'Smart cards to greatly benefit private sector,' DG Operations, Nadra Technologies Limited

Since 2008, Saleem Rafik has been serving as the CIO at Nadra Technologies Limited (NTL). He joined Nadra in 2007 as its CIO, where he was responsible for business and technology integration and implementation of commercial ventures and projects. He has previously served as CIO at MCB (2005-07), director at ARP Conseil & Systemes (2000-05) in Geneva, CIO at Deutsche Bank Suisse SA (1999-2001), and Director IT at Merrill Lynch Bank Suisse SA (1993-98). His early career spanned across roles in IBM and Price Waterhouse.
Following are excerpts from BR Research's sit-down with one of NADRA's leading technologists in Islamabad, where he talks about NTL's scope of activities and what next to expect:
BR Research: Please tell us about the mandate and activities of Nadra Technologies Limited.
Saleem Rafik: Nadra Technologies Limited (NTL) was established as a commercial arm of NADRA. Since 2004, NADRA was deemed to be self-sufficient in generating its own revenues; therefore, it did not receive any government funds. It was a blessing in disguise. With no government budget, NTL has been a great source of meeting expenses and growth of the organisation. We had to get creative to carve out different revenue streams thus we decided to market our systems and services to the private sector as well as explore international arena.
BRR: What are the ways through which NTL is facilitating the citizens?
SR: Our focus is citizens' facilitation and we have to be financially viable to do that. In 2005, we realised that public was facing tremendous problem in paying their utility bills. The spread of electricity and gas services were growing, however, there were only the bank branches where bills could be paid. Nadra then developed Kiosk machines for utility bill payments. It was an operationally challenging and technologically complex venture taken up by Nadra to facilitate citizens. All the systems were assembled and integrated within Pakistan, though hardware was brought from abroad. The Kiosks worked in such a way that you swiped your CNIC into the machine to access your consumer number and paid bills in cash. This was all done online, within the kiosks. This service was helpful to citizens who wanted to avoid long bank queues.
Realising the operational complexities of Kiosks in the rural areas, NTL replaced the Kiosk system in 2008 with e-Sahulat--a totally web-based service for bill payments. NTL came up with the idea of prepaid franchise operations, and today, we have over 5,000 Nadra e-Sahulat locations nation-wide. This model was the first in Pakistan (although other organisations are quick in taking credit on being first) and perhaps the first in the world as a "prepaid" franchise. Easypaisa and other folks learnt from our model and came into the market much later.
We were the first to address what we call "the service divide", ie the gap of services found between Urban and Rural Pakistan. We ruffled the feathers and others followed. NTL, a commercial entity, could have easily become a bank and offered financial services to the citizens but we didn't want to be distracted from our main focus.
NTL also provides citizen verification services (Verisys) at these outlets. Verisys as a product has different flavours designed for different industries. Banks use Verisys for account opening process. Telco's use it while issuing mobile SIMs and there are several other services based on Verisys. We have internally trained our franchisees who are carefully selected and are subject to due diligence. We allow our agents to do business with other branchless banking providers. E-Sahulat has now signed as a super-agent of HBL Express, which will be launched soon and help us serve the public for their domestic remittance business.
BRR: What other services have been developed by NTL?
SR: After the Kiosks, we then started looking into other applications. First, we developed such systems like motor vehicle registration, national driver's license, which could all be integrated into one card. We also made solutions for land records, vehicle tracking system, etc. But, due to different policies in provinces, we could not make much difference on that front nation-wide.
But, we are working with organisations like the National Highways Authority and Motorways Police for driver license. With NHA, we have a project for e-tag (automatic toll collection on Motorways). That has helped them in cost savings and bringing transparency. We have provided access control systems to many organisations. This is a great tool to bring secure entry at any point.
We are also facilitating several organisations for pension payments and zakat disbursements very successfully. This is done in a very transparent manner. Our disbursement process incorporates biometric verification on the spot. This foolproof environment is essential where proof-of-live is a requirement.
As a result of our efforts, Nadra is now the largest system integrator in the country. The government calls us in complex and critical situations like floods, IDPs' facilitation, and earthquakes because Nadra has the capability to deliver systems within days. For instance, we built an ATM-based cash payment system for Swat IDPs within three days. The United Nations has recognised this capability, and our Chairman has received an award for this at the UN Headquarters in New York. In emergency situations, UN is now proposing Nadra's systems, which is a great recognition for an organisation from Pakistan.
BRR: Please tell us about the Smart cards project. How can private sector take use of that?
SR: All CNICs are to be replaced with Smart National ID Cards (SNIC) by 2020. We have issued nearly four million SNICs so far. These cards are really secure. The SNIC cannot be copied. In addition, the in-built security features make it impossible for any copy to be useful. This will enable all organisations to bring transparency in their processes and remove fraudulent use of individual identity. The smart card will be a good tool to support the law enforcement agencies.
The SNIC will raise the status of a citizen by enabling a number of services and functions for an individual. The SNIC has many smarts in it. There is a lot of use in it for the businesses. As they say--the sky is not the limit anymore. The multi-layered, passive security chip has a memory, which can be used to store hundreds of applications. So, there are hundreds of ways to use this smart card. You can use it to book airline tickets, to issue books from libraries, to get accounts with banks, etc.
Right now, we are engaging the companies and educating them about SNICs' benefits. Imagine a bank that comes out and says that everyone holding a smart card is their accountholder and that the SNIC number is their account number. Suddenly, it will have millions of accounts. The day businesses understand this, it will be the day of real change. The card reader environment is not prevalent yet, but it can be reached soon if businesses start to understand the benefit of this card's features.
BRR: How did NTL's domestic capability lead to international projects?
SR: We had extensive experience in integrating different technologies; therefore, it was natural to explore the market for our skills. Our first international project was in Bangladesh, for driver licenses. Then we won a project in Kenya for a BOT-based Machine-Readable Passports (MRP) project. We had already made these passports for Pakistani citizens and it received international recognition. The Kenyan government has now asked NTL for their citizens' registration services. We have recently taken up projects in and Sudan and Nigeria as well.
These projects are not worth hundreds of million dollars. But even a million-dollar project for us is Rs 100 million for NTL, which is a good amount in helping run the organisation. A given project's revenue depends on the level of competition and business environment. We have been very cost-effective in our delivery. The cost-effectiveness has added to our ability to win and execute projects overseas. As a result of our CNIC delivery to more than 95 million citizens and our projects globally, Nadra has been listed by "ID World" in the Top 50 organisations globally. We have also received an Excellence Award for the year 2011 in the ID Industry.
BRR: You were behind the e-Sahulat project. How do you view the service delivery landscape for the unbanked in Pakistan?
SR: There are many gaps in the market. About 70 percent of the population lives in rural areas and those areas are witnessing huge service gaps. When I was executing this project, I saw people walking 15Kms just to pay their electricity bills. When e-Sahulat was launched, the market picked it up and we didn't have to advertise. We let our franchisees keep the most of fees' share, unlike other providers out there, because we want to develop local economies. This is our small contribution in building the rural economy.
That strategy has helped NTL process 23 percent of entire utility billing volume in the country through 5,000+ e-Sahulat outlets. Our collections are around Rs 9 billion a month, and they are growing. But, it didn't come easy. We had to do all the hard work: bringing utility companies on board, getting their data, massaging the data, and putting it into a usable form.
Branchless banking channel should be cheaper for the common man who is supposed to be the beneficiary. But, right now, it's not cheaper. Transaction fees are really high. I would like the SBP to regulate this. How come, online transactions are so highly priced? When NTL enters this area, it will not function that way. We are coming in with HBL Express and ours will be competitive rates. The pie is big enough. Volumes are huge. So the rates must come down.
BRR: Has NTL any plans to touch the agriculture sector?
SR: Pakistan depends on agriculture for food supplies as well as employment. I personally believe that rural population must have means to survive in rural areas; otherwise migration to urban areas will continue to take place and overwhelm the cities which are already struggling to provide facilities to their population. If you look at small farmers, most of them are just one harvest away from bankruptcy. We need to bring solutions, to help ensure their survival and growth. Small farmers are suffering on all counts, from seed availability to harvest issues. They need help to improve their productivity through education, funds, easy access to urea, low cost productivity improvement tools and market information.
NTL is not working on this right now, but this is a national issue and everyone should be thinking about this issue. I am asking people to toss around ideas to see how we can be a part of the solution. Whatever we'll do, we will have an indigenous vision and thinking behind it.
BRR: How can NTL be beneficial in expanding the outreach of database like BISP?
SR: The only true information source for citizen identification is NADRA. BISP had come to us and we assisted them in validating their criteria for the poorest of the poor. If a person has three or four mobile phones and has a passport, they don't fall in the criteria. Similarly, multiple entries and fake entries have been weeded out through our database. Similarly, one person cannot withdraw cash for multiple beneficiaries, eg in case of IDPs.
BRR: What are your thoughts on one master database to facilitate in governance and law enforcement?
SR: Nadra as a registrar is focused on citizen ID related subjects. A master database-if you mean to have criminal data, credit and financial fraud etc in it--could be helpful. However, this is a separate subject and the responsibility lies with different organisations. It can be helpful in law enforcement, like in the case of the US Homeland Security department, this is precisely being done. We can provide technical assistance if required.
BRR: What has prevented Nadra from falling prey to traditional public sector inefficiency?
SR: Nadra is a young organisation and within just 12 years, it has made a significant impact on the national landscape. Nadra is built on a very strong foundation and an organisation culture that rests on delivering performance. The founders of the organisation were qualified leaders and visionaries; they have laid a strong technical and organisational structure. They understood the long-term vision and have delivered an identification of a citizen.
We are constantly evolving, if we don't, we will be extinct like dinosaurs. We have a proven, sustainable model that could be applied to other organisations to get them out of being a burden to the government. Other organisations should seriously consider evolution in their structure, processes and business model. The landscape rather, the "space" is changing rapidly. Successful models will understand the change and apply it on their model. The "e" of the model is now a reality and understanding the impact of technology on businesses and organisations needs to be used as an effective tool.