Silk Bank to Launch Its Digital Banking Services

Silk Bank will launch its digital banking services as a pilot project, with the company hoping to offer comprehensive digital banking services for its customers by next year.

Silk Bank’s Shaukat Tareen addressed a briefing about the half yearly financial results of the bank. The bank’s Chief Financial Officer Khurram Khan and other senior officials were also present at the briefing.

Shaukat Tareen said that Silk Bank got its digital banking license recently and will start a pilot project to offer digital banking services to its employees. By the next year Silk Bank will be able to launch it commercially.

He further said that the financial sector is changing and witnessing a major shift in the banking industry. In the next few years, the banking industry will witness a turnaround as technology platforms end up replacing banks.

“In my opinion Google, Amazon and other Technology platforms will become banks. Right now they are doing buying and selling. They also started taking deposits and giving loans. Banks need to convert themselves into digital and therefore, Silk Bank is also focusing on this,” Shaukat Tareen added.

About Pakistani Rupee’s effective exchange rate, Shaukat Tareen said that during the last few years, the American economy performed well and its currency also became stronger against other currencies. All major currencies were devalued against the US dollar such as the Euro, Pound, Yen, RMB and more, all of which witnessed a decline in value. Only the Pak rupee didn’t undergo devlauation.

“If Pakistan does not adjust its currency, both local and export industries are going to be affected. Pakistan will become a trading economy instead of an industrial economy. Because due to the strong exchange rate, exports decreased and imports increased. The numbers also show that our currency needs to be devalued,” Shaukat Tareen added.

Shaukat Tareen also said that Silkbank will focus on mortgage finance because in the low interest rate environment this is the best time for it. However, he was of the view that we first need fast implementation on foreclosure laws.

“Pakistan is facing a shortage of 10 million houses. Each year there’s a shortfall of some 400,000 houses. Banks can lend home owning loans on 8 percent. This ensures that the rates will be as equal as those paid as house rent. If this figure is more than what is paid as house rent, the mortgage will not produce the desired results,” Tareen added.

Tareen said that Silk Bank is also focusing on Islamic and consumer banking. It is also willing to reduce its corporate banking initiatives. In the future, Silk Bank will be split into conventional and Islamic banking.

Bank Performance

Earlier, Silk Bank’s Head of Investment Banking, Shuja Alvi gave a brief overview on the company’s performance. He also highlighted and showcased Silk Bank’s growth in the time to come.

Silk Bank earned a profit of Rs. 1.179 billion at the end of calendar year 2016. The main driver of the bank’s profits was consumer finance and Islamic Banking.

Silk Bank has been able to reduce its non-performing loans (NPL) by 10 percent. In 2013, its NPL stood at more than 16 percent of overall advances. This figure came down to 6.6 percent in 2016.

The bank’s deposits stood at Rs. 101,984 billion, and its advances at Rs. 78 billion.

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