Corporate Strategy

Tameer Bank ‐ Micro Finance Banking
Arsalan Aziz

2011

Instructor: Mr. Shahid Zaki
EMBA PS‐IV (INSTITUTE OF BUSINESS ADMINISTRATION)

Contents
INDUSTRY BACKGROUND ................................................................................................................................... 4 TAMEER BANK .................................................................................................................................................... 5 Vision .............................................................................................................................................................. 5 Mission ........................................................................................................................................................... 5 Products ......................................................................................................................................................... 5 Tameer’s Tripple Bottom Line goals .......................................................................................................... 5 Projects in Progress for 3BL goals in 2008‐2010 ........................................................................................ 5 GENERAL ENVIRONMENT .................................................................................................................................. 7 . Technological Change .................................................................................................................................... 8 Culture Trends ................................................................................................................................................ 8 Economic Climate ........................................................................................................................................... 9 Legal and political condition ........................................................................................................................ 10 Demand for Financial Services ......................................................................................................................... 12 PORTER’S FIVE FORCES .................................................................................................................................... 13 Threat of Rivalry ........................................................................................................................................... 13 Threat of New Entrants ................................................................................................................................ 13 Threat of Suppliers ....................................................................................................................................... 14 Threat of Buyers ........................................................................................................................................... 14 Threat of Substitute Products ...................................................................................................................... 14 SWOT ANALYSIS ............................................................................................................................................... 15 Strength ........................................................................................................................................................ 15 Weakness ..................................................................................................................................................... 15 Opportunity .................................................................................................................................................. 16 Threat ........................................................................................................................................................... 17 VALUE CHAIN ANALYSIS/VRIO ......................................................................................................................... 19 Value Chain .................................................................................................................................................. 19 VRIO Analysis ............................................................................................................................................... 20 . BUSINESS ACTIVITY MAP .................................................................................................................................. 21 STRATEGY ANALYSIS ......................................................................................................................................... 22 Acquisition by Telenor ................................................................................................................................. 22 Partnership with Asasah .............................................................................................................................. 23

Partnership with AsiaCare ............................................................................................................................ 23 SUGGESTIONS .................................................................................................................................................. 24 ANNEXURE A: STATUS OF MFIs IN PAKISTAN .................................................................................................. 25 ANNEXURE B: MICROFINANCE INDUSTRY INDICATORS .................................................................................. 26 ANNEXURE C: PERFORMANCE INDICATORS OF MFIs in PAKISTAN ................................................................. 27

INDUSTRY BACKGROUND
Microfinance collectively refers to the supply of loans, savings, and other basic financial services like insurance, to the poor. As the poor people cannot avail these financial services from the formal commercial banks (because of the collateral requirements), microfinance tends to provide to them exclusive of these conditions. For these financial services, the poor people are willing to pay for because of the added dvantage they receive for not collateralizing anything. The term also refers to the practice of sustainably delivering such services. More broadly, it is a movement that envisions a world in which as many poor and near poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers (Christen, R. P., Rosenberg, R., and Jayadeva, V., 2004). Prior to the introduction of microfinance, development projects in 1950s, usually introduced subsidized credit programs targeting at specific communities. Such schemes often met with failure. Poor repayment discipline and subsidized lending rates caused massive capital loss for the rural development banks. A microfinance institution (MFI) is an organization that provides financial services to the poor. This very broad definition includes a wide range of providers that vary in their legal structure, mission, methodology, and sustainability. However, all share the common characteristic of providing financial services to a clientele poorer and more vulnerable than traditional bank client. Quite simply, a micro finance institution is an organization that offers financial services to the very poor. Most MFIs are non‐governmental organizations committed to assisting some sector of the low‐income population. MFIs build resources by support of government or public institutes or formal/informal NGOs (Sapovadia, V. K., 2003‐2004). Microfinance was started in Pakistan in the early 1980s when the Aga Khan Rural Support Program (AKRSP) launched its credit operations in the North in 1982 and with the establishment of the Orangi Pilot Project (OPP) in the same year. The model of AKRSP was implemented in the whole country in 1990s with the establishment of National Rural Support Program (NRSP) and the Sarhad Rural Support Program (SRSP). These institutions were general support institutions that provided a wide range of social services, including financial services. Financial services that were provided to the poor were often socially driven and were highly subsidized and little efforts were made to recover delinquent loans. To address these shortcomings in 1996 the RSPs established specialized microfinance NGO called as Kashf Foundation. In 1998, this precursor of the Pakistan Microfinance Network (PMN) began to play a role in representing emerging Micro Finance Providers (MFPs). Further developments followed in 2000, when the Pakistan Poverty Alleviation Fund (PPAF) made its first loan to MFPs, and SBP opened a microfinance unit. In 2001, the GoP helped to create a major retail institution, the Khushhali Bank, dedicated to serve the poor. The microfinance market in Pakistan is evolving at a rapid pace with new entrants, products, practices and a growing clientele. Generally, in the microfinance sector, we only consider the formal organizations providing services to the poor. Whereas apart from these formal organizations there are also informal ways through which poor people engage themselves in financial activities. The informal sector comprises of ROSCAs (Rotating Savings and Credit Associations), money lenders and the credit people get from stores and being the most popular way amongst the poor population.

TAMEER BANK
Tameer Bank is microfinance bank emerged by a group of highly experienced bankers committed to go where no (Commercial) Bank has gone before. It is a private commercial Microfinance Bank licensed by the state Bank of Pakistan Tameer Distinguishes itself from other Microfinance Banks by using one of the first nationwide, private sector, Non NGO transformed, commercially sustainable micro‐finance institutions in Pakistan. Tameer Bank aims to provide dedicated services to economically active poor and to be demand driven, client centers and responsive to the special need of our customers.

Vision
Tameer Bank’s Vision is “To emerge as a global benchmark for innovative and commercially viable microfinance solution to the unbanked for their Socio‐economic empowerment”.

Mission
To set new standards of excellence in value added microfinance and related services through innovative technology and highly skilled professional staff for customer convenience and satisfaction. • • • • • Equal Opportunity Meritocracy Innovation Integrity Respect

Products
Tameer Bank believes that people of Pakistan deserve to be given a change to improve their financial future. This can best be achieved, not by giving handouts but by giving handholding. Tameer is not just for Profit Company, but a lot more, in its purpose of existence and its responsibility toward the community it operates in. The 3 bottom line of Tameer bank below are the core development agenda which the organization follows and achieves through projects, products, services and processes to ensure that not only financial sustainability is achieved but a number of other equally important social bottom lines are also achieved for the bank, the customer and the community as a whole Tameer’s Tripple Bottom Line goals • People Empowerment • Community Development • Financial Self‐Sustainability Projects in Progress for 3BL goals in 2008­2010 • Students Education Scholarship • Student Education loans

• • • • • • • • • • • • • • • • • •

Adult Financial Literacy Community Trade Support Systems House hold Financial Inclusion Child Inoculations Credit Free and/or Low cost Insurance Entrepreneur performance recognition and support Employee performance Recognition and support Mitigation of Expensive money lender credit in the communities Women inclusion in banking, finance and trade Community Sports Development CSR with companies interested to invest in Communities Education Development of IT labs and learning centers in Communities Banking Internships and Jobs for Microfinance customers and community Emergency Financial help desks at hospitals Community school representation Fisherman and Costal Development Industrial Worker Education & Development Program

GENERAL ENVIRONMENT
The origin of microfinance in Pakistan can be traced back to the early 1990s and two projects: the Orangi Pilot Project and the Aga Khan Rural Support Program (AKRSP). In 1999, the AKRSP and the National Rural Support Program accounted for 84 percent of total microfinance services; Kashf Foundation was then the only specialized microfinance institution1 Today, a multitude of institutions provide microfinance services in Pakistan. Twenty of these institutions are registered on The Microfinance Information exchange (MIX) Market (an online information service), 19 of which are members of the Pakistan Microfinance Network (PMN). Most of these institutions are not specialized in microfinance, but combine microfinance with other development programs, such as health and education. Microfinance providers in the country can be classified into the following groups: • • • Microfinance banks (MFBs): specialized institutions that operate as microfinance banks; Rural Support Programs (RSPs): programs that run microfinance operations as a part of integrated rural development initiatives; Nongovernmental organizations/microfinance institutions (NGOMFIs): nongovernmental organizations that run microfinance operations as part of integrated development programs or that focus exclusively on microfinance; Commercial financial institutions: commercial institutions involved in microfinance; or Government‐owned institutions: institutions involved in microfinance that are owned by the government.

• •

Microfinance outreach ‘000’ 1 Estimate based on data provided by the PMN and NRSP, 1999.

Technological Change
To address the vast majority of credit decision, liquidity crunch, global recession and over indebtedness business challenges and to achieve operational scale and efficiency, MFIs must leverage information and technology to realize these objectives. I deliberately emphasize information and technology as these are two discrete and critical aspects to be focused on and utilized in the MFI’s supply chain. It therefore behooves MFIs to have a sound Information and Technology (IT) strategy, and one that focuses on “basic blocking and tackling” and researches and pilots disruptive technologies to change the rules of the game. It is important to point out that technology by itself is not the panacea, but when coupled with strong and effective operational process management, MFIs can gain significant benefits that flow to its bottom‐line, strengthening its competitive positioning and improving its ability to meet customer demands. Microfinance is an excellent example of a “disruptive” concept – banking to the poor was heresy to formal sector banks just a decade or two ago. MFIs that use technology in an innovative and effective way can bring about disruptive change and leapfrog their competition. Primary Focus Areas: Microfinance organization must take a holistic approach to review, revise and streamline organization or network‐wide operational processes and governance. A sound planning framework is required to develop a strategic Information & Technology Plan based on the organization’s long term business strategies. MFIs of all sizes cite technology and the “core” back‐end software in particular as one of their biggest challenges. It is the back‐end that is the heart, the processing engine – processing thousands of transactions on a daily basis that enables MFIs to grow and scale their operations. “Core” back‐end software may not be as hip and cool as the attention grabbing front‐end technologies but without it MFIs cannot survive. A good number of MFIs do have a “core” back‐end, however a significant proportion of those systems are not supporting the growth and increased impact of the institutions running them. MFIs must invest in a good, robust, and scalable “core” if they are serious about growing their operations effectively and efficiently. ‘Core’: The Processing Engine Strong core MIS (Management Information Systems) enable MFIs to process large numbers of relatively small transactions efficiently, and can provide insight into an MFI’s business that enables MFI leadership to tune their products and operations to more effectively serve more poor clients. A core MIS system can provide MFIs and their stakeholders with the tools to more effectively measure both financial and social performance and, in turn, enable the MFIs to tap new sources of capital and tune their business for greater impact. Innovations like mobile banking, ATM integration, new products and business models need to be tied together in order to achieve network and scale. Those innovations must plug into and be supported by strong back‐end technology to transform the innovations into a new baseline of operations for MFIs. Even though ‘core’ is the processing engine for MFIs, it is preferred that they should buy the software instead of developing it in‐house.

Culture Trends
The microfinance industry is growing through a period of rapid scaling up. In each year over the period 2004 to 2006 the numbers of borrowers worldwide, according to Mix data grew at an annual rate over 20% and gross loan portfolio increased over 40%. The research has shown that Cultural trends can provide a significant contribution to operations and development results of an MFI. The micro financing has high impact on socially disadvantaged communities. The Micro financing industry has direct impact of many social attributes of the society from education to the other financial services and it is also the source of

poverty alleviation and human development. The cultural trends are to be consider for the specific product development for focused region.

Economic Climate
Inflationary pressures continue to threaten Pakistan’s economy, adversely affecting growth and making financial intermediation costly, as high interest rates raise prices and lower long‐run real returns. As a result, the State Bank of Pakistan (SBP) maintains a tight monetary policy stance, which promotes economic growth and price stability by targeting monetary aggregates, such as the broad money supply and reserve levels, in accordance with real gross domestic product (GDP) growth and inflation targets set by the government. Over the past five years, economic management has improved as a result of new legislation to decrease public debt. Moreover, the SBP has strengthened its treasury capacity and the government has established a Monetary and Fiscal Board to ensure formal monetary and fiscal policy coordination.2 In July 2008, the State Bank raised the benchmark interest rate, or KIBOR, by 1.5 percent in an effort to fight inflation. This benchmark is used to determine the pricing of all rupee‐denominated corporate and commercial bank lending, which in turn increased from 10.5 to 12 percent, increasing the cost of borrowing and doing business in general. Pakistan has also come under pressure to reduce high domestic oil subsidies as a stipulation of a potential World Bank loan, which would improve the budget deficit but potentially aggravate inflation. The Economist Intelligence Unit expects real annual GDP growth in the country to slow from 6.7 percent to an average of 5.2 percent in fiscal years 2008–2009, owing to slower investment resulting from increased political and security risk, greater inflation, and recessionary pressures from world markets.10 Over the past five years, investment has been the main driver of economic growth—20 percent per year—but is expected to slow to a sustainable level. This growth was spurred by government efforts to progressively liberalize the economy and create an environment in which the private sector could thrive, which in turn helped attract foreign direct investment. Despite the expected slowdown in foreign investment overall, China plans to increase investment in Pakistan from $1 billion to $15 billion by 2012. Private consumption growth is expected to remain strong, at an average of 5.8 percent a year in 2008–2009, and government spending, to increase—driven by increasing expenditures on anti‐terrorism security measures as well as welfare and poverty reduction programs.

Dr. Shamshad Akhtar, 2006, “perspective on Pakistan’s Monetary policy Development” State Bank of Pakistan” Karachi, Pakistan
2

Legal and political condition
Pakistan’s political environment has undergone vast changes over the past year. President Pervez Musharraf has dominated the political scene since the 1999 coup, but his power in Pakistan is now weakening. Despite winning a second five‐year presidential term in late 2007, he was forced to step down as Chief of Army Staff. Then in February 2008, his party, the Pakistan Muslim League‐Quaid, was defeated in parliamentary elections. The winners of those elections, the Pakistan People’s Party (PPP) and the Pakistan Muslim League, formed a coalition government. A power‐sharing agreement was signed in March 2008 and President Musharraf swore in Yousaf Raza Gilani as Pakistan's new prime minister. Gilani, who replaced Benazir Bhutto following her assassination as leader of the PPP, now leads the newly formed coalition government. In the short time since the coalition has been in power, many positive changes have taken place, including efforts to reinstate the judges that were ousted in November 2007.3 This latter move signifies positive movement towards lessening the army’s role in politics, although the coalition government is unlikely to provide a permanent solution to the political crisis because of the history of mistrust between the two parties. In the event of widespread civil disorder, therefore, the prospect of further direct military intervention cannot be ruled out. Pakistan's long‐term outlook is unpredictable because terrorism, sectarian tension, and deepening socioeconomic divisions are undermining stability. Security concerns are being raised by threats from militant groups and regional conflicts. The Government of Pakistan’s perceived bias towards Punjab, the most affluent province in the country, has caused disgruntlement among the population of underdeveloped areas, such as Baluchistan. This unrest often results in political violence, with militants sabotaging important infrastructure, such as natural gas lines. Regionally, there remains the potential for further conflict with India over Kashmir, although the peace process currently appears to be generating dividends, albeit small. 3 Economist Intelligence Unit (EIU), 2008, Pakistan: EIU Country Report (London: EIU).

The government welcomes foreign investment and has supported the privatization of public sector assets over the years. However, corruption remains a key concern of doing business in the country. This concern, coupled with the security threats highlighted above, makes Pakistan a challenging country for foreign investment.

Demand for Financial Services
Overall, financial penetration in Pakistan is quite low. Pakistan has the highest number of people per bank branch in the region, second only to Bangladesh. Currently 37 percent of adults have bank accounts and the number of borrowers—5.5 million—constitutes only 3.5 percent of the population. There are only 171 deposit accounts and 30 loan accounts per 1,000 people. Agriculture and SME credit reach 1.5 and 0.16 million borrowers, respectively. Outreach of the documented microfinance sector was 1.13 million as of March 2007. Financial inclusiveness is critical, given that 42 percent of Pakistan’s population is under 15 years of age and about 24 percent of the population—nearly 40 million people—live below the national poverty line. Financial exclusion exists for a number of reasons. Geographic constraints play a large role, with 67 percent of the population living in rural and remote areas. Innovative delivery channels, such as branchless banking, are not yet utilized. Financial institutions are reluctant to venture into new areas and do not have the capacity to assess demand and deliver financial services down market. Information on borrowers is inadequate because institutions do not report standardized information and do not maintain databases. Banks also do not serve a large segment of the population because they require collateral or specific documents. In most cases, land records are not suitable documents for security and the lack of legal recourse in the event of nonpayment restricts banks from lending. Finally, the population is excluded financially because illiteracy, as well as cultural and language barriers, limit awareness and understanding of financial services. Products and services, moreover, are not tailored to help the population overcome these obstacles. Structural economic reforms, particularly in the financial sector, were initiated in the early 1990s and consolidated after 1999. These reforms were characterized by greater openness, liberalization, and privatization of state‐owned enterprises, including four of the five main public sector banks. At the same time, the State Bank of Pakistan, which had been under the control of the Ministry of Finance, was given a much greater degree of autonomy. Between 1997 and 2004, the market share of local private banks increased from 26 to 65 percent, reflecting two large privatizations, several acquisitions by foreign banks, and more rapid growth overall.25 These reforms led to radical changes in the ownership structure and management of the banking system—and increased competition.

PORTER’S FIVE FORCES

Threat of Rivalry
The sector’s high operating cost to loans ratio (Presently 22%) poses a key challenge to make microfinance viable business model. A reliance on brick and mortar branches and extensive human resource base has been adding significantly to high operating costs. The existing quality of management teams, technology and internal control systems of microfinance players are not conductive to required level of growth. However, there are some MFI, RSP and NGOs, who are well equipped with the new ideas and acquiring the technology, which is creating a considerable rivalry in the industry. The market of microfinance in Pakistan is still under the supply of services of Micro financing facilities. The rivalry is high among the growing organizations as the industry is changing its trends from traditional to technological and innovative product development and to be the successful it’s necessary to adopt the changes. These new trends have increased the rivalry in the industry and much start working collaboratively. First Women Bank is working with Pakistan Postal Service, similarly Agha Khan MFI (AGRSP) also done agreement with the Pakistan Post service.

Threat of New Entrants
Microfinance is a high touch, high cost business. As a business model, its greatest challenge is to lower operating costs in order to reduce the cost of service borne by borrowers. Hence it must marshal its resources to identify areas of greatest potential for lowering operating costs, and execute relentlessly to achieve these cost savings using technology where appropriate. MFIs must continue to take prudent risks to grow and scale their operations and to lower their operating costs through the use of technology – customers are counting on it. The threat of new entreats is not much considerable for the industry.

Threat of Suppliers
The one of the big threat to Micro finance banks and institutions is the generation of funds. Tameer Bank is Non – NGO Commercial Microfinance service. The big affecting factor for the down of the microfinance institutions is the funds. Tameer Bank is mainly controlled by the Telenor Company and has initiated many programs and projects to generate the funds itself rigorously. The Threat of funding from government and other agencies is not considerable for the Tameer Bank.

Threat of Buyers
Microfinance in Pakistan has yet to make major breakthroughs to reach millions of underserved people who acquire a wide variety of financial services. Pakistan has one of the lowest financial penetration levels in the world with 56% adult population totally excluded, and another 32% informally serve. However despite considerable support from government, donors and the State Bank of Pakitsan, the microfinance sector has only been able to tap a small fraction of the potential market, with current active borrowers standing at roughly 2 millions. The market is still unnerved and below the level of the need of the microfinance services. The Threat of Buyer is not considerable at this time for the microfinance industry in Pakistan

Threat of Substitute Products
The channels to serve the underprivileged people are some and very few of them are systematic. The many are still looking for the services of financing for their needs. Micro financing is considered as the source of poverty alleviation and social growth of the nation. The alternate for the micro financing are negligible or not effective to be considered as the substitute of the micro financing activities.

SWOT ANALYSIS
Strength
Technology plays an important role in building and managing the large retail portfolio and helps in adopting efficient delivery channels and putting in place robust MIS. The Tameer Bank is putting its steps forward to be Technological pioneering in microfinance service industry. Telenor mobile comany have purchased major stakes of Tameer Bank. This marriage of Banking service and Technology open a new era of mobile banking in Pakistan. Tameer Bank is running many joint programs with Telenor like easypaisa. This Technological advancement in the mobile banking services is great and sustainable competitive strength of Tameer Bank which is serving customers financial banking needs with comfort and easiness. The big example of Tameer’s Success is easy paisa which has operational easiness for the user as well as effective banking service. This kind of mobile banking is difficult to establish and also have operational complexity to be imitated. Tameer is the only Microfinance Bank which provides the majority of its loans on an individual assessment as opposed to group basis. Tameer's average loan size is twice the industry average. With disbursements in excess of Rs. 400 million every month, we have introduced a much needed individualized model to the industry. Tameer is also cognizant of the savings requirements of microfinance customers. It is the first bank in the industry to launch a deposit saving certificate with a denomination of Rs. 5000 for women and Rs. 10000 for men. With a monthly interest rate of 13.34 percent, we provide customers with the highest rate in the industry. Institutional Strength remains the core responsibility of microfinance banks and institutions. Tameer Bank is strong in making and implementing strategies for the required management structure, training & human resource base and strengthens the business process. Organizational structure and wide network on different geographical location provides strength to Tameer bank. Using this Tameer can effectively target big circle of consumers easily and effectively. Tameer has diversified portfolio, including institutional savers as well as a few micro savers. Commercial banks have not shown interest in micro saving at all, nor have the government‐backed Khushali and other institutions.

Weakness
Tameer Bank potentially seems to be strong to handle the threats and to trap the opportunities in the market. There is big unattended market for the micro financing services in the country, mostly in the urban areas of Pakistan. Most NGOs and financial institutes are concentrating in the urban areas, specially the cities of Punjab. The industry has big horizon to grow and develop the new trends in the industry but currently the pace is very slow. Tameer Bank is developing new things and serving in many areas for human development also but the rate is slow with the moving trends of the industry. There is lot of margin for the first mover which is still un‐worked.

Opportunity
Tameer Banks is Non‐NGO financial organization and its 51% shares are purchased by one of the big mobile service company of Pakistan. The availability of finance is an opportunity of Tameer Bank to compete and grow in the microfinance market. The increasing demand of the necessities and education in the society has also become an opportunity for the micro finance bank and institutions. Mobile banking has undoubtedly taken the lead with the collaborative mobile banking model, where collaboration takes place between the carriers and the banks who can distribute the roles of the value chain amongst themselves. ‘easypaisa‘ from Telenor Pakistan and Tameer Bank is great catch. The fast changing dynamics will soon take the Mobile banking to new levels. Before coming to the topic, let’s take a look at this Stakeholder Impact Diagram from the Mobey Forum.

The figure above clearly indicate that they principal stakeholder of the mobile financial services (MFS) is the ‘customer’, with MNOs, banks and merchants playing the key role to provide MFS. In Pakistani market, so far we have seen mobile bill payments and mobile money transfer (domestic) playing in action and attracting the consumers. Exploring on more customer demands from MFS I came across a study report from Innovar, a financial service consultancy. The report reveals the following observations as obtained from survey involving more than 7000 consumers to aid MFS developments. • Consumers are most likely to use mobile financial services for six categories: o purchase of perishables o bill payments o unmanned vending payments o purchases on internet

• • • • •

o pre‐paid top up o person‐to‐person payments (money transfer) Consumers see mobile payments is more suitable for remote payments than face‐to‐face retail payments Consumers prefer to use credit, as a form of payment method for mobile payments Consumers aged 20‐40 appear to be most receptive to the mobile payment services Consumers prefer to use existing handsets for mobile payments Registration processes and user interface need to be simplified in order to encourage greater consumer adoption

The Micro finance Bank and institutions are mostly spread in the urban area and very few are working in rural areas also. The rural market is available for the micro financing activities there. Mostly the NGOs are working in the rural area and NGOs usually have problem in fund generations.

Threat
The threats Tameer’ Banks main threats are the political instability, religious and social taboo as a risk to their organization. The threat of non availability of fund is not much high for the Tameer Bank. They also have the threat of competition in the industry as the technology is bringing new trends and operational effective procedure for micro financing. The biggest threat to the microfinance sector in Pakistan is misguided and myopic intervention by the elected representatives. For example, in certain areas of the Punjab, elected representatives have made statements claiming a general amnesty from micro‐loans. Such irresponsible statements have created an environment of poor credit discipline all across the sector. Currently, Pakistan faces tough challenges on the international and national stage. The biggest threat to the microfinance sector in Pakistan is misguided and myopic intervention by the elected representatives. Such interventions carry the potential to actually wipe out the gains of the decade‐long growth in the sector. For example, in certain areas of the Punjab—Pakistan’s most populous province—elected representatives have made statements claiming a general amnesty from micro‐loans. Such irresponsible statements have created an environment of poor credit discipline all across the sector. These national‐level challenges call for immediate, direct and focused efforts from the economic managers in Pakistan. For microfinance to operate smoothly, it requires certain enabling conditions like political impartiality, rule of law and contract enforcement. In the long run, if the government does not step in and address these issues, we could see a wave of credit indiscipline that could negatively affect the quality and the outreach of the sector, along with the credit‐ worthiness of low‐income borrowers. Moreover, if the microfinance sector is not able to avert this crisis then this will not only lead to a complete drying up of investment capital for the BOP, but will also expose Pakistan to a whole host of economic and social problems: rampant unemployment, hunger, morbidity, and full‐scale social unrest. This will only exacerbate the tough economic challenges that Pakistan is presently facing. Credit discipline is, indeed, a public good. Therefore, there is a very strong need for a direct and

focused government policy for the protection of the microfinance sector from such irresponsible, ill‐ advised and myopic political intervention. The threat of Government backed banks high share and collaboration of other MFIs is also creating competitive environment more tough. The government back institution have flow of funding from government for the disbursement to the customers (poor) as compare to the commercial working nature of Tameer Bank. Along with it, The one of the major concern of the customer is to receive services at low rate which tends the MFIs to reduce operational cost. AKRSP and other are joining the strengths of other organization to gain competitive advantage in the industry by reducing the cost of their service and to increase their market size. The growing competition is also increasing threats of rivalry in for Tameer Bank.

VALUE CHAIN ANALYSIS/VRIO
Value Chain

Value Chain of Mobile Banking Service

Value Chain of Micro Financing Service

VRIO Analysis
VRIO is primary tool to analyze different resources and capabilities which a firm possesses can give it competitive advantage. VRIO frame works help to analyze the internal strengths and weakness. VRIO is questions about four things of resource or capability of organization i.e Value, Rarity, Imitiability and Organization. S.No Resource/Capability 1 Wide Network 2 Trained Human Capital 3 4 5 * Many Commercial wide spread networks are also entering in the Microfinance **AKRSP and other NGOs/MFIs are also doing collaboration with other organization Mobile Banking Collaboration with other Diverse Portfolio Value √ √ √ √ √ Rarity * √ √ ** √ Imitability Cost Organization √ √ √ √ √ √ √ √ √ Advantage Competitive Parity Sustained Competitive advantage Sustained Competitive advantage Competitive parity Temporary Competitive advantage

BUSINESS ACTIVITY MAP

STRATEGY ANALYSIS
Over the past five years, Tameer Bank has introduced a number of transformational changes within the Microfinance industry. Tameer is contributing towards all of the millennium development goals with special emphasis on financial inclusion. At present only 13 percent of Pakistan’s population is provided for by the commercial banking industry. It is Tameer's goal that at least 70 percent of the population will be able to access financial services by 2015. With the introduction of Easypaisa, a branchless banking solution that can work for everybody but is designed for the unbanked, Tameer along with Telenor are set to change the financial ecosystem. In the past six months, Easypaisa has completed over 7 million transactions such as over the counter utility bill payments, over the counter domestic remittances, creation of mobile wallet accounts and international remittances. With over 10000 easypaisa outlets, Tameer has bought banking services to the customer footstep Tameer is the only Microfinance Bank which provides the majority of its loans on an individual assessment as opposed to group basis. Tameer's average loan size is twice the industry average. With disbursements in excess of Rs. 400 million every month, we have introduced a much needed individualized model to the industry. Tameer is also cognizant of the savings requirements of microfinance customers. It is the first bank in the industry to launch a deposit saving certificate with a denomination of Rs. 5000 for women and Rs. 10000 for men. With a monthly interest rate of 13.34 percent, we provide customers with the highest rate in the industry. In order to provide a positive change, a holistic view must be adopted. Four basic requirements need to be met if any sustainable change is to be made: Firstly the solution must be scalable. The high cost of distribution of the conventional banking model (bricks and mortar) cannot deliver cost‐efficient services to the poor. Hence, a branchless banking model is the only solution. Secondly, in order for other players (Telco's, Banks, Retailers) to enter the branchless banking world, an enabling environment must be in place. Effective regulations covering branchless banking by the State Bank and Pakistan Telephone Authority (PTA) Bank must be clearly defined. Thirdly, the solution must, over a period of time, be financially sustainable. Solutions that are totally dependent on donors or are heavily subsidized run the risk of harming rather than helping the poor. Lastly, the services and solutions (loans, savings, money transfers, health, life and livestock insurance) should be tailored for the needs of the poor. The barrier of entry must exist in line with the target market. A highly successful example of the coordination of these elements is Easypaisa's over the counter domestic remittance service. Working with the State Bank, a “Know Your Customer” and anti‐money laundering regulation was formulated reflecting the risk associated with a Rs. 10000 transfer per month. Tameer is emergent in the industry of micro financing banking by making partnerships & collaboration with different level organizations and developing new products. As the microfinance industry in Pakistan is comparatively young and less established; Tameer Bank is working on new ways in the microfinance industry of Pakistan. Its few competitive strategic coalitions are as follows

Acquisition by Telenor
Telenor Pakistan is a 100% subsidiary of Telenor Group and a leading mobile operator in Pakistan with more than 18 million subscribers. Telenor Pakistan has 2500 employees. The Telenor Group has close to

160 million mobile subscribers worldwide, with revenues of NOK 105 billion (approximately USD 19 billion) in 2007 (including Kyivstar). The Telenor Group has more than 35800 employees, of which 25600 operate outside Norway. Telenor acquired 51% of the shares in Tameer Microfinance Bank. The acquisition was for the common business strategy to provide financial services in Pakistan

Partnership with Asasah
This is the first NGO – MFI and Commercial Financial Institution partnership. Asasa is a registered Pakistani NGO and microfinance institution (MFI) based in central Punjab with 23 branches ‐‐ began operations in March 2003 with 100 % commercial funding from the First Elite Capital Modarba. Tameer Bank come into contract with Asasah to provide cash management and service delivery facilities for loan disbursement and repayments. By this Asasah’s clients can receive disbursed loans at any of Tameer’s Network of 100 branch banking outlets, as well as at any 1‐Link ATM in the country, and to repay the loans via easypaisa branchless banking solution

Partnership with AsiaCare
Tameer Microfinance Bank in partnership with AsiaCare has launched ‘Tameer Sehat O Sukoon’, a health micro‐insurance product that will be offered to low‐income individuals to provide them with quality healthcare when they need it most. The aim of the launched product is to help poor households have access to formal insurance that protects against health risks such as severe or chronic illness, accidents, and obstructed births. These shocks are particularly damaging for poor households who are more vulnerable and less able to absorb the financial consequences of such events. Tameer Sehat O Sukoon is an in‐patient product, which offers cashless access to health services with coverage worth Rs 35,000 against an annual premium of Rs 650. It is being rolled out across the Tameer network, which comprises more than 100 customer touch points across Pakistan. It will be available for Tameer Bank customers as well as non Tameer Bank walk‐in customers. Tameer Bank’s partner, AsiaCare Health & Life Insurance Company, was established in 2009. It provides a wide range of insurance plans and offers customised products and services. The products offered are a result of in‐depth industry knowledge, market research and an understanding of customers’ health insurance needs.

SUGGESTIONS
There is a default culture in the country where people take loans and then avoid paying them back or even if they have political power, they make the lender write off the loan. Tameer should have strong system to control this repaying problem. The Urban region is ignored by the MFIs, only few Micro Finance Banks and some NGOs are working specifically for the rural areas. Tameer Bank should also focus on this market to get maximum benefits out of there. Tameer should work on focus based strategy also. It should identify the needs of the specific region so that it can effectively work there to provide the required services for that region. By this it can also plan customized products and development plans for that region. It will help tamer to achieve it objective more efficiently. The competition is growing in the industry of mobile and all the MFIs are working to reduce their cost of operatin. The acquisition of Tameer by Telenor is sustained competitive advantage for it. Along with this, It should keep on decreasing the operational cost by implementing technological advance technique to provide the financing services to the poor at affordable rates. For this, Tameer can also join the network of postal service of Pakistan which is widely spread all over the country and can be effectively used for the spread of financial services in the country.

ANNEXURE A: STATUS OF MFIs IN PAKISTAN

ANNEXURE B: MICROFINANCE INDUSTRY INDICATORS

ANNEXURE C: PERFORMANCE INDICATORS OF MFIs in PAKISTAN