Pakistan bank bucks global trend with plan for 200 new branches

Bloomberg

As banks around the world shut branches and lay off tellers, Pakistan’s Faysal Bank is headed in the opposite direction in the hope that a drive into Islamic financial services will boost deposits and shareholder returns.
The Karachi-based lender plans to open 200 new branches offering Shariah-compliant deposit accounts in the next two years, and convert 40 regular branches to Islamic outlets this year, according to Chief Executive Officer Yousaf Hussain. By the end of the program more than three quarters of the network will be Islamic, one of the most effective ways to attract new deposits in Pakistan, Hussain said in a recent interview.
“Branches are still relevant. Lots of people feel comfort with having a branch close to them,” Hussain said. “There is space in the Islamic banking market, clearly.’’
Faysal Bank wants to tap into the rapid growth in Shariah-compliant deposits in a country where three-quarters of the population doesn’t have a bank account, and many of the unbanked shun regular commercial banks because of Islam’s prohibition on interest payments. They often want the assurance of a physical branch outlet to trust the bank with their money, instead of keeping it at home or using informal savings networks.
That’s a contrast to the situation in the developed world, where banks are shuttering branches and laying off front-line staff as they seek to save costs and adapt to the changes brought by financial technology. Former Citigroup Inc. head Vikram Pandit has predicted that developments in technology could result in 30 percent of banking jobs disappearing in coming years.