KARACHI, Nov 2: Pakistan is now working on a seven-point agenda for e-banking as spelt out by State Bank Governor Dr Ishrat Husain at a conference held here this week.

The SBP governor observed that e-banking required “re-engineering of business processes” to minimize costs and pass on the benefits to the customers.

If historical record can serve as a guide, technological advancement not only leads to reorganization of business process, but it also impacts deeply on social and political culture. And the nature of IT differs from all past technologies.

The growth of IT industry is driven by human capital unlike other sectors that are physical — capital based. Hence it is throwing up a new generation of entrepreneurs as indicated by the proposed IPO offer of Resource Group at the Karachi Stock Exchange.

The e-banking agenda presented by Dr Ishrat Husain also includes secrecy and privacy in e-banking. Mishaps anywhere in the world, under the Pakistani law, would be a liability of the bank concerned.

Other problems that banks have to tackle are inter-connectivity (including intra-connectivity in banking) of IT skills in banking, robust payment system, M-banking (mobile), gaps in legal framework. The banks have to cover the transition by the end of 2003.

The e-banking conference held on Monday was co-sponsored by MCB, ABN AMRO, IBM and Teradata, a division of the NCR.

As the ABN AMRO country manager told the participants, time and speed drive competition. At varying levels, all businesses are making efforts to catch up with the advanced systems and technologies. On Saturday, Pakistan’s first online stock trading service was launched by Aqeel Karim Dhedhi Securities.

Similarly, Habib Bank, which is the largest recipient of home remittances, has introduced various technology products through the SWIFT Network. These comprise fast transfer (FAST) launched in UAE, fax money order and express cheque remittance.

The bank has developed and is providing e-commerce and online banking facilities for its customers at 75 branches in 12 cities. The customers can encash their cheques as well as transfer funds in the accounts through any of the networked 75 branches.

In the past three years, HBL says it has made heavy investments in technology. It has acquired the world renowned banking package from Mysis International that would take 12 months to implement and would update banking functionalities to international standards, including electronic/internet banking and e-commerce.

It has the network of 61 ATMs covering 12 cities. Fund transfer and utility bill payment through ATM are under testing and will be introduced soon.

HBL has also developed a software application for signature verification. Since last year, signature of 200 branches have been scanned and developed. This application enabled customers to encash cheques from any of the networked branches.

In the last three years, the bank increased the number of branches on the network from 8 to 110, connecting 14 cities. HBL plans to link up 350 of the key branches to centralized Database at head office.

Yet another dimension of the IT industry is that it is creating a new generation of entrepreneurs, who have started moving into the local stock market with IT skills that would lead to modernization of local corporate culture.

One such example is that of the Resource Group, Pakistan, (TRG or the company), which proposes to raise a capital of Rs600 million through a private placement of Rs400 million and an initial public offering of Rs200 on the Karachi Stock Exchange.

The sponsors would have a minority share of 17 per cent in the paid-up capital. They would subscribe $2 million or Rs120 million to the company share-holding. It would be a departure from the current trend. In the local market, the normal practice among the sponsors is to acquire majority stakes in the company.

The ownership pattern in companies relying on human capital and skills is different from investment in companies setting up physical capital or infrastructure.

Zia Chisti, TRG chairman, says the success of the American companies is explained by separation of management and ownership. If sponsors’ equity is acquired by some other groups, the professional managers would be happy to work for the new owners.

In a media present, the sponsors said that TRG, a locally incorporated company formed under Venture Capital Company Rules, 2001, holds interest in acquired US companies as well as Pakistani service facility through an offshore incorporated vehicle called TRG International Holdings (TRG International). All funds raised by the TRG Pakistan are deployed into a 100-per cent stake in TRG International, which in turn holds a series of controlling interests in its acquired US-based call centre companies and also owns the Pakistani facility/service delivery vehicle.

The TRG concept is centred round labour arbitrage between the US and Pakistan. The company wants to improve the profitability of its portfolio by acquired companies by shifting their service delivery to its low cost offshore facilities in Pakistan.