Midland Bank relies on digital technology for steady growth
Eight years ago, Midland Bank Ltd set out to become a bank for the masses, based on technology and reaching the unbanked of the hinterland.
The private commercial lender focused on digital banking and set up physical branches only in strategic locations.
“We have always focused on online banking,” said Md Ahsan-uz Zaman, managing director and CEO of the bank, in a recent interview.
The direction of the bank was justified by the constant growth of the tech-savvy population.
As the coronavirus pandemic has upset traditional banking and boosted the need for digital banking, Midland Bank, which is celebrating its eighth anniversary today, could derive satisfaction from its strategy.
Today, he is confident to provide stronger services than others, as he has already established a strong digital footprint.
“The younger generation is tech savvy and people are very busy.
So the tendency to visit branches is declining, ”Zaman said.
Midland Bank has launched the Midland Online online banking app, which allows customers to have a bank in their pocket.
“Customers will find it all here,” said Zaman, who worked at Grindlays Bank, Bank of America, JPMorgan and Mutual Trust Bank before taking over as head of Midland in 2014.
Midland was one of the first banks to adopt the National Payment Switch Bangladesh, a central bank electronic platform that enables interoperability between lenders for retail card or online transactions through ATMs, points of sale and an online banking system.
It participates in the Bangladesh Electronic Funds Transfer Network, which facilitates credit and debit transactions as a check clearing system.
In early 2021, the Bangladesh Bank took the initiative called Interoperable Digital Transaction Platform (IDTP) to make all accounts of banks, mobile financial services (MFS) and payment system providers (PSP) interoperable from here this year.
Eleven banks, two PSPs and one MFS are involved in the process, and Midland Bank is one of them.
“We have already invested in the acquisition of hardware and software for the IDTP,” Zaman said. As a single banking entity, Midland Bank is also connected to EkPay, a payment processor that offers bill payment services to customers and merchants.
“You might find that we don’t aggressively do traditional banking.
But our digital footprint can reach anyone, everywhere, ”he added.
Under the slogan of “Bank for Inclusive Growth”, the bank has focused on providing simple, convenient and secure banking services to its customers.
It has a network of 112 distribution points – 34 branches, eight sub-branches and 70 agent outlets – across the country. Most branches are located in rural areas.
When setting up a branch, stand or agent, Midland always chooses an area where banking services are not widely available.
“If you want to benefit people by providing banking services, you have to establish outlets in areas where there are not many banks,” Zaman said.
The bank has also struck a balance between traditional banking and digital banking to ensure profitability at this point.
Despite the pandemic, which crippled the economy, Midland’s deposit base widened to Tk 4,506 crore in 2020, from Tk 3,950 crore in 2019.
Loans increased to Tk 3,786 crore from Tk 3,174 crore during the period. He made a profit of Tk 65 crore in 2020, up from Tk 55 crore a year ago.
Midland Bank has one of the lowest NPLs ratios in Bangladesh: Bad debts accounted for 1.16% of outstanding loans last year, up from 2.64% a year earlier.
“By maintaining a lower cost-to-income ratio and internal expense efficiency, our profit has continued to grow. Our capital adequacy ratio is very strong,” Zaman said.
The bank has participated in government stimulus programs for large companies and small and medium-sized enterprises (SMEs).
“We have fully met our target for large entities. For SMEs, we have almost reached our disbursement target,” Zaman said.
Midland Bank has disbursed Tk100 crore under the Low Cost Government Approved Infrastructure Project Investment Promotion and Financing Mechanism project as a participating central bank financial institution. Another Tk 150 crore is being disbursed.
The bank operates a centralized business model for corporate loans from its Gulshan branch in Dhaka and its Agrabad branch in Chattogram.
No business loans are disbursed by branches and sub-branches, which can only provide loans to individuals and SMEs. However, they can refer large companies to branches in Gulshan or Agrabad for large loans.
“Retail and SMEs are our main focus,” Zaman said, adding that SME lending is growing at a good pace.
According to Zaman, the biggest challenge is when customers want higher rates for deposits and lower rates for loans.
The bank accepts deposits at a rate of 5.2 percent. Sometimes it goes up to 6%. “Deposits are increasing and customers from many big banks are coming to us,” he said, attributing the feat to efficiency and better cash management.
As Sharia-based banking gains traction, Midland introduced Midland Bank Salam last year.
Products such as MDB Super Saver and MDB Family Support have already won the hearts of customers, Zaman said.
The banking agent service provided a great opportunity for Midland Bank as it wanted to avoid relying on physical branches. He deployed the service in 2016.
The bank is making the most of agent-based banking services to get on-board rural customers who are new to online banking.
“It’s technology-based, but customers can do banking with a physical presence,” Zaman said.
Last year, Midland Bank introduced a digital account opening based on the central bank’s electronic know your customer (e-KYC) directive, helping users access financial services without visiting branches during the coronavirus pandemic.
It has deployed an e-saver account to allow customers to open it from any branch, sub-branch and bank branch.
“It may appear that Midland is a small bank. But we have all kinds of windows to meet all customers’ needs.
For the famous banker, trust and customer satisfaction are of the utmost importance.
“At the end of the day, the questions remain: have we succeeded in gaining the full confidence and satisfaction of our customers?
“We want to provide the service with efficiency, diligence and attention so that a customer can feel it when they come to us. We have taken all the necessary measures so that it can feel the difference in quality of service compared to other banks. “
“We’re not ready to make a big profit all of a sudden. We believe in sustainability. From the start, our main effort has been to establish a bank for the general public.”