The expansion of consumer banking services in Pakistan, such as the wider, fast growth of credit card use and consumer loans, has presented bankers with the unexpected challenge of finding experienced and well-trained managers. Many such managers left the industry during its days of low growth and went into other careers or left the country.
“It’s a big challenge for banks. We face the issue of human resource development in a big way,” says Badar Kazmi, country head of Standard Chartered Bank.
From his corporate office along Karachi’s busy I.I. Chundrigar Road – the heart of the business and financial community – Mr Kazmi is eager to reverse what he calls a leftover of the days of low performance when “flight of intellectual capital” hit banks.
The past three years of lower interest rates forced banks to become more savvy and concentrate on services that were previously offered selectively.
One of those services is loans, which were used to purchase an estimated 70,000 cars last year, sharply up from 30,000-40,000 the year before, bankers say.
Struggling to cope
“HR [human resources] managers are discovering that there is a shortage of people with the right kinds of skills and they are now struggling to cope with this challenge,” says Mehdi Zaidi, a London-based Pakistani banker and consultant who has run in-house training courses for banks in Pakistan. He says that the consequence of the rising demand is that Pakistani bank managements are forced to pay up to twice the salary that mid-career professionals earned three to four years ago.
The rising demand has pushed recruiters to local prestigious management schools, such as the Lahore University of Management Sciences and the Institute of Business Administration at Karachi University. And new entrants are increasingly being asked to arm themselves with IT skills to cope with the rapid expansion of hi-tech services in urban areas.
In the past five years, every Pakistani bank has either created a new IT department or expanded an existing one, as an indication of increasing commitment to technology.
Syed Ali Raza, president of Karachi-based National Bank of Pakistan, the only public sector bank, believes that in the next five years, 35%-40% of all transactions across Pakistani banks will be done electronically. “Banking is undergoing change more than many other occupations, and the emphasis is increasingly on efficiency and the use of technology,” he says.
Opinion is divided on exactly what are the key factors that are pushing up the use of IT, other than just the demand for increasing efficiency. Some analysts believe that rising insecurity in parts of Pakistan is causing clients to increase the demand for online transactions rather than carrying cash from one city to another.
“The law and order [issue] is certainly part of what is pushing banks to modernise. Big businesses increasingly want to avoid having their people carry cash, for fear of being robbed,” says the head of a foreign bank based in Pakistan.
Borrowing booms
Mr Raza, however, believes that rising numbers of customers are driving the trend. “We had approximately 20 million accounts five years ago. But back then, there were less than half a million borrowers. Today, there are more than 26 million bank accounts and about 2.5 to 3 million borrowers, which is a phenomenal rise,” he says.
Irrespective of what is driving this trend, banks are under pressure to review their hiring practices and seek out some of the best graduates, who previously went to other sectors. Bankers say that the demand for increasing efficiencies remains well ahead of the pace of change.
“It’s just in the past three years that Pakistani banks have begun facing a kind of transformation that has forced them to look afresh at internal structures,” says the head of the foreign bank.
Mr Zaidi believes that the managements of Pakistani banks are responding to the challenge of meeting their needs for HR. Nevertheless, he says, it remains a struggle. “Training has to be rounded, taking into account a number of important areas where there is clearly a need,” he says. “You can’t change the direction overnight, even if you realise there is a gap.”
