to use credit card as short term payment solution and need to payback on time to avoid any surcharge or penalties. We can’t use that as a term loan. If we have the plan to payback in a long term we should opt for term loan which is comparatively low markup product and is well-suited for long term debt.
In Pakistan, initially banks lent massively without understanding the payback capacity of customers and this bubble burst in 2007 where we saw lots of defaults and banks suffered massive losses but after the introduction of ECIB by SBP there is massive improvement in quality of portfolio and non-performing loans have been reduced substantially as well.
PAGE: How would you comment on Musharakah mode of financing in Pakistan?
Abdul Rasheed:Â Pakistan is an Islamic state where people are strongly attached with Islamic practices and at times this attachment is hurdle in expansion and acceptance of markup base products and there are citizens who are always looking for Shariah compliant products for their financial needs and rapid growth of Islamic banking in Pakistan is evidence of it.
Musharika is basically a partnership between customer and bank where bank is partner with customer to purchase goods and customers use goods like home, car or machinery and in return customers provide rental on that and customers also buy units on monthly basis and with the passage of time as customers buy units on monthly basis banks’ share reduces and customer’s share increases and at the time of maturity of this partnership ownership of the asset is transferred to the customer.
This isn’t markup base product but based upon partnership and rental basis keeping in view the Islamic principles and it also encourages the people who were reluctant to opt for the markup based products.
PAGE: How useful is technology to promote consumer financing in Pakistan?
Abdul Rasheed: Technology is changing this world and today most of the world’s leading brands are technology companies. Technology can play a very important role in shaping banking world. This has changed the way how we can approach the customer or customer can approach a lender.
Now customers don’t have to walk into a bank for any query or product. They can simply approach any digital channel for their query. They can buy any product from wherever they like and can pay with their card or Paypal.
The world has absolutely changed by technological revolution and banking is no exception. Today we use biometric ATMs as well. Still there is huge portion of our population living in rural areas and most of them have no access to banking system as banks have concerns about profitability and operating expenses in opening branches in third-tier cities.
As we have more than 100 million phone users in Pakistan and this can be the biggest opportunity as with the partnership of telecommunication companies banks can reach these customers without compromising on their cost and this is possible with the help of technology.
In the future, technology will reduce the need of physical infrastructure and most of the customers will be routed through digital channels and ultimately it will reduce the cost of doing business as well and banks which have invested in technologies will be greatly placed for rising future challenges.
Today customers judge the banks on the basis of their mobile app as well. Technology also will change the way we lend the loans to customers. During the last decade ECIB changed the banks’ lending processes and reduced the risk and in coming days credit score card will be more and more important and banks can immediately disburse the loans to customers who have excellent track record on cheaper rates as compared to the customers who don’t have good credit history.
To me, technology will change the way we are doing banking and it will reduce the operating costs for banks, improve their bottom line and also reduce the cost of banking products for customers as well.