Rizwan Dawood Shams, Additional Managing Director (AMD) of IPDC Finance, explicates how the company managed to outperform itself despite the pandemic, the importance of SMEs in an economy and his role in shaping IPDC as a model financial institution in Bangladesh
With 18 years of experience in the financial sector, can you briefly tell us about your journey?
I started my professional journey with Standard Chartered Bank (SCB). Subsequently, I have worked with different companies in the financial sector in crucial positions over the years. However, joining as a Senior Manager in the Corporate Business department of IPDC in late 2007 is what I believe is a milestone, far from realisation at that point. Today, looking back at all the challenges we overcame together as a team are indeed a benchmark for developing organizations to follow.
IPDC’s ascend is a remarkable feat in Bangladesh’s financial sector and a case study to many. To me, it is a reminder of the various vacant roles, hovering responsibilities, and accountability that my fellow leaders and I took upon ourselves. Each position had its pits and hits. But what remained was my endurance to make it a success. I have been fortunate enough to have the almighty, organization and family work as a catalyst in this process. Still, I must emphasize that your dedication and determination will feed life into your dreams.
How has your experience as Deputy Managing Director of IPDC prepared you for the Additional Managing Director role?
As the DMD, my focus was on the primary business functions of the company. In the last five years, IPDC’s business portfolio grew six times, NPL is currently the lowest in the industry. Customer deposit grew by 9.2 times, quarterly revenue increased by 6.4 times, and solid growth in net profit of 3.4 times. While we moved persistently towards excelling in our numbers, we also introduced accommodative services that peer institutions later adopted; IPDC Joyee and SME Bondhu are only a few to mention.
IPDC’S ASCEND IS A REMARKABLE FEAT IN BANGLADESH’S FINANCIAL SECTOR AND A CASE STUDY TO MANY. TO ME, IT IS A REMINDER OF THE VARIOUS VACANT ROLES, HOVERING RESPONSIBILITIES, AND ACCOUNTABILITY THAT MY FELLOW LEADERS AND I TOOK UPON OURSELVES
It has indeed been a fascinating journey. Each new role only excited me to unleash my potential further, which certainly would not have been possible without the immense faith put in by the organization. At IPDC, I have instilled one motive for sure, i.e., you set the bar, I will raise the bar. Hence, IPDC was the first financial institution among all NBFIs to have reached the target of disbursing stimulus loans to CMSMEs all over Bangladesh (as set by Bangladesh Bank). As usual, not only did IPDC reach the mark before the deadline, but it also requested the central bank for additional stimulus and further extended a helping hand to the affected Cottage, Micro, Small and Medium Enterprises (CMSMEs) amidst the pandemic.
My new role as the first Additional Managing Director (AMD) of IPDC Finance is empowering and demanding. But what is a position without any spice? As an adjunct to the company’s honourable Managing Director (MD), I am expected to ensure smooth operations in all aspects, not just the business. I could not ask for a better team to lead. This organization is nothing but a bunch of highly motivated, charged-up, passionate workforce.
What are some of the challenges that arose with the onset of the pandemic? How has IPDC managed to overcome these hurdles?
The pandemic has been a real-time trial for the financial industry in Bangladesh. Even though the sector has the capacity to mobilize resources required to change a country’s economy, the industry is inherently bureaucratic. Nevertheless, we appreciate the timely action by the Government for delivering us a flock of instructions/ guidelines from the Central Bank and other regulatory authorities to support the business community and sustain Bangladesh’s economic development.
The financial sector coped up quite vigilantly in executing the instructions/ guidelines and faced the pandemic from the forefront. One may be amazed at how despite being equally hit, IPDC has been far from the pandemic blues. Despite the Covid-19 fallouts, IPDC has outperformed itself compared to that in the same period last year. I believe it is the sheer inquisitiveness of the management to make the best out of a situation instead of drifting in dismay.
This highly adaptive, resilient, and the well-equipped team worked extra hours. In return, the management recognised those efforts and rewarded them accordingly. As a result, barely any complaints from clients were found. Moreover, our depositors were surprised to receive their interest ahead of time. Perhaps, it is possible for a team that is passionate about business and compassionate towards their clients. As we still sail through the waves of this pandemic, our accommodative and innovative approaches will lead us ahead. I wish the same for all the other FI’s, too, as only together can we help business thrive.
How would you assess the impacts of the pandemic on the financial industry? How should the stakeholders of the industry act to ensure efficient and robust recovery of the sector?
For Banks/FIs in particular, the pandemic generates multifaceted crises, primarily through increases in default rates. The impacts of the pandemic, if judged on three dimensions—firm value, capital adequacy, and interest income, different NPL shock scenarios suggest that all banks are likely to see a fall in risk-weighted asset values, capital adequacy ratios, and interest income at the individual bank and sectoral levels. The decline in all three dimensions will increase disproportionately if NPL shocks become larger.
Our Government and Bangladesh Bank have come forward with guidance and timely support during the pandemic. However, each member of the financial industry has a different role to play. We must be creative to find an easy, convenient, and affordable banking solution. It is easy to become more risk-averse in our business, and yet this is the time when businesses need the most assistance to sustain their business, let alone grow.
There are still fundamental issues such as access to low-cost finance, market linkage, skilled labour, export market exposure, etc. In recent times, Bangladesh Bank has facilitated initiatives to support low-cost financing through different stimulus and refinancing schemes. Being partners to those initiatives at IPDC, we have observed significant business entities, especially SMEs’ lack proper documentation and record-keeping. Since Bangladesh has progressed in many aspects, including technology and automation, technological adaptation is a must.
The tech ecosystem comprising tech platforms and payment platforms should reduce the data/record deficiency. Here comes the role of ‘IPDC Orjon- South Asia’s first blockchain-based digital supply chain finance platform and ‘IPDC Dana’ to finance the retailers based on their sales data recorded with manufacturers and distributors. This easy and data-driven solution is getting popularity among last-mile entrepreneurs.
IPDC introduced the first-ever blockchain-based supply chain finance platform in Southeast Asia- ORJON and AI-based retailer financing platform-DANA. Can you elaborate on these platforms and tell us how they have been performing?
IPDC is on a mission to create a holistic end-to-end supply chain ecosystem in Bangladesh. Regardless of their size and operation, suppliers of different reputed companies are enjoying seamless and paperless supply chain finance solutions through Orjon. During COVID, where the physical movement of documents is almost impossible, ORJON helped small and medium businesses efficiently manage their working capital cycle and thrive even during these challenging times. Through Orjon, we are ensuring transparency and security and solving real-time data movement-related problems. The backward functions and participants, i.e., Suppliers, Manufacturers, and their supply chain functions, are handled via ORJON.
And forward positions for supporting retailers, micro-merchants, and tier-2, tier-3 distributors are served via ‘IPDC Dana.’ DANA is an AI-based platform to support the growth aspirations of Tier-2, Tier-3 distributors, micro-merchants & retailers. Financing them based on transactional data rather than traditional document-based financing helps them to sustain and grow. This easy and data-driven solution is getting immensely popular among last-mile entrepreneurs.
You have played a pivotal role in transforming the organisation over the years – what is your vision for IPDC and yourself as you embark on this new journey?
I might have perhaps played a part in shaping IPDC as a model financial institution. Still, it is the strong leadership, dynamic innovation, persistent directives, consistent support, and the motivation that have helped me reach the goal.
The state of an economy is often analysed through the prism of its SME sector. In Bangladesh, the sector has been held back by various challenges over the decades. IPDC is dedicated to facilitating the robust growth of the SME sector. To that end, we launched an SME Bondhu package to support the Government’s stimulus package as per instructions from Bangladesh Bank and support businesses in need of CMSMEs, amidst the pandemic.
Ticking the requisites of service delivery is not taking us anywhere unless we make the recipients speak for us behind our back.
Hence, we do not envision to be the best financial institution alone but the most passionate financial brand in the minds of our consumers. All the fortitude to introduce innovative solutions for them speaks of that passion. Leveraging the opportunities and challenges of industrial revolution 4.0, we have adopted speed as the new currency of our business. Hence, we are confident that we deliver extraordinary customer service.
Also, as I embark on this new journey, I believe the key to staying focused is consistency. We just come one step closer to our ambitions and while witnessing small triumphs on the way. So, here I am again, back to work right after this moment of glory with ICE today.
Photographs: Courtesy of IPDC