Home Banking Interview with Ms. Erum Tarin, Group Product Manager – Deposits, and Mr. Naveed Mushtaq, Business Head – Credit Cards, of Silkbank Limited

Interview with Ms. Erum Tarin, Group Product Manager – Deposits, and Mr. Naveed Mushtaq, Business Head – Credit Cards, of Silkbank Limited

by Prashant
Silkbank’s Board of Directors

Silkbank Limited, with its head office in Karachi, Pakistan, is today one of the country’s most dynamic banks, having strengthened its retail-banking arm significantly recently. The bank provides a comprehensive range of consumer, corporate and Islamic products and services and is listed on all of Pakistan’s stock exchanges. In 2001, the financial institution then named Prudential Commercial Bank Limited was, under the supervision of the State Bank of Pakistan, acquired by Saudi Pak Industrial and Agricultural Investment Company (Pvt) Limited and became Saudi Pak Commercial Bank Limited. Seven years later, a consortium of financial institutions (including International Finance Corporation) acquired a majority stake in the bank, and the following year, it was rebranded as Silkbank Limited. Throughout this evolution, its steadfast commitment to customer satisfaction has remained constant. Driven by its motto “Yes we can!!!”, the bank maintains a strong foothold in numerous locations around the country, with 123 branches in 39 cities—, a presence that is only being greatly enhanced by its determination to incorporate every digital innovation yet conceived into its day-to-day operations. Enjoying phenomenal growth in customer acquisition, Silkbank is well on its way to fulfilling its vision to be the “benchmark of excellence in premier banking”.

Recently, Ms. Erum Tarin, Group Product Manager – Deposits, and Mr. Naveed Mushtaq, Business Head – Credit Cards (Issuance & Acceptance), of Silkbank Limited spoke with International Banker about the extraordinary lengths to which the bank is going to grow its reach in Pakistan and set itself apart from its banking peers, primarily through digital innovation. Erum and Naveed, thank you very much for joining us today….

Ms. Erum Tarin, Group Product Manager – Deposits.

Silkbank’s retail-banking performance in 2019 was remarkable, with branch banking, in particular, turning in a strong performance as deposits grew by approximately Rs 10 billion. Erum, to what main factors do you attribute this spectacular growth?

Erum: The year 2019 for branch banking proved to be a turning point in terms of deposit solicitation and an increase in market reach. Multiple factors helped the segment reach remarkable levels of success. The first factor was the Malir Development Authority (MDA) project in which Silkbank partnered with Malir Development Authority for a housing scheme targeted towards the low-income group. This was an instant success that created a buzz amongst customers and helped increase the reach of this housing scheme. In addition to the MDA project, branch banking also launched aggressive staff campaigns at branches for current accounts and term deposits, resulting in the solicitation of a large chunk of deposits for the bank. These campaigns boosted the spirit of branch staff and motivated them to excel further to qualify for certain incentives.

The most significant achievement for branch banking was the incremental deposit growth generated through Flexi Munafa Term Deposit. Branch banking successfully launched a captivating media campaign of Flexi Munafa in October 2019, which led to massive deposit solicitation during the last quarter of 2019, generating approximately Rs 4 billion during this campaign period. This media campaign also resulted in a large pool of leads, strengthening the market reach of the product and the bank. With an attractive rate of 14 percent, Flexi Munafa became a market leader in the world of term deposits and attracted a large pool of deposits for the bank. At Silkbank, what remains the most integral aspect is the continuous training of sales staff for better growth of the bank. Rigorous product training sessions were conducted for all five regions of the bank to educate and guide branch staff regarding the bank’s products and services, with special attention given to the newly hired staff. The growth of Rs 10 billion was observed primarily in core deposits, which showed the stability of our products and resulted from focusing on term deposits more than institutional deposits.

Mr. Naveed Mushtaq, Business Head –- Credit Cards, of Silkbank Limited

Silkbank has an unrelenting drive to deliver the most innovative products and services to customers. What do you consider to be the most innovative solution the bank has delivered to the market recently, Naveed? And what specifically makes it stand out from similar offerings from competitor banks?

Naveed: For us, constant innovation is the hallmark in everything we do. All the solutions we have delivered recently in the market are an amalgamation of our overall strategy to improve our customer experience. One of these features is the acceptance of credit-card payments from other bank’s ADC (alternative delivery channel) and OTC (over-the-counter) channels. Being a smaller bank, we have a limited branch network to accept credit-card payments; hence, we launched this service whereby our customers could easily make credit-card payments by using their existing banking relationships. Although this has been replicated by other banks as well, we have taken the lead in offering this service. Since this was a new market offering, most of the customers were unaware of this feature. With a combination of customer- educational programs, BTL (below-the-line) promotions and marketing communications, we successfully educated our customers on the convenience of this feature. The results have been very encouraging, with not only positive feedback from customers but also Silkbank becoming one of the top three banks in the market in terms of payment volume. The other dimension of this feature is that we allow our credit-card customers to make payments to Silkbank, or any other bank’s credit program, using our mobile app. No other bank is offering this part of the said feature, thus making us stand out in the market.

Silkbank takes pride in being a leader in innovation and the new era of digitalization. The bank also launched its tablet-based banking solution in 2019, which provides its staff and customers with the convenience of instant account opening, debit-card activation and instant biometric verification. This innovative solution helped the bank to penetrate a distinct area of the “revolution”. The ability of tab- based banking to instantly open an account is unique in making Silkbank stand out in the industry.

Please further explain Silkbank’s tab-based banking services, Erum. And, in particular, how does the instant account opening through the tab service work, and how does it improve upon the bank’s previous system?

Erum: Tab-based banking (Tabs) is directly linked with Silkbank’s core-banking system that generates an immediate response to an account-opening request raised through the Tabs service. Customer relationship managers are allowed to carry tablets with them to initiate new relationships at customer locations. The account-opening feature on Tabs is used more for those customers, the ones who are not able to visit branches. Through tab-based banking, customers can open their accounts at their doorsteps, to which instant verification from our account-services department is provided to staff. This results in instant account generation for customers without having to visit our branches, reducing time and paperwork for both the customer and the bank.

How competitive would you say the retail-banking sector is in Pakistan, Naveed? And what is the single most appealing quality of Silkbank’s retail-banking business that makes it superior to that of its peers?

Naveed: The retail-banking sector is very competitive, with well-established large players ruling the roost for the majority of the last two decades; however, with the launch of Silkbank’s consumer products, not only have we made significant inroads in the industry but are now leading the market in multiple indicators, including market share and fresh issuance. The single biggest asset of our products is our focus on putting the customer first and providing them with best-in-class customer experiences. This is evident from our strategic direction, where all new initiatives are taken with the same premise of improving the customer journey. This is possible with the help of a team of experienced bankers who have a legacy of leading from the front.

Also, Naveed, what is the single biggest way in which the coronavirus has impacted business operations and strategy at Silkbank? How are you currently endeavouring to respond and adapt to this ongoing challenge?

Naveed: The emergence of COVID-19 completely changed the market dynamics for businesses in Pakistan. The past few months have been exigent for the entire banking industry. From half of the branches being closed to reduced branch hours, COVID-19 has affected branch-banking operations to a significant degree. The major deterrent was experienced during the visits of sales representatives for maximum onboarding of customers to Silkbank. While these were some of the challenges faced by the bank, Silkbank made sure that customers’ facilitation and safety were its priority during these times. The focus shifted from the conventional mode to the digital mode of banking, with an emphasis on mobile and internet banking to encourage banking from home rather than coming to branches.

Silkbank introduced multiple digital initiatives to adapt to this ongoing pandemic. These initiatives included enhanced IBFT (Inter Bank Fund Transfer) limits and debit-card activation through Silkmobile and at Silkbank ATMs (automated teller machines), ultimately improving the digital transactions from 20 percent in December 2020 to 32 percent in June 2020. Silkbank has adopted an aggressive digital strategy during the past months to cater to the needs of customers while making sure precautionary measures have been taken at the branch’s end.

Can you further explain Flexi Munafa, Erum? And how is this service helping to attract new customers to the bank?

Erum: Flexi Munafa is a unique term deposit that offers three multiple payout options to customers: Advance, Mahana and Salana. While the Mahana and Salana payout options were already available with Silkbank and the industry, it was the Advance payout option that proved to be a game-changer for the bank. This term deposit offered the highest profit rate of 14 percent by the end of 2019, making it an instant success amongst core customers. The unique product proposition related to Flexi Munafa in the shape of the advance profit-payout option attracted a significant chunk of the market and helped increase deposit solicitation for the bank.

One of the bank’s most significant recent challenges has been to educate customers and ultimately convert them from the conventional mode to the digital mode of banking. What are some of the main steps involved in this conversion process, Naveed?

Naveed: The bank believes in the power of effective communication with its customers when it comes to educating them regarding any new digital initiatives. This communication is carried out through emails, SMS (short message service) and social-media channels. This is further strengthened by our Digital Change Agents at branches; one agent per branch is responsible for educating customers about Silkbank’s digital-banking channels. This is done through the effective demonstration of operating Silkmobile and Silkdirect, while guiding customers about each process in a detailed manner. We also introduced a customer-engagement campaign, where customers could win the latest iPhone for using Silkbank’s digital channels. This campaign generated a positive response amongst customers and immensely helped the bank in converting customers to the digital mode of banking.

Silkbank experienced 81-percent positive growth in June in the number of transactions conducted through Silkmobile, along with an increase of 30 percent in customers’ enrolment on Silkmobile. This shows the bank’s commitment and dedication towards this cause—as the future, it seems more than ever now, is purely digital.

How do you see retail banking in Pakistan changing over the next few years, Erum? And what specifically makes you believe that Silkbank is well positioned enough to capitalise on these changes?

Naveed: Pakistan is going through a transition with the advent and adoption of next-generation connectivity. And while there are the usual hiccups, the digital future we are headed towards is not under any doubt. We have seen rapid digitalization of many sectors in the economy, with financial services also making strides. Customers are becoming accustomed to convenience and instant gratification and are better informed. The future of retail banking, including consumer products, revolves around three essential pillars, which are: upgraded service experience, delivery across all touchpoints and value addition through innovation.

Silkbank is a smart-sized bank, which allows us to take timely decisions and makes it easier for us to adapt to technological transformation faster than our competition. In this way, we are uniquely positioned to capitalise on and adapt to the changing landscape in Pakistan. Our strategy is devised on the following core principles:

Upgraded segment-based approach: Customers now have access to a vast array of information and have transcended beyond being satisfied by traditional products and services. Customers have diversified needs, which we need to understand and harness towards the introduction of segment-based offerings. Following are some of the key initiatives in the pipeline, which are targeted towards the diverging customer segments:

  • Dual-interface credit and debit cards: Dual-interface cards will allow customers to conduct contactless transactions, which is a key requirement in current and post-COVID-19 situations;
  • Zero-limit credit card: Targeted towards the customer segments who would otherwise not qualify for credit;
  • Mastercard credit card: Credit-card variant offering reward points, credit-card controls on mobile. Differentiated from existing Visa credit-card offering;
  • Co-brand credit cards: Co-brand cards offering customers greater value when shopping for groceries and/or fuel;
  • Segment-based cards: Cards differentiated based on gender, needs (i.e., women cards, health cards);
  • End-use-defined personal loans: A variant in the personal-loan category whereby customers will have the option of getting personal loans for end-use-defined products (i.e., home appliances, furniture, education, etc.).

Enhanced customer experience and journey: In an age in which customers demand instant gratification and expect a seamless customer experience, it becomes paramount for us to align our systems and culture to meet these expectations. We are working on rapidly adopting best market practices from developed economies and reengineering current processes, which will help give us a competitive edge in the years to come. Some of these initiatives include:

  • New features on mobile and internet banking: With the adoption of the Kony platform for internet and mobile banking, new features such as credit-card activation, value-added service enrolment and card controls will be added to existing credit-card features;
  • Tab-based/online acquisition: We will add tab-based acquisition options for potential customers. This will not only reduce paper clutter but also reduce TAT (turn-around time) for approvals. An online acquisition channel will also be added, where customers may apply for credit cards through our web-based portal. The same will be replicated on all channels, including ATM, internet banking and mobile app;
  • Digitalization of collateral: To conserve paper and reduce clutter, Silkbank will start sending its credit-card customers correspondence and collateral via digital channels, including welcome-pack collateral and monthly billing statements. Similarly, other collaterals such as repayment schedules in personal loans, NOCs (No Objection Certificates), etc., are also being sent through emails;
  • Multi-channel service enrolments, features and controls: Customers will have multiple channels, including mobile banking, internet banking, AHD (automated help desk), ATMs and phone banking for features such as VAS (value-added services), enrolments, card activation and card controls;
  • Automatic utility bill payments: Customers will have the option to add billers, where recurring bills will be automatically paid;
  • Instalment-plans booking at the point of sale (POS): Customers will have the option of instantly converting their POS transactions into instalments at the merchant itself;
  • Instant reward redemption: Customers will be able to use their accumulated points to pay for transactions instead of utilizing their credit limits.

Innovation: Silkbank has laid paramount importance on digitalization, and it is one of the cornerstones of our strategy. For us, innovation entails everything we do—i.e., processes, products, channels, etc. We have a dedicated innovation team that is working in close collaboration with other departments to launch new and innovative products. Post-COVID-19, it is expected that digital channels will become the more dominant banking channels. To increase focus on digital adoption, we have set up a separate Digital Banking department. As banks pursue digital adoption to improve efficiency and customer experience, it is going to be an evolving process. In addition to the initiatives already shared above, we are also in the process of launching the following features:

  • SMS banking, WhatsApp banking and chatbot: These new channels will offer alternatives to customers for communicating with the bank and allow easy access to basic banking services and requests;
  • Tokenization: Tokenization features will be added for Silkbank cardholders, which will offer an additional security layer for CNP (card-not-present) transactions by sending customized tokens instead of PANs (primary account numbers) and customer details to the merchant.

Silkbank’s example is certainly an inspiration to other banks seeking to advance through digitalization. Erum and Naveed, thank you for speaking with me today.

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