In recent years, as foreign banks have announced either their outright departure or at least a severe curtailment of operations in Pakistan, one name has been conspicuous for not having any apparent desire to leave the country: Standard Chartered Bank. Its success in Pakistan is a case study in the virtues of a long-term investment horizon, and a lesson on how foreign banks can use technology to capitalise on growth in frontier markets.
The first thing to understand about Standard Chartered is that it is no ordinary foreign bank. “We do not have a home market,” said Raheel Ahmed, the head of retail banking for the Middle East, Africa and Pakistan, in an interview with The Express Tribune.
What Ahmed is referring to is the fact that while Standard Chartered is headquartered in London, it derives more than 90% of its revenues from outside the United Kingdom, primarily focusing its business on Asia, Africa, and the Middle East. It is listed in London, but also in Hong Kong and Mumbai.
It opened its first branch in Karachi almost exactly 150 years ago, in 1863. This is clearly not a bank in the business of leaving when things get rough. “We have a very long term investment horizon,” said Ahmed. “Our view is not just of a few years. We look at the next fifty, even hundred years of growth opportunity.”
Standard Chartered Bank Pakistan is listed on the Karachi Stock Exchange, though 99% of it is owned by the bank’s global parent. At 130 branches in 29 cities, its Pakistani retail branch network is the second largest for Standard Chartered Bank globally, second only to its network in South Korea. Part of this is the result of the successful merger with Union Bank in late 2006. Regardless, the large branch network is a huge advantage for the bank.
“We know Pakistan as well as any local bank,” said Ahmed.
Size is not always useful, however, and acquisition of a local rival is not always a successful strategy for foreign banks. The now-defunct ABN Amro Bank bought out Prime Bank in 2007, but that merger was broadly seen as a disaster.
What distinguishes Standard Chartered from its rivals is the relentless pursuit of delivering a better customer experience, leveraging technology to a greater degree than most, if not all, of its rivals. “The paradigm of customer experience being paramount has been a key differentiating factor,” said Ahmed.
The bank offers one of the most convenient suite of technology solutions for banking customers. It has the highest number of cash deposit machines in Pakistan, for instance. It was the first bank to introduce ATMs for the visually impaired. And it is a dominant player in internet banking.
There are over 800,000 users of internet banking in Pakistan, and Standard Chartered has a 37% market share in that category, despite accounting for only 4% of all deposits. The ease of use of its online banking platform has resulted in the bank being preferred for online money transfers. “We are the transactional bank of convenience for a larger number of people,” said Ahmed. He is being modest. Standard Chartered is involved in 80% of all online interbank transfers in the country.
Positioning itself as the primary transactional bank has been a shrewd move: if customers prefer the bank for making their payments, they are likely to make sure that their account at Standard Chartered has as much money in it as possible. The results of this strategy show up in the bank’s deposits-per-branch ratio: at more than Rs2 billion per branch, it is the highest in the country.
Yet the bank’s management is anything but complacent. “There is no barrier between local and foreign banks in terms of technology anymore,” said Ahmed. And so it is upping the ante: using satellite imaging to decide branch locations and revamping the design of many of its branches.
That investment has shown up in the bank’s profitability: it is the tenth largest by deposits, but sixth largest by net income, which clocked in at Rs6 billion for 2012, up 8.9% for the year.
Published in The Express Tribune, March 22nd, 2013.
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@Bushra Malik: Can you give me the contact details of their head quarter pl.
@Bushra Malik: Can you give me the contact details. to whom i should complain about the services to their headquarters.
how we make a express money from any bank or standard chartered.
how we make express money ?
I ordered a banker's cheque to be made by telephone and told them from where I want to pick it up. When I reached the brank they told me its in Clifton branch. I asked what instructions do you have and they told everything clearly as I told the phone banking officer I literally had to abuse the manager to get a simple task done. In the end. Abusing worked.
Pathetic Bank. It's customer service is so inefficient it is not even funny. Simple account opening, cheque book issuance, debit card can take ages and ages. They have ridiculous and mindless policies and procedures which are a cause of pain. And yes, the profits they make is mostly by catching customer unaware with hidden charges and bank fee. The Bank's employee morale is low and they under hire. One employee is doing the job of 4 employees. The bank does not care if the customers are suffering because of the bureaucratic nature of the bank.
To those people who said that I should have mentioned that Standard Chartered benefited from the other foreign banks closing shop, you are right. That was in my notes, but I forgot to include it in this article. I do apologise.
I personally do not like to invest my money in a foreign bank.
horrible bank, horrible service and most account managers are on weed....they cannot open an ordinary savings account in 2 months, despite having all necessary documents....they take even longer for corporate banking needs....
ABN Amro, HSBC, RBS...
hmmm,... where have I seen those alphabets before?
Oh, yea. They were pessengers in on a bus.
I don't bank with SCB, but I agree with their caption: Here for good.
I would not like to bank with cowboy banks who come and go.
As for corruption and SCB, please excuse me but 'our' famous BCCI was also active in the same markets.
Unbelievably high foreign currency conversion rates, not having enough employees to serve customers, no other foreign banks...it was bound to be profitable.
it is an advertisement through journalists( normally paid in kind or some favor )
SCB is growing not because of own strength but because of weakness of other players. retail head should have given the data of at least retail assets of SCB and comparison with major rivals. Only one parameter is given , that is of net income ( not profit ) increased by 8.9% over the previous year.. But unless the same parameter is compared with performance of other players it is meaningless.
I have reservations that the author does not understand the difference between merger and acquisition.when it is written "Part of this is the result of the successful merger with Union Bank in late 2006." it was not merger it was acquisition.
Money speaks in this report.
Sorry, but SCB really does not deliver a "better customer experience". My experience with them as a corporate customer has been terrible - they are unfriendly and extremely bureaucratic.
They why it is valued at below par at the Pakistan Stock Exchange?
If you compare the services of standard chartered with the likes of ABN Amro , HSBC or RBS...you would find this bank lagging miles behind in customer care and technologies....no wonder this Bank started growing in their absence
I have been an account holder for almost 7 years now.......their Internet Banking is good BUT they slap charges on anything they can think of without intimating you....same for their Credit cards, even though they had promised that there will not be annual charges but I have to fight every year to get my charges removed...... I wish someone from State Bank is taking notice of this and check thier practices
Why Standard Chartered is still growing in Pakistan? Because absence of competitors in Pakistan.
Gulam Rasool"Kuldeep sharma" New Delhi
they get work out of fresh employees as in west and fire the old due to stress. try DIBPL, no rush there like scb
Substandard service and clerical minded management hiding behind corporate policy, thats what i think of SCB !!!!!!!!!!!
Although a significant player here, SC is almost non-existent in global markets...
Ques: Why Standard Chartered is still growing in Pakistan? Answer: All the other foreign banks have closed their shops.
Askari bank has much better internet banking facility, and it is free!
Is this an ad?
Non-unionized employees, a low employee-to-deposit ratio or employee-to-customer ratio, emphasis on customer service, use of technology and not forgetting a focus on richer clients (retail or corporate) makes the bank profitable. Ah, did I mention lack of government interference in giving loans to party-in-power chamchas ? Also the bank's reputation is not local, its international with Pakistan being the smaller part of its global business, so the governance processes are extremely sound and adhered to.
You know what bankers say about Standard Chartered in London..."where there is corruption, there is Standard Chartered". If you look at their most profitable branches, you will realize they are mostly in Third World countries. And no wonder Pakistan is such an attractive market for them!
internet banking costumers will be on rise with 3g arrival to Pakistan and I think they should focus on mobile internet banking also to keep their dominency in internet banking
Being a account holder for last 7 years i can confidently say they are the best bank in Pakistan. I have an account in UBL and dealt with some other banks, believe me they are disastrous. For start, just try to make a pay order with a bank other than SCB.