The global financial landscape has recently undergone a significant transformation with the development of the modern digital ecosystem.
Many young fintech startups today are focusing on identifying and fostering the digitalization of financial services in Pakistan by utilizing promising breakthrough technologies from Mastercard that would lead to improved financial inclusion in Pakistan.
Additionally, these companies have been working hard to create a frictionless digital payment experience for their customers as a result of the increased competition in the fintech industry.
SeedCred a leading nano-lending fintech is also in the race to cater with its app Barwaqt which aims to expand the nano-lending business across the country.
With its hassle-free and paperless digital Nano loans via Mobile application, ‘Barwaqt’ is dedicated to providing instant and secure execution of the lending process.
ProPakistani spoke to Abrar Ameen, a veteran in the banking sector who has worked with leading financial industries of Pakistan and is currently serving as CEO SeedCred.
In this interview, he talks about fintech, SeedCred Financial Services Limited, and nano lending prospects and challenges in Pakistan.
Here’s how the discussion went:
What was the idea behind creating SeedCred as a fintech in Pakistan? Tell us about Barwaqt.
Pakistan ranks lowest among countries in financial inclusion in the World. The number of unbanked people in Pakistan ranges from 75 to 80 percent of the adult population. That is a massive number by any standard. So the ratio of those with access to credit is far lower than those with a bank account.
This principle factor encouraged our sponsors and foreign investors to create SeedCred. The company aims to provide access to credit to the population segment that cannot obtain small, personal loans for meeting emergency requirements from mainstream financial institutions without offering collateral /personal/ community guarantees.
So, SeedCred Financial Services Limited is a Non-Banking Finance Company licensed by SECP based out of Islamabad. SeedCred is engaged in the business of offering hassle-free and paperless digital nano loans through its mobile application “Barwaqt”.
Barwaqt application is the consumer interface through which the loan is processed and repaid after the regulated due diligence of the borrower.
The entire process is safe and informs clearly about the interest rates and processing fees to the borrowers. The customer data is completely secure and encrypted as per the company’s own ethics and secrecy standards. To date, 10 million downloads of Barwaqt App have been done.
What would you say about the Islamic point of view on financial services?
In Islam, the concept of lending/ borrowing money is not Haram (forbidden). We have extensive Islamic jurisprudence enacted globally on this critical issue. Islam recognizes the necessity of borrowing funds for personal needs, trade, investment, etc.
During my banking career in the early 90s, I worked for 11 years in Faysal Bank, created initially as Faysal Islamic Bank of Bahrain – the first Islamic Bank in Pakistan. Since then, several Islamic banking institutions have been successfully established in Pakistan. So there is a definite demand for Sharia Compliant financial products in Pakistan, and we strongly believe in that direction.
What steps are you taking to make Barwaqt a better source or option for loan providers for the unbanked and the underbanked?
We prioritize making the entire user experience seamless, frictionless, compliant with all relevant regulations, and free from any personal intervention. This means that we constantly review the back-end approval process, which uses AI-based algorithms to determine an applicant’s loan eligibility.
The general misconception is that if someone applies for, say Rs.10,000 loan; they will get that amount. However, the loan amount is actually determined by several factors like age, income, employment, repayment capacity, clean repayment track record, etc.
In addition, we use nationally acceptable Credit Checking services (which are approved by regulators) to see each borrower’s credit history while processing a loan request. This is done electronically, but if there is some disparity in the information provided by the borrower and the system raises a red flag, our verification officers call the applicant to obtain clarity.
Similarly, no physical contact between company and borrower ever takes place for repayment of loans. And our staff is strictly instructed to speak to the customers politely.
What would you say about your customers’ data security and how you use that information while protecting it from misuse?
This is a critical issue for us, and we take customer data protection very seriously. Recently, when doubt was raised about our App’s data security aspect, we had it tested by a very well-reputed IT security expert in the country, and no data breach was reported. But, of course, in the IT domain, nothing is ever free from risk.
Therefore, we constantly review our App’s security features based on internationally accepted data security protocols. At the same time, we do not provide access to the customer’s data to any of our staff members except those few who can handle it very securely.
What employee benefits are you providing your employees to make them loyal staff members of your company?
No amount of financial incentives is enough to encourage staff loyalty if they are not treated with respect and dignity. We have made clear rules for respecting the dignity of our staff members, besides offering them financial incentives like a bonus, medical cover, congenial working environment, reward programmers, performance certificates, etc.
You would be amazed to know that we have a female staff to male staff ratio of 51 percent, which means that our female colleagues feel secure and comfortable working in our environment.
What kind of team leadership should one have to lead one’s way to the top of a company?
In my humble opinion, empathy in a leader is the biggest quality one should possess. If this quality is missing, a team leader can easily be categorized as cold and impersonal. Impervious to his staff’s problems. Selfish, cold-hearted, etc.
So to earn loyalty, devotion, empathy, and then lead by example, qualities are a must. For instance, if I expect my staff to work late hours, but I never stay with them to help, assist or guide them, they will never have confidence in me as a leader.
Similarly, if a leader only points out the staff’s faults without mentoring them on how to overcome them, then he is just a manager, not a leader. Blaming the team for all workplace shortcomings without taking part in the blame is a sign of weak leadership.
How important are the external partnerships for a fintech like yours for the growth of its business?
These partnerships are vital simply because no one can complete the ecosystem alone. Collaborations and partnerships are the names of the game. Even globally, many of yesterday’s rivals are now business collaborators.
So, while business competition is healthy, partnerships are even more beneficial. Look at Sony/ Samsung, Microsoft/ Apple, Toyota/ GM, and many others. By collaborating and creating partnerships, organizations benefit themselves and the ecosystem, making it more elastic, stable, and resistant to shocks, and help contain systemic risks.
Has the growth of Nano loans in Pakistan shown a strong demand for credit in Pakistan?
Absolutely yes! The people of Pakistan are thirsty for conveniently available and accessible credit without a plethora of paperwork. The existence of microcredit bureaus has benefited the nano loan providers’ ability to give people digital credit.
This spurs confidence and enables ordinary people to access the institutions that provide nano loans for availing the funds without messy paperwork, multiple visits to the office, and above all, with privacy and without embarrassing themselves in front of family or friends
Nano lending is new in Pakistan, and there are complaints against companies, including yours. How would you counter it?
The recent unwarranted controversy in the media stems from a lack of understanding of the Risk Matrix. We provide clean un-collateralized loans to people who apply online. We also have to consider the colossal exchange risk exposure because, after all, the lending is against the foreign equity injected by our sponsors.
Then there is the Return on Equity – not to forget the huge operational cost which runs our very extensive infrastructural framework. So on this aspect, we are guided by our worthy regulator and constantly review our policies and operational factors to cater to the regulatory and business requirements.
How do you see the nano loans industry evolving in Pakistan in the years ahead?
Any business always starts with low-hanging fruit. Very soon, you will see these nascent companies in this segment grow and evolve into EMIs, or even digital banks because each product has a shelf life.
When this industry does not evolve, re-create, re-invent itself very quickly and stick to its original business model, we have the examples of Kodak, Nokia, and Polaroid. Fujifilm saw the future coming, so it invested in making excellent digital cameras that mimicked its highly regarded negative film’s color reproduction quality.
As a result, it has survived the technology revolution while staying relevant. Car manufacturers who lag in developing EVs will perish, while those who invested early in this technology will lead.
The same is the case with nano lenders. If they don’t innovate or offer new products with new features that the market needs, they will become irrelevant, and others will fill their place.
