- The rise of digital financial services leads the way with global implications
Interview with Mr. Hamad Rasool Bhullar — an analyst
PAGE: Tell me something about yourself, please:
Hamad Rasool Bhullar: I have been working for both the private and public sectors over the last about 32 years in multiple roles with almost 27 years in professional training. With respect to my work with the financial sector, I have been involved in research and training for almost 27 years so far, and conducted over 350 trainings on different aspects of finance, business ethics, audit and corporate governance from basic concepts to professional applications in projects finance, Shariah Compliant risk management, investment management and financial analysis etc. in addition to the freelance consultancy and financial advisory in these fields.
I remained a non-executive member on the Board of an Investment Bank for almost 4 years. My qualifications and experience over the last 32 years have mainly been in accountancy, corporate law, IT, economics, corporate finance and Islamic Finance, Takaful, business turnarounds, projects finance, audit & ethics with training and business advisory in multiple areas of corporate sector as well as public sector within and outside Pakistan.
I have the privilege to have issued the first Sukuk in Pakistan’s Investment Canvas with some other such initiatives.
PAGE: It is presumed that in the steeply evolving digital landscape, technology has become pivotal for delivering gorgeous services to customers in the banking sector. Please elaborate with details:
Hamad Rasool Bhullar: It is becoming quite interesting and attractive for the older generation as well, while among the younger lot in our society, it is already quite popular, to make digital transactions “without the fear of loss”.
This fear of loss is still prevailing among the older generation like ours, as I have seen a lot of such cases, where they have suffered losses in the process. The financial and other transactions mobile apps have greatly occupied a good ratio of the business, where we hardly ever have to visit the bank physically, but continue to perform our businesses, which is a great facility. Further to this it is bringing positive signs of confidence in the business players especially the small business and micro-finance banking sector by the general inclusive approach. The trend line for digital transformation is getting even steeper. The only problem is that the majority of the population, especially those over 40 years of age are feeling reluctant only due to the fact that they have used it quite late in their age.
PAGE: To stay competitive, banks must leverage the power of innovative technologies to enhance customer experiences, optimise operations, and drive growth. What is your standpoint on it?
Hamad Rasool Bhullar: There is no other option left for survival anymore, for the banks and other financial institutions, and the positive thing is that they are working on it, I had said a few years ago, that the digital financial system will change the banking sector of the world, it is gradually enabling as the physical presence of the banks is only for some limited transactions. We are experiencing today that the rush of customers at the branches has been reduced as a large number of customers do not need to visit the bank branches so frequently as was required a decade ago, this is what, the tech effect is on financial services. Switching to technology has also reduced the cost of business operations for both the customers and also for the financial institutions, so they are better able to focus on innovations and this happens only when the banks attend to the specific needs of their customers.
PAGE: It is widely believed that global banking IT spending is projected to reach $761 billion by 2025. How would you comment on it?
Hamad Rasool Bhullar: That actually establishes the global reliance and trust in the digital system of financial services, the fact is that the leading player in this context is India, followed by China, South Korea, Thailand and UK, while Nigeria and Japan coming at 6th and 7th slots in digitally using banking services. India at present covers almost 45 per cent of the global volume and the trend is rapidly spreading every day. Factually, my expectation in this regard is that this volume is expected to cross $1,000 billion even during 2024. The mobile apps working in this field are spreading so rapidly that the central banks of the world have felt difficulties in managing such a large number of transactions.
By the global regions, South Asia & Pacific Region has the great potential of being the major contributor of the digitally learned population and consisting of middle and lower middle classes of the global population. The digitalisation of micro-finance banks and digital wallets have facilitated this trend as the majority of this spending comes from this segment of the globe.
PAGE: Is it true that integrating new technologies with existing systems is one of the top challenges in implementing digital transformation initiatives?
Hamad Rasool Bhullar: On the one hand it is a great opportunity for the banks to facilitate their customers, to attract deposits which enables them to create more credit, and on the other hand, it has become a secure and safe way of life for the customers of these banks as everyone is connected through this system. Using a common platform by the B2B and B2C transactions through mobile apps, the need for physical currency is gradually getting eliminated.
We can hope that a day will come when use of physical currency will become an undue exhibition of wealth and a sort of undesirable and unethical. We can say that the use of digitally integrated systems for business transactions, through QR codes and cell phones is becoming a norm for society.
Pakistan and Gulf countries have also to adopt this trend for survival and keeping the desired pace in the market. The age barrier and fear from digital form of wallets, for older aged customers will hopefully change in near future, as due to their innocence and having used to the physical currency. Some incidents of digital financial frauds have made them more cautious to become part of digitalisation.