TBY talks to Vali Zarrabieh Acting CEO & Member of the Board of Saman Bank, on the concept of community lending and the bank’s successful e-banking program.
THE BUSINESS YEAR What have been the defining characteristics of the banking industry in 2011?
VALI ZARRABIEH We were faced with a number of challenging issues throughout 2011. However, by facing those challenges, we managed to equip ourselves with a mechanism to greatly improve our internal control system and restructure the organization with a focus on our clients. It also helped us to put more of an emphasis on corporate governance rather than just focusing on growth. That was a great opportunity for us; every change strengthens you and makes you healthier with respect to the competition. It really was a year of change.
How can these challenges be turned into growth opportunities?
We turned the challenges into an educational process; you must constantly study the changes that are happening to the market and its legal framework and learn from it. Then you implement a system, in order for your organization to weather it with minimum loss. That’s how we develop and educate ourselves. This has helped us to strengthen our internal procedures and it was educational in terms of restructuring our organization to be more agile, and to be more responsive to the challenges of the market more dynamically. When you live in a routine with few challenges, you get used to what you are doing. But when you face a challenge, you start thinking. When you get through the challenges successfully, you get to know the team better, find better solutions, and start thinking out of the box. What is better than that for an organization? Two years ago, when we developed our five-year strategic plan, we segmented it into three phases in terms of our focus: growth, internal procedures, and more growth. In 2011, our clients ranked us number one with respect to the loyalty index measured on a quarterly basis, and our deposits grew more than 39%, which was basically a record for the market. We started segmenting our clients into retail, premier, private, and corporate banking. By having a corporate banking unit, we achieved two aims: offering better services to our corporate clients, and concentrating all the large exposures of the bank into one business unit in order to better measure and supervise credit risk. Corporate banking involves not only dealing with lending, but also a comprehensive and A-Z client service. Our risks are now controlled much better and we are overwhelmed by new clients’ requests, giving us the luxury of selection by running a “know your customer” (KYC) procedure at the international level. Our focus on retail banking is with a view on e-banking services, based on our historic achievement. Therefore, we are not focusing on growing the number of branches, rather we focus on increasing the number of retail clients by offering them the ease of use of e-banking services (on the transactional side), and utilizing the branches mainly for the purpose of offering new products and alternative banking solutions. By taking this direction, our client base has increased by 50% over the past two years. By implementing our CRM system, we now know the gender of each client, the category, their income, how and where they live, and basically their demography. That has helped us to introduce some new services customized to our customers’ needs. In 2011, we also managed to successfully raise our capital to the new regulation stated by the Central Bank of Iran.
Saman Bank introduced e-banking to the Iranian market. How would you assess the quality of this service and how do you create a competitive edge?
We blend. We have access to an international knowledge base, especially in terms of e-banking products and services, and we customize them to our own needs. We mainly develop the applications ourselves. Our new website will be launched in late June and we implemented a new internet banking service in 2011 named “Saman NetBank.” If you compare Saman NetBank with the internet services from other banks, you can tell the difference yourself. The usability, the interface, and the user-friendliness of the menus and toolbars are totally different from what people have experienced before in this market. And this was achieved just by bringing over the knowledge and customizing it to our own needs and culture. A local fund transfer is a very vivid example of this because the need in this market is repeat transfers to relatives, small businesses, or partners. We have a group transfer system, where you can transfer from one to many accounts. It allows timed transfers and automatic daily transfers, and these are what our customers need from us. In mid-June we are going to launch our new mobile banking, with a new brand name called “Samanak.” We are the only bank that has apps in Apple stores and for Android, which can also work with SMS or GPRS, as well as switch between the two platforms when the coverage of either is not available. Saman Bank works with many internationally recognized experts in the e-banking field to maintain the quality of service.
In which financial sector are there opportunities for you to grow and what new financial services can be introduced in the market?
First of all, we are going to launch our new brand and logo. Other than that, we believe that SMEs and retail are the two markets where the risk is relatively lower, and they have not been developing greatly in this market. Everybody is after major clients, but in this society small communities matter a lot and we have a beautiful culture with respect to helping each other when in need: for that, there are few banking services available. I’m not talking about micro financing; I’m talking about communities of 10, 20, or 50 people living on the same street or neighborhood. They sit down, talk, and establish small funds in which everybody participates with a small amount, and they lend the money when in need to a member. These small funds are not regulated, and they are not supervised by any bank because it is community-based action built on trust. We are working on offering a product specifically for this market and establishing small funds for these communities. They will be able to open an account with us and transfer their funds on a monthly basis, or by using whatever mechanism they agreed upon among their community. We would like to participate in some of the successful funds by adding more funds at a preferred rate, because the whole transaction is within the bank and we can track the pattern. This is not microfinance, it’s community lending—and it makes our bank different from the others in the market. On the SME side, we are focusing on small shops and businesses by offering point-of-sale (POS) terminals. By installing them we can see the pattern of their sales, and the level of revenues they generate, and subsequently design a product for them.
What is your outlook for the Iranian economy going forward to 2013?
In corporate banking, our only focus would be on facilitating and financing food commodities and pharmaceutical products, as well as working capital financing. On the retail side, we will focus more on offering credit cards with the use of our newly implemented scoring system. SME lending is fairly successful for us, especially with merchants that use our POS terminals. Moreover, on the SME side, we maintain our focus on brokerage firms that participate in both the stock and commodity markets. This growth is driven by the development of the stock market and it’s becoming deeper and deeper with respect to volume, value, and frequency of transactions in those markets; the participants are becoming more sophisticated, they require a variety of services, and we offer specialized services to brokers especially. We will try to stay on the edge and specialize even more in e-banking and international banking.
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© The Business Year - July 2012