Najma Minhas, GVS Editor, speaks with Mr. Noman Azhar to understand what direction banks are going during the corona lockdown. He is the Executive Vice President at JS Bank and also heads their Branchless Banking and Digital Implementation Department. JS Bank is one of Pakistan’s fastest growing banks. Recently, they set up a Rs. 110 million COVID-19 fund to look into the impact of the virus in Pakistan. Mr. Noman Azhar sheds light on Pakistan’s transition to bankless branching amidst the lockdown and explains JS Bank’s efforts to make this time easier for their customers.
GVS: Can you tell us about the impact of the lockdown on banks in Pakistan and what kind of challenges have you faced?
Noman: I think the impact of Coronavirus is unprecedented, as it has not only affected the banking sector in our country but every sector worldwide. Nevertheless, the banking sector has faced immense challenges. We are not actually recognized as such, but we are also part of the frontline workers in this crisis. While, a lot of industries have either stopped working or started working from home, our branches since the pandemic have been open and serving customers.
JS Bank is working to facilitate our customers because obviously, the money has to flow and the economy has to run. To support our economy, we are standing on the frontline with the law-enforcing agencies and with the health. Where these workers are playing a very important role, the bankers are also risking their lives to keep the branches open.
GVS: I agree with you entirely. Obviously, customers need to access their money and make their payments in this period. How have you ensured safety in these branches for your customers?
Noman: As you mentioned earlier, our COVID-19 fund is basically dedicated to fight the coronavirus. It essentially has four segments. Under two of those, we are distributing masks and PPEs to our workers along with other frontline workers. We are making sure that all the requisite precautionary measures are being taken. For example, we are disinfecting our branches and distributing sanitizers, along with all that we can to make sure that our employees remain safe while serving the customers.
GVS: So, you’re the head of Branchless Banking which is a very important field during the COVID-19 lockdown. There was already a growing trend of branchless banking in the country. For example, Standard Chartered have reduced their branches from around 375 to almost 70 in the last two years. How do you see COVID-19 impacting this trend overall and in your bank?
Noman: I think with all the negatives that this crisis has brought forward, there is a positive as well. We have learnt to become digital. As you rightly mentioned, an effort was being made since the last 10-20 years to transition customers from cash-based transactions to digital ones. One good part is that the COVID-19 epidemic has accelerated it. And the need to perform cashless transactions has increased. The numbers are also increasing on the digital channels.
In fact, they have increased by almost 20-30% across the industry, which shows us its potential. And this is just a start. People have started realizing that digital banking is more convenient. So, I see this as an opportunity. It is not only the current crisis that requires this change. People are now realizing that a process as long as 30 to 40 minutes can be done in less than 30 seconds at home through branchless banking.
GVS: You say that there has been an increase of 20-30% of transactions on the digital channels. What are these digital channels?
Noman: Digital channels are alternate channels for transactions provided to our customers. For example, our mobile app connected to your banking account. So, the entire industry is witnessing an increase in the percentage of transactions through digital channels as opposed to physical banking in the branches. For example, previously payments were made when you physically withdrew cash from an ATM and then handed it over to the respected party. But now, we prefer IBFTs, that is, Inter-Bank Fund Transfers. Hence, they are increasing through digital interactions and moving towards branchless banking.
— JS Bank (@jsblpak) April 15, 2020
GVS: Have you introduced any digital-related products during the coronavirus pandemic?
Noman: Yes, we are working on several products and in fact, have released a few of them. For example, the Ehsaas Kafalat program launched by the Prime Minister. For this, we have a branchless banking channel called, JCash, which has almost 30,000 agent networks across Pakistan.
We have provided all our agents with necessary protective gear to ensure that they safely disperse this cash amongst the deserving needy people. So, while these people were coming to our agent locations to give their biometrics, we – along with other partnering – banks facilitated these beneficiaries. We have dispersed a huge sum of money under this Kafalat program.
GVS: Is this in anyway related to your product, JS Wallet?
Noman: JS Wallet is basically an account you can open while sitting at home. All you need to do is download the JS Wallet app in your phone, submit the following data: your ID Card number, the issuance date of your ID Card number and your mobile number.
GVS: Then what happens to all your KYC – Know Your Customer requirements? If all you need is an ID Card number then doesn’t KYC become problematic?
Noman: No, it does not. You see, when we receive the ID Card number and its date of issuance, we fetch the fetch its live record from NADRA. And while validating this information against NADRA, we also validate it against AML/CFT blacklists etc. And if you clear all those steps, you can open the account. But it happens so quickly that the customer doesn’t realize it. Also, this account has a limited number of transactions available. You can perform a transaction of Rs. 25,000 but not Rs. 2.5 Million on it.
People are now realizing that a process as long as 30 to 40 minutes can be done in less than 30 seconds at home through branchless banking
GVS: So, can I put in more than 25,000 Rupees in this account?
Noman: You actually cannot. There are certain limits – daily, monthly and yearly. But this is just a start. It essentially gives you experience in digital interactions with the bank. You can also upgrade that account as well.
GVS: Is there any way you are working with the government through one of the digital wallet schemes?
Noman: Yes, we are exploring any other options with the government to hold campaigns and launch products. These will not only be focused to increase digital transactions but rather, to create opportunities to generate revenue through these digital channels. So, many such initiatives are in the pipeline. What I can tell you is that JS Bank is not only focused on generating revenue.
For example, our 110 million fund is not to generate revenue but its focused on four domains. These include, manufacture and distribution of masks and protective gear, research on the virus, distribution of food rations with the government etc. In addition to that, we are creating awareness through our social media handles, like Facebook, Twitter etc. For example, we have a campaign where we promote people to make a mask at home in return for free health insurance. All they have to do is, follow our instructions and post a video of it.
Make a mask, win free health insurance #MaskHumSabKeLiye! Watch how to make a mask here: https://t.co/nZ9oDF9Lyz and send us your video at 03487003000.#JSBank #JSBankFightsCorona #BarhnaHaiAagey pic.twitter.com/CX7MbOA2pF
— JS Bank (@jsblpak) May 10, 2020
GVS: During this very difficult period, where people are out of jobs or facing reduction in salaries, the governments are helping their people. Similarly, banks in the west are also playing an important part. For example, they are housing mortgaging schemes. I heard that in the UK, they deferred payments so that mortgage owners facing problems with salaries don’t have to repay that amount for the next three months. Do we have similar schemes here in Pakistan?
Noman: Yes, we do. SBP has mandated such schemes across the country and JS Bank is leading in the cause. State Bank has been very proactive, they quickly reacted to the environment and provided banks with proper policies to follow suit. For example, JS Bank has deferred payments for house loans, car loans, credit card payments etc.
SBP introduces Refinance Scheme to Support Employment & Prevent Layoff of Workers, at 5% (3% for tax payers) covering 3 months wages valid till 30 Jun 2020. For more details, visit https://t.co/oSWfvMiAc7
Visit your nearest branch to apply!#BarhnaHaiAagey #JSBank pic.twitter.com/ArTbsFrspO
— JS Bank (@jsblpak) April 22, 2020
GVS: So, for how long has JS Bank deferred the payments in Pakistan?
Noman: We have deferred payments up to a year, which is a massive relief to the public. In addition to that, we are working very aggressively to provide finances to tax-paying companies with employees at mere 3-5% interest rates, as per the instructions by SBP. This ensures that corporates don’t lay off their employees and will eventually save the economy by preventing people from losing their jobs. So, we are doing all that we can to help our own employees along with those of other companies. And I assure you that these 3% loans are key for many to survive on their jobs.