Md. Kyser Hamid has 13 years of experience in the financial service industry. He joined IPDC in August 2018 as the Deputy Managing Director and Head of Retail Business. Before joining IPDC Finance, Kyser Hamid had worked for BRAC Bank Limited as Head of Retail Sales and Regional Head of Distribution. He also worked for IDLC Finance Limited as Head of Regional Business, Consumer Division.
He met the Fintech team at his office to talk about the role IPDC is playing in the financial sector of this country.
Here is an excerpt of the conversation.
Can you tell us how did you begin you career?
I completed my BBA majoring in Accounting in 2006 from Dhaka University. Afterwards, I did my internship at Incepta Pharma. Being an accounting graduate, I had this intention of becoming a financial analyst. Therefore, I enrolled in the CMA program at ICAB. We all had this notion that we should do jobs that are in line with the subjects we studied at university. Since I studied accounting and finance and then enrolled in CMA, I thought I would also work in that field. However I soon realized the accounting job was not meant for me. After the final examination was over, I applied for management trainee positions and I was accepted at Delta Brac Housing Finance Corporation (DBH). At DBH, I worked at the finance and resource department.
My reporting boss was the Chief Financial Officer. Since it was a small organization, I had the opportunity to learn about marketing, sales support, operations, business and product development as I worked with all these departments. When the interest rate fell quite sharply in 2006, I saw the customer service department going through a tough time while dealing with aggrieved customers, especially home loan customers. They used to come every day, shout and complain about why we had raised the interest rate. On top of that income tax was imposed on deposits at NBFIs which was previously free. People used to take their money out of banks and saving certificates to save in NBFIs. A person who received 1000 Taka per 1 lac after tax at source was deducted suddenly could collect 900 Taka only. During this transition period, I saw many customers who were upset come in and raise many issues. 10 to 15 difficult customers came every day to talk about how they were affected by the sudden change in income tax and interest rate. I noticed that people who were responsible to deal with those customers, they were not able to do so. That is why I began to entertain some customers.
I found it quite interesting that I could convince a customer with a different analysis and at the end of the day he was happy. It dawned on me that I was quite good dealing with customers and soon I became very popular. Customers actually asked for me when they came into the office. When a customer approached me, I tried to understand his total financial problem. After I explained the portfolio according to his requirement, the customer started to depend on me. At that time I received the best customer service award. I became more confident and I was promoted after seven months. That is how my journey began in customer-facing sales and marketing departments.
In 2010, I told my employers at DBH that I wanted to work in retail sales. However, they were not really enthusiastic about putting me in that department. They thought since I had no experience in retail sales where contractual sales people work for low pay and considering my background, they were not sure if I would fit the bill. Fortunately, the Managing Director supported me and allowed me work with 10 sales people in a discarded office. Then my journey took a new turn. The sales team of 100 individuals at DBH brought in business worth 27-28 crore Taka while my team of 10 sales people brought it 30 to 35 crore Taka of business to DBH. Then the management appreciated my efforts, my style of making sales and gave me a sales office in Baridhara and told me to take 30 people onboard. I prepared my team to be the financial consultant of a customer and take care of his entire investment portfolio instead of giving any specific product solution.
In 2012, I moved to IDLC Finance. At IDLC, I became the Regional Head of Consumers. DBH was a single product company that dealt with home loan but IDLC’s retail side comprised of car loan, personal loan and home loan. The fact that I had to supervise a team that sells car loan was another challenge for me. After studying the car loan scenario, the market and the showrooms, I came up with a new KPI, a different model for car loans at IDLC. My employers at IDLC were quite amazed since I didn’t have any prior experience handling car loans. When I joined IDLC, the consumer portfolio was around 650 to 700 crore Taka. Within a short span of time, this number began to grow exponentially and even the organization was not quite ready to cope up with the rapid pace of growth. When I left IDLC in 2015, the consumer portfolio was above 2,000 crore and deposit portfolio was above 4,000 crore Taka. Then I moved to Brac Bank. Here I faced a new challenge since I was a non-banker; I had spent nearly 10 years in NBFIs.
In NBFIs, you cannot receive CASA, current and savings accounts. Selling CASA is a different ball game. Then you have to sell credit cards as well. My team at Brac Bank had 1,200 members, and Brac Bank has the largest sales team in the country. So my progression was from a team of 30 members at DBH to a team of 300 at IDLC Finance and finally to a team of 1,200 at Brac Bank. DBH had five branches, IDLC had 20 to 25 (mainly 5-6 meant for retail sales) while Brac Bank had 186 branches and 450 unit offices. At Brac Bank was I curious to know how the sales happen and I dug deep to find out exactly how and why it happens. When I joined Brac Bank, the retail portfolio was below 2,000 crore and after six months, it became 3,000 crore Taka. We reached 4,000 crore in the next 8 to 10 months and became the largest retail bank in the country. I was the head of Retail Sales and Senior Vice President at Brac Bank where I worked around three years. Then I moved to IPDC Finance as the Head of Retail Business in August, 2018. I also work as a Deputy Managing Director. In my 13-years of work experience, I have spent more than 10 years in NBFIs and three years in a bank.
What are the strategic areas IPDC is focusing on?
I will give you some data before I relate our strategy with the reasons behind it. Bangladesh’s population is now around 160 million or 16 crore. Almost 15 crore people have mobile connection. Nine crore people have access to internet connectivity. The median age of this country is 24. 60 percent of our population is below the age of 30. Our GDP growth in the last decade was around 6 to 7 percent. Our per capita income on the purchasing power parity basis crossed 4,600 dollars. We have been able to create a successful model even for those who live in the most remote areas of Bangladesh. Bangladesh is called the Mecca of NGOs. We have Brac, Grameen Bank and other NGOs that cover the extreme poor, poor and the lower-middle income group in this country. The middle and affluent consumer group (MAC) is around 12 million. The disposable income for the MAC group is more than 400 dollars per month. And every year 2 million people join this group. By 2025, it will be close to 20 million, the middle and affluent class.
In a recent survey I saw that 81 percent of population believes the news they view online. 60 percent of people search for products on the internet. With growing purchasing power, the middle and affluent class has smartphones and uses the internet. If you ask me what will be the need for this class, I will say consumer products. People need lifestyle products when their purchasing power increases. They need household equipments like air conditioner, television, refrigerator, furniture etc. At a later stage they need a house of their own. There are 36 districts in our country where the MAC population is over 1 lac. By 2020, the MAC population will be at least 1 lac in all 63 districts. People who live in the districts outside Dhaka, they want to build a house after their purchasing power increases. There is still a social taboo about taking a loan to build a house or apartment. When I was in a bank, I was also apprehensive about taking a loan so consider someone who does not have any banking literacy. If you ask our parents, they want to avoid taking a loan. People still think there is a lot of hassle with loans like the interest rate, mortgage and others.
Now we have this growing MAC class and when they construct a house without any loan, the entire process takes 2 to 3 years at least since they are mainly depended on their savings. They do some work on the house and after their savings run dry, they halt construction. After they build up their savings, they again start constructing the house. In this way, the quality of construction suffers and ultimately the total expense becomes much greater in the long-run. By taking a loan, they could have avoided these problems and the costs would have been much less. NGOs have a huge role in breaking this mindset of not taking loans as you can see many people in villages take loans for a better livelihood and financial wellbeing. If you can reach out to the ‘missing-middle’ segment with a product like home loan which requires a long-term commitment of 20-25 years, you can become a partner in their development and help them fulfill their dream.
Our strategic objective is to reach that consumer segment with an affordable home loan especially for those who live outside Dhaka. We recently launched a nationwide “affordable” home loan offer titled “Bhalo Basha” making eligible anyone earning a minimum of Tk 20,000 per month. Though a maximum 90 percent of a property’s value can be availed for 25 years tops, the loan limit will be decided based on the customer’s income and property value. For the segment whose purchasing power has increased and they need household equipment, we have launched a product called ‘consumer goods finance’ where we provide loans at 0 percent interest on an EMI basis for 6 months, 12 months, 18 months etc. Apart from these two strategic products from the retail segment, we have some other strategic products from IPDC’s point of view like supply-chain finance and retailer financing. With the rise in GDP of Bangladesh, the middle and affluent segment is steadily increasing and this is where we are positioning our strategic products from IPDC.
What are the upcoming products of IPDC?
We have launched the affordable home loan in several districts outside Dhaka and by the end of this year; we expect to deliver that product in 50 districts from our offices in those locations. I can tell you that the terms and conditions of this home loan is unique in our country as we disburse loan up to 1 million Taka without any collateral. For our ‘consumer goods finance’, we have partnered with organizations like Transcom Limited and it will available in 20 showrooms in Dhaka very soon. We expect to take this product to over 100 stores all across Bangladesh by this year. We also have some other products in the pipeline.
We want to bring in interest-free products targeting the youth segment. Our strategy is to focus on the youth, women and the under-served population. We will launch a new product for women in March. A woman who is working or has property in her name will be able to avail various discounts in over 250 lifestyle product stores. In addition to that, she will get discounts in 10 to 12 hospitals as well. We will be giving her life insurance coverage of 2.5 lac covering 10 incidents per year. She will also get online doctor’s consultancy 24/7. We will introduce a product called IPDC Priti, a complete financial solutions for women where you can easily get the appointment of highly sought out doctors. Initially, we are offering this product only for women.
We all know that the customers are very demanding. How are you dealing with your customers?
You see IPDC’s strategy is very clear; we don’t want to sell any products; we offer effective financial planning to the customers. Our customer service is unique from other organizations as we view it as a long-term relationship. We want to be partners for the long haul. We believe that customers should grow and we will also grow. In that regard, we are sharing revenue with each other. The customer whose revenue is increasing, he or she is giving us a share of that revenue.
We don’t offer a single solution, for example after taking home loan to build or purchase a house, the customer may need money for renovation after a few years, or intend to buy a car since there is parking space at his new home, he can take loan to expand his business etc. So we fulfill the 360 degree requirements of a customer. We differentiate with our competitors by our relationship with the customer and by our tailor-made services. We have a dedicated relationship manager for each and every customer. We don’t have any orphan account. In essence, we have a complete relationship-based banking model.
What are you doing to meet the goal or objective of IPDC?
As I have told you earlier, the objective of IPDC is to work with the youth, women and the under-served population. We are constantly working with passion and the largest NGO in the world, Brac is in our shareholding as well as the government of Bangladesh. There is no individual ownership at IPDC. IPDC is owned by various renowned institutions. There is no scope for profiteering at IPDC. The government is working for the betterment of the mass population. Similarly, our profit that goes to Brac actually comes back to the society. In effect, there is no profiteering and that is why we are focusing on the under-served population. If you take a look at our products, you will notice that we are concentrating outside Dhaka so the financial services are available in districts and mofassil towns. We are offering easy terms and conditions. Through our range of products, we intend to build a long-term relationship with the customers. The way we do our business is completely aligned with the strategic objectives of IPDC.
How are you dealing with your competitors in other sectors?
This is a valid question because the competition is extremely intense nowadays. You can notice something amazing here; we have almost 60 banks, 34-35 NBFIs. When you talk about competition, all the banks and NBFIs have interest rates in their minds. These organizations are competing with other to provide the lowest interest rate and the advertisements we see all around will back me up. Nobody actually cares about the requirement of the customer. Customers are now intelligent enough to recognize the short-cut, quick-winning strategies offered to them. You cannot offer the lowest interest rate for long-term products. So the customer acquisition strategy has been found out. Secondly, according to the information I gave you earlier about our population, if you cannot reach out to them technologically and offer tailor-made solutions, you cannot win here with just the interest rate.
As an organization, IPDC is very young; our median age is below 35. So we are very tech-friendly. What we are missing right now is e-KYC or electronic KYC. If integration of the Election Commission, telcos and other organizations can happen, we will be able to provide the customer with the necessary validation almost instantaneously. In other areas we are ready. We are giving solutions to customers where through technology they can avail all the information, inquire when necessary and get the service in the end. All the files are processed and sanctioned online when we go outside Dhaka. So we take the advantages of relationship management, tailor-made solution and fintech (financial services through technology). We believe we can win over the competition with these three things rather than using pricing strategy.
What are the technological innovations you are adopting to serve the customers?
First of all I want to tell you that our sales-force is equipped with loan-advance module and sales management in their device. The lead we get from any customer reaches the head office automatically. Sitting at the head office, I can find out exactly what the salesperson said about a specific product to a customer, whether he is in Bogura, Rangpur or Thakurgaon. Since we have the lead from the customer beforehand, it saves time and effort when we start working on that case. When we communicate with that customer directly, we can provide an accurate assessment upfront. We can in principle say what will be the amount of loan, the probable interest rate and monthly installment then and there.
I have seen all the organizations work separately while graduating the data along with the entire process of loan sanctioning. This greatly increases the turnaround time for customers. We have managed to solve this problem as we handle all the information electronically. Secondly, we have launched this service in various stores in Bagura, Jessore and Dhaka where the customer can avail the loan upfront by providing his or her photo, images of the NID and bank statement. Now we intend to bring in the digital wallet which will allow payment integration for the customer.
We are upgrading our core banking and we expect to complete the process by the third quarter this year. We are using the latest technology available for this purpose. In essence, technology is allowing us to serve the customers in the scale that we do. In terms of supply-chain management, no other organization is even close to IPDC and we recently won a supply-chain excellence award. Technologically speaking, we are far ahead of any financial institution and although our operation is not as large as a bank’s, we have overtaken others in terms of customer service and product offerings. Our sales management is automated, something no other banks have at this moment. We also have e-document management to speed up the entire process.
What is the future plan for IPDC?
We are the oldest financial institution of Bangladesh as we started our journey in 1981. We have also played a role in setting up other financial institutions in this country, be it their sponsor share holding or preference share bonds. IPDC was also involved in some mega projects of Bangladesh. Earlier, we were a corporate focused financial institution but from the end of 2015, we are completely focusing on retail and SME. Our balance sheet composition at present is 50 percent corporate, 25 percent for SME and retail. But our current strategy is to increase the composition of retail and SME. In retail, we want to be as big as possible. We are eyeing a massive retail portfolio as well as in SME. Strategically we are moving in that direction and by 2021; we hope to become the largest NBFI. Currently we are in the third position. In retail, we want to be as big as possible and recently we have been awarded “The Best Retail Finance Company 2018 in Bangladesh” by International Finance Magazine.
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