Mr. Syed Mahbubur Rahman joined Dhaka Bank Limited as the Managing Director on November 08, 2015. He has 27 years of experience in Banking Services and Credit related arena. Prior to joining DBL, he was the Managing Director & CEO of BRAC Bank Limited.
Mr. Rahman worked in various roles with some of the biggest names in the financial sector of Bangladesh such as Prime Bank Limited, Citibank NA, Standard Chartered Bank, ANZ Grindlays Bank, IDLC Finance Limited etc. before moving to BRAC Bank Limited in 2008. He started his career in Saudi Bangladesh Agricultural & Industrial Investment Co. (SABINCO). He also served as the Director for BRAC EPL Investments Ltd, BRAC EPL Stock Brokerage Ltd, BRAC Saajan Exchange Ltd, bKash Ltd, BRAC IT Services Ltd and IIDFC Securities Ltd.
Mr. Rahman is also a Member of the Board of Governors at Association of Bankers, Bangladesh Limited.
He was accorded with the prestigious ‘The Asian Banker Leadership Achievement Award’ for Bangladesh for the period 2011-2013.
On the seventh floor of Dhaka Bank’s corporate office in Kakrail, everything from its calculated decor to the busy bankers zooming in and out of big glass doors has an unmistakable air of efficacy.
Behind one of those doors sat Syed Mahbubur Rahman, the managing director and CEO of this leading commercial bank. His spick and span appearance is imbued with the same vibe and energy as the office space surrounding him. His brisk, yet unassuming announcement to the Fintech Magazine team that he will be unable to give us a lot of time was expected and sensible from a person with his responsibilities.
The experienced banker, however, ended up speaking in detail in answering our questions, but without trespassing over the stipulated time he had set for our meeting. The views and opinions that emerged as a result are insightful and refreshing, which the readers of Fintech can now gather from the interview.
FINTECH: You have over 30 years of experience in the financial sector. Can you shed some light on your illustrious career?
SM.Rahman: I have worked in a number of banks and non-banking financial institution (NBFI) in my 30 years of career. I first started my career in a NBFI called Saudi Bangladesh Agricultural & Industrial Investment Co. (SABINCO). After that I moved to the commercial banking sector. Specifically, in commercial banks, I have spent over 22 years of my career. I was in multinational banks, and then I moved to the private commercial banks of the country. I worked in the Prime Bank as its DMD and after that I moved to Brac Bank in the same capacity as its DMD and worked there for about a year and half. In June 2010, I took over the position of Managing Director and CEO in the Brac Bank. I stayed there for five and half years as CEO. Then I moved to Dhaka Bank in 2015.
FINTECH: What are the epoch breaking products inclusion you have observed in the banking industry in the last couple of years?
SM.Rahman: To be honest, in the banking industry, almost all are working with same products, only with different packaging, you can say. Nothing new has been introduced in the last couple of years. In fact, the truth is that the banking industry seldom has scope of coming up with innovative products. The only innovation that was done in the recent past is the introduction of mobile financial service (MFS). It has been able to bring a big revolution. MFS however came to Bangladesh in the form of payment service. It is basically a platform for the transfer of fund. But we have not been able to take the full benefit of this service. People are not using the service as a wallet yet. Being able to provide true mobile wallet service should be the ultimate goal of the MFS providers. Because, if you want a true cashless society, that’s the way to go.
FINTECH: What kind of new and innovative products Dhaka Bank is providing?
SM.Rahman: Since joining the Dhaka Bank, I have been trying to modify and re-design some of the existing products to make it more attractive and beneficial for our banking clients. I have realized that in this digital era, to give our clients the best banking experience, there is no alternative of bringing automation and digitalization in our products. The truth is, the automation in the banking industry mostly has come for individuals- I mean the large corporate clients. Because, the banks are earning the lion share of its profit through their corporate clients and because of that they have to make sure that the corporate clients are getting the best possible services and automation of course aids in giving better customer service in a faster way.
But this automation process is a bit slow for the retail banking and for the SME sector. I am trying to change that. I am trying to automate the banking process as much as possible. If my clients at Dhaka Bank can conduct their banking transaction by not appearing in the branch, then I would consider it as a success.
In Dhaka Bank, I have also started the practice of paperless banking. Banking industry is still heavily dependent on trails of paperwork’s. The idea of paperless banking is thus still considered as very audacious. But as I want to automate the banking process as much as possible, I have indulged in starting the practice here. In giving loans such as ‘Vehicle Loan’, we make sure that now no papers will be exchanged among the bank and the loan takers, all will be done digitally. I have recently approved two loans in the system. This is probably for the first time that loans have been sanctioned digitally by any commercial bank.
FINTECH: What new and innovative services are introduced in the retail banking sector?
SM.Rahman: In the Dhaka Bank we have tried to address the banking needs of the some of the particular segments of the society which other banks haven’t started addressing yet. We introduced a product which no other banks in the market have brought yet. The name of the product is ‘Antorik’. This is basically a service for the fragile people in the society including the elderly ones and the physically challenged ones. In ‘Antorik’ service, we have established dedicated customer service for those types of people when they come to the branch. As a banker, I believe that we should address the needs of every type of people in the society.
We have to have a very open mindset now. If I still think that I can move ahead with brick and mortar system, then I am wrong. I told my team members that if you want to conduct SME banking, you have to reach out to the customer and try to give decision there. There is no point of bringing them here in the branch to do the banking. We have to give the customers that level of comfort and satisfaction.
To give a better and quicker banking service, our core banking software (CBS) is getting updated. We will finish the upgradation process by October this year. For our cards, we didn’t have a robust platform. We had separate platforms for debit card and credit card. Now we are trying to bring all card services under a single platform. We are hoping that within the next three months, this single platform will be launched. We have already obtained primary licensing approval for visa and mastercard. We have also applied for introducing agent banking services. I believe agent banking will change the landscape of branch banking practices and it will bring more unbanked population under banking network.
I personally want to put more focus on inclusive banking. I am not so up for branch banking because establishing more branches actually doesn’t yield that much positive output. Besides, of branches remain unprofitable then, it hampers the rating of the bank. Agent banking surely needs time to pick up. You can’t expect immediate output from agent banking. We are meanwhile mulling ways to make agent banking more human-centric.
FINTECH: You have already talked about paperless banking. Banking industry is gradually shifting towards that. The whole industry is and will be going through a series of banking disruptions. How are you preparing for that?
SM. Rahman: First of all, what I am trying to achieve here in my bank is that, I should be able to give decision to my banking customers through a single net. It can only be done with the help of a solid and robust financial technology platform. I want to create certain devices or certain apps with which I can take banking service to customer’s door-to be precise in customer’s pocket. I have experiences in doing so because I started the process while I was in the Brac Bank.
There are some constraints in doing so though. Bangladesh Bank is yet to approve digital banking. Central Bank still requires paper procedure. To start digital banking, you have to maintain digital log. If you continue your paper banking at the end of the day, then true digitalization will not come.
The harsh truth is, if you want to do something in the financial technology sector, then you have to have the rules and regulation in your favor. Suppose, for opening LC, I want to give customer a very good solution with which s/he doesn’t need to come to the branch for opening an LC. But unless, physical documents come to the bank’s office for verification, I cannot even through my LC. I can do everything digitally now but the whole procedure is yet to be implemented because of that culture of physical document verification.
I believe, to fully avail the potential, all stakeholders need to be in unison. By all stakeholders- I mean ‘all’- including the central bank, the association of commercial banks even the telecommunication companies because the digital transactions will be conducted using their bandwidth and channel.
The problem is, as it was identified by some of the stakeholders in the commercial banking sector, that the telecommunication companies are trying to expand their hands in the financial technology sector. I would say that’s a problem because telcos are like the builders and keepers of road here and for using their roads, we are giving them the required tolls. But if they themselves want to start doing business here, then that will create problem because then the regulator will feel jittery. Bangladesh Bank is very clear about MFS that it has to be bank-led. I personally think that mobile wallet will change the way we do financial transaction in the society. It is yet to be introduced in large scale in Bangladesh. Take a look at India. They are implementing their demonetization policy in a very robust and smart manner. They have a significant forward leap. There is as big a fintech company as Paytm there now.
The main problem with fintech is ensuring customer safety and security. In many countries, customers have no problem sharing their data. In Bangladesh, as MFS has to be bank led, there is a problem, because we sign a confidentiality agreement with the customers. As per the agreement, I cannot share their information with anyone other than Bangladesh Bank, NBR and ACC. This constraint in sharing data has created a roadblock as this is basically an era of data. A human has just become a summation of some data. By looking at the social media account of a person, one can now learn a lot of things about that person. This is data warehousing and banking sector eventually needs to go in that direction. I can be customer centric by knowing a lot about customer and for that I need secured and safe platforms and the ability to share data.
FINTECH: What are the main impediments in making fintech popular here? Is it the regulation or the mindset?
SM. Rahman: Mindset is of course an important factor here. If we can’t change our mindset then improvements will not come. The mindsets of the old bankers have to be changed. Otherwise, it will not become possible to be paperless or fully digitalized. We have to be receptive against the changes happening in the market. We also need to bring other stakeholders here. The regulators and us-the banks have to have same pace. The central bank has already lowered the limit of MFS. But the amount of transactions increases nonetheless. So you can’t be sure now whether these increased numbers of accounts are forged accounts to beat the system or it actually reflects the increase in number of customers. The point I am trying to make here is, it’s not possible to put regulatory barrier onto things like MFS.
FINTECH: Financial fraud has increasingly become a concern. What can be done to fight financial fraudulence?
SM. Rahman: That’s why the issue of ethical hacking sprung up in recent times. We need to look at the system. We have a benefit that the money cannot go out from the country easily. There has been talk about two-factor authentication (2FA). Customers need to understand what 2FA is. The banks are increasingly trying to stop financial fraud. Now you are getting the service of sms banking and internet banking. We are trying to make the banking easier for you.
The customers however have some responsibilities as well. Suppose you have changed your mobile number or email address, you have the responsibility of notifying the bank. Now suppose a fraudulent transaction is made through your account and the sms is sent to your old mobile number as it was in the system. If you come later and accuse the bank of not doing its part, then that is unfair.
I believe, fintech will come eventually and take over the market, but before its full-fledged launching, the eco-system has to be built up. Otherwise, financial fraudulence will become more massive than ever. It cannot stand on a thin bubble because then it will burst soon. Suppose, you want to bring NFC based payment system. For that I have to first have the approval of the regulator and that can come if the regulator gets assurance of a full-proof system. We also need to educate the customers. I think we all need to work together to build the eco-system for the fintech. Otherwise there will be a gap and that will create a lot of noise in the system.
FINTECH: Our local software industry has made a significant improvement and the apex body of the software makers-BASIS- has an increased focus on the local market. Do you think that the local software makers have achieved the ability to design and implement world class CBS?
SM. Rahman: If you look at the central bank, you will find that it is using software developed by foreign developers. I need to be double sure before I use some system. So, naturally, we want to have a system which is more robust and tested. But that doesn’t necessarily mean that we will not go for local developers. In fact, in Dhaka Bank, we installed some of the plug-ins and middleware developed by the local software developers. I am pretty sure that with the passage of time, our software developers will be able catch up with the world’s largest software developers.
But there are some issues. There is an issue of timely delivery of products.
The local software companies are yet to achieve full confidence of the banks in that regard. I have asked a local software company to develop the mobile app of our bank but it has been almost a year now but we still don’t get the delivery of that app. The software companies are suffering from human resource. If you look at the local software industry, you will see that the employees here switch company very often. Even in the middle of the project, some of the employees leave the company. If this cannot be stopped then I think the buyers will feel jittery in engaging them for developing their products.
FINTECH: Compliance is a major issue now. Are you conducting your system audit, system security assessment on a regular basis now?
SM.Rahman: Yes, we are conducting those on a regular basis. We have to submit those reports to Bangladesh Bank now. In our audit team, we have taken some people from the IT background. We have recently held talk with an international company about our Anti Money Laundering (AML) side. IT security is of paramount importance now. Financial control and compliance is ‘the thing’ in the international world now. Getting certification from appropriate body is very important. We are building a data center now and we have already applied for getting it certified.
FINTECH: There are 57 banks in the country? Do you think the number is too much for an economy of this size?
SM. Rahman: For an economy of $150 billion, I don’t think we need these large numbers of banks. In fact, we need less than 10 banks in Bangladesh. This is my personal opinion though. Look at South Africa. It’s a big economy but it has only six banks. Look at even Australia. There are four large banks. The government here in Bangladesh gave approval to the fourth generation banks on the basis that those would focus on non-traditional areas which other banks haven’t focused on yet. But unfortunately, within few years, those have focused their attention in the same areas as others. This is one of the main reasons of increasing NPL. You have to look at how many new customers these banks have got. They are basically banking with the same customers. Mostly banks do wholesale banking. I don’t think that’s a healthy practice.