Dhaka Bank rides on tech to make banking smarter

Many banks around the world are opting for digital banking while adopting up-to-date technologies to accelerate their banking activities. In Bangladesh, one of the private commercial lenders, Dhaka Bank is also riding on such tech to make its banking system vibrant and accessible to their customers.

In a conversation with Mehedi Hasan of The Business Post, Emranul Huq, managing director and chief executive officer of Dhaka Bank talked about the banking situation amid Covid-19 pandemic, technology-driven banking system, challenges to implement stimulus packages and transaction behaviour changes. 

The Business Post: Due to the current pandemic situation, the banking sector is suffering as private investment falls sharply. How is your bank coping with the crisis?

Emranul Huq: The country’s business and economy has halted for almost three months when the coronavirus hit the country last year. The government announced several stimulus packages to save lives and livelihoods in the pandemic.

As per the government’s directives, the garment industries remained open. Hence, the RMG export rose amid the sluggish economy. 

But, the demand for credit in the private sector was very low as the industrial expansion was halted largely due to the fall out of the Covid-19 pandemic. As a result, surplus liquidity has increased in the banking sector. We are also lending to the industries considering the risk. Now, excess liquidity has increased instead of increasing the loans, which badly impacted the profitability of the banks.

TBP: How did the transaction behaviour of the customers change due to the pandemic? 

Emranul Huq: People are changing their transaction behaviour amid the unusual pandemic period. Now clients are considering tech-based banking services for the sake of keeping social distances.

We introduced several tech-based services to meet the growing such demands. Now, our clients can open a bank account even from home through the e-KYC (electronically Know Your Customer) system, a recently launched tech-based product. We introduced Dhaka Bank Go, a mobile app to operate customers' own bank accounts. Clients can also avail several other services such as transferring their money from one account to another account and bank account to an MFS account, paying utility bills, paying fees of educational institutions through

the app.  

Previously, customers used to visit bank branches in-person for trade-related transactions such as foreign exchange, opening letter of credit (LC) and providing export documents but now we have introduced a technology-based product name ‘Trade Cloud’. As a result, customers can apply for LC from their own homes. Currently, these services are gaining popularity. In recent times, we are receiving huge positive responses from the customers for tech-based products. 

We upgraded our IT system in the year 2018 and the upgrading process was continuing in the years 2019 and 2020. Besides, we are continuously developing our products to meet our clients’ demand.

TBP: Nowadays, most banks emphasise their focus on agent banking and sub-branch banking to minimise operational costs. In this regard, what is your point of view? 

Emranul Huq: The profitability of most of the banks has decreased due to the pandemic. However, we made profits just by stopping the extra and luxurious expenses. As part of the move, now we are putting focus on setting up sub-branches instead of full-fledged branches as the operational cost of sub-branches is much lower than the full-fledged branches. Last year, we set up only two full-fledged branches while we opened 12 sub-branches. Apart from our regular banking activities, we are now implementing the government financial inclusion agenda through our sub-branches.

TBP: What is the speciality of your bank? Tell me some reasons why borrowers will go to your banks, and depositors perk money, instead of other banks?

Emranul Huq: We are trying to maintain our hard earned reputation. There is no ill-fame about our bank in the market in our 26 years journey. During the passage of time, we also have achieved quality growth as we emphasised on skilled manpower. Dhaka Bank is trying to keep its brand image constant with the focus on the good governance issue. 

TBP: Does the deferral facility on loan classification create problems? If the BB withdraws the facility, will it push the default loans up?

Emranul Huq: It is a matter of great concern for the country’s banking sector. That’s why, we are always monitoring the borrowers who are enjoying the deferral facility on loan classification. The bank is also monitoring the cash flow of clients. We are trying to boost recovery drive for the clients whose cash flow is good during the

pandemic. 

The banks would not face any problem if they have a strong supervision and monitoring system over their respective clients even amid the pandemic. But if the banks failed to follow the cash flow of their respective clients or even failed to monitor their borrowers, the banks might face challenges as soon as the central bank withdraws such a facility.

TBP: What is your post-Covid lending strategy as domestic consumption is on the rise?

Emranul Huq: Domestic credit demand will increase at the post-pandemic level in both small and large industries. Small and medium enterprises faced various difficulties and challenges in the last one and a half years because they could not sell their products in festivals like Eids, Pahela Boishakh etc. We will prioritise those industries for providing loans as their businesses need to grow at the post-pandemic

period.

The implementation of some mega projects was postponed because of the pandemic. Now, the government will require more funds for early completion of those projects. Our bank plans to provide loans for accomplishing those projects.

The credit demand in the pharmaceutical sector will increase in the upcoming days due to the ongoing Covid-19 pandemic. There is a good prospect in the pharmaceutical sector in the upcoming days. 

We will be involved in a diversified sector in the post-pandemic period. Now the country is fully dependent on the RMG sector for export earnings but we need to diversify our export basket.

Our support is with the country’s economy to achieve credit growth for attaining GDP growth. 

TBP: What are the major sectors of investment? 

Emranul Huq: Corporate loans size is the highest in our total loans portfolio. About 85 percent of our total loans goes to the corporate sector as around 23 or 24 per cent of the loans portfolio is in the RMG sector.  

Total power generation in the country is now around 18 thousand megawatts to 19 thousand megawatts and we have financed 10 per cent of the total investment in the power sector. We have investments in the domestic demand-based manufacturing sectors. We are also financing various government's infrastructure development projects in the country.