Great business and investment opportunities between Zambia and Pakistan: Managing Director, Investrust Bank, Zambia

BR Research: Investrust Bank and AutoSoft Dynamics have been working together for two decades. How did a Zambian bank and a Pakistani IT company come to establish such a long-term and persevering relationship?
Friday C Ndhlovu: In the 1980s I was working as the managing director of the largest bank in Zambia. After a change of government caused upheaval in that government-run institution, I left that position and went on to establish a new bank. Thus we established the Investrust Bank in 1995. As we were establishing that bank, we recruited a managing director who in turn introduced us to Mr. Lutfullah Khan whose company had developed a software solution for banking.
In the early days, the bank's funds were limited and we had to be quite careful in our allocations and expenses. We were convinced in favour of the software because it encompassed workflows of the various banking operations, it was already working well for other banks in Zambia and Yemen and was also relatively inexpensive. Since that time our relationship has evolved and strengthened.
The relationship has not always been easy. Over the years there was some pushback from stakeholders within the bank who did not feel that working with a company based in Pakistan was the best alternative due to the security and political risks. As the bank grew and our requirements also scaled up and changed, AutoSoft was consistently able to deliver. I firmly believe that we made the right choice then and over the years AutoSoft Dynamics has worked consistently to help us meeting all emergent challenges.
BRR: It is well established that the cost of production in Pakistan is generally low. Is that the single most important determinant for working with AutoSoft Dynamics?
FCN: We have studied various other banking solutions over the years and have compared their strengths and weaknesses to our existing solutions. Although most banking services are more or less uniform across the international market, each institution has unique internal processes and work flows. In our experience, any IT solutions provider that sets out to provide a solution for any banking operations must first comprehensively understand these processes, requirements and scope. Only after thoroughly internalising these can they provide an adequate software solution for the bank.
But the world's leading enterprise software solutions are not specifically tailored for an institution or even for the banking industry as a whole. The implementation of those solutions would mandate the bank to change its internal processes instead of being customised to suit these work flows. Trained, experienced and affordable resources here in Pakistan enable us to automate operations tailored to our business needs.
BRR: Tell us about the size and business scope of the bank and the industry in Zambia.
FCN: Investrust Bank has 26 branches and a workforce of about 500 personnel. We are a local bank with a capital of about $20 million and we are experiencing strong growth in recent years, offering a gamut of services from retail and corporate to leasing and trade finance, etc. We are managing a portfolio of close to $1 billion at this point in time. Banking penetration is relatively low in Zambia as about 60 percent of the adult population has bank accounts. The total population of Zambia is about 15 million people, similar to the population of Lahore and its suburbs put together.
Banking penetration in Zambia is on the rise and various industries are exhibiting strong growth. Both Investrust Bank and AutoSoft Dynamics have been able to capitalise on this growth through our mutual relationship. As such, they have been able to expand their clientele in Africa while we have also been able to acquire more business from Pakistani firms and individuals. Overall there are great business and investment opportunities between Zambia and Pakistan.
BRR: How do you view the growth of Islamic banking in Zambia?
FCN: In Zambia, the banks are generally willing to lend at high rates; generally a nominal rate of 24 percent as compared to inflation levels around nine percent. That is a considerable spread as compared to here in Pakistan. Islamic banking is now legal and the regulator has listed requirements for the industry. About 10% of the population is Muslim and we believe there is appetite for Islamic banking there, because of its emphasis on asset backing. The economic profile of Zambia and Pakistan is similar and the mushroom growth of Islamic banking here is inspirational for its potential back home.
BRR: Experience in Pakistan versus the prevalent perception.
FCN: Although my association with this country has spanned over two decades thanks to AutoSoft Dynamics, this is my first visit to Pakistan and it has given me a whole new perspective on this country and the people that live here. It is a beautiful country with splendid weather and great people. There is poverty here but overall the conditions here and generally much better than the prevalent perception. The infrastructure in and around Lahore, Islamabad, Muree; places I visited, is also well developed. I came in as a stranger and I am going back as an ambassador of Pakistan.
BRR: Tell us about your own career path and the genesis of AutoSoft Dynamics.
Lutfullah Khan: AutoSoft Dynamics was established in June 2000, but was derived from a predecessor by the name of Automation Software Services. I had been working with BCCI and when it closed down; I inadvertently became an advisor to the liquidators on all the bank branches which became banks when BCCI shut down. I had been working on the concept of a solution that would help us replace the much more costly proprietary hardware that was running at these banks at that time. The idea was pitched to a couple of banks in Yemen and Zambia.
Upon completion of AutoBANKER, developed using UNIX and COBOL, we offered it to clients in Zambia and Yemen. Initial licenses were signed with Union Bank of Zambia and Yemen Commercial Bank whereby the system offered its clients core retail banking, with subsequent modules covering various optional functionalities.
In 1994, I joined Prime Commercial Bank (PCBL), a Lahore-based institution as Executive Vice President with a clear understanding from the Bank that Automation Software Services would continue to provide services to its overseas clients. The bank at the time decided to take the AutoBANKER IT system, and also took all AutoBANKER related modules as those were developed. Overseas Clients of Automation Software Services ie UNION Bank Zambia, Investrust Bank Zambia, Yemen Commercial Bank Sana'a and Watani Bank for Trade and Investment, Yemen, also continued to take services from our team.
In 1998, AutoSoft Dynamics was initially conceived as a joint Collaboration project with Sheikh Khalid Bin Mahfouz Family (owners of National Commercial Bank Jeddah and also sponsors of PCBL) to be formed with a US $1 million capitalisation. It was agreed that NCB would eventually outsource its software support to AutoSoft in Pakistan. The project never however materialised due to the take-over of NCB by the Saudi Government.
In 2000, we decided to start the operations of AutoSoft Dynamics and the operations of Automation Software Services were merged with AutoSoft Dynamics and on July 1, the company signed PCBL as his company's first customer. 18 members of the bank's IT team joined AutoSoft to form the initial team of the Company.
An architecture was adopted which capitalised on cost effective scalability that cutting-edge technology made possible. AutoBANKER IT was created as a centralised system based on N-Tier architecture thus requiring minimal branch deployments while allowing banks to perform real-time reconciliation across a large number of branches.
BRR: Tell us about the range of IT solutions offered by the company and its impact on banking industry as a whole.
LK: AutoSoft's product suite automates both simple and complex processes for banks. Simple tasks include opening accounts, issuing cheque books, checking balances, processing deposits, transfers and ATM withdrawals. More complex automation provided by AutoSoft includes trade finance (import, export and export refinance activities) and treasury automation (foreign exchange, money market and corporate office transactions). Additionally, modules that automate administrative tasks such as human capital and fixed asset management are also part of AutoSoft's offering.
Aside from conventional banking products, AutoSoft has a strong portfolio of products catering to the fast-growing USD1.5 Trillion Islamic Banking industry. Islamic banking products are based on distribution of profits and losses of investments as opposed to interest based computations in conventional banking. Islamic Banking products require highly specialised processes and transactional workflows that must be compliant with Islamic jurisprudence (Shariah). AutoSoft was one of the first banking software automation companies to develop and deploy a fully Shariah compliant product suite.
AutoSoft 's management and core development team have decades of experience in the local and International banking industry and its Automation. AutoSoft provides its clients a full spectrum of products and services that cater to meet the ever-changing needs of the financial services industry.
At this time, its systems are being used in 13 National and seven international financial institutions in the Middle East, Asia and Africa. The company has been profitable since its inception and at this time, AutoSoft's solutions have over 1000 banking site installations and are used to support over 2 Million banking customers and transact a deposit portfolio of more than Rs265 Billion and an advances portfolio in excess of Rs125 Billion. The company houses over 120 employees with offices across three major cities of Pakistan.