Fi­nan­cial ser­vices

Banks and fi­nan­cial ser­vices com­pa­nies are tap­ping into PNG’S ris­ing mid­dle class.

Business Advantage Papua New Guinea - - Contents - By David James

PNG’S se­nior bankers are fo­cus­ing their strate­gies on a grow­ing mid­dle class. Robin Flem­ing, Chief Ex­ec­u­tive of Bank South Pa­cific, says the bank has sharply in­creased its lend­ing for hous­ing. ‘Hous­ing loans have prob­a­bly grown by about 40 to 50 per cent; maybe a lit­tle bit more,’ he says. ‘It means that our re­tail bank­ing has grown and de­vel­oped and in­creased its in­ter­nal met­rics.

‘It is cer­tainly not a driver of short-term prof­its. It is more a longer term po­si­tion­ing for an emerg­ing mid­dle class over the next 10 to 15 years.’

Mark Baker, Man­ag­ing Di­rec­tor of ANZ in PNG, agrees the coun­try is de­vel­op­ing a more ma­ture con­sumer mar­ket. The bulk of ANZ’S busi­ness in PNG is cor­po­rate, but the bank is also fo­cus­ing on the grow­ing mid­dle class. Baker points to the re­cent launch of a Visa debit card.

‘Pa­pua New Guineans want to travel, and they want to be able to fund them­selves in the way that most trav­ellers do, which is to se­curely debit their home ac­count,’ he says. ‘You are also see­ing some growth in mort­gages as more land is re­leased and ti­tles reg­is­tered. We’re al­ways open to peo­ple ap­proach­ing us on this.’

Tech­nol­ogy

A sec­ond pos­i­tive for the fi­nan­cial ser­vices sec­tor is the in­creas­ing so­phis­ti­ca­tion of tech­nol­ogy. In ef­fect, PNG is leapfrog­ging the in­dus­trial era by de­ploy­ing post-in­dus­trial tech­nol­ogy.

Greg Paw­son, West­pac’s Re­gional Head, South Asia and Pa­cific, says al­though the coun­try is 20 years be­hind more de­vel­oped mar­kets like Aus­tralia and New Zealand in elec­tronic trans­ac­tional bank­ing, it is catch­ing up quickly.

‘That will give peo­ple back the time they spend vis­it­ing branches or man­ag­ing their fi­nan­cial af­fairs. It will also help to take the pres­sure off the vol­ume, the sheer vol­ume, in cash and cheques that are in the bank­ing sys­tems in both (the PNG and Fiji) mar­kets to­day. It causes us more con­cern in PNG be­cause the se­cu­rity cost of mov­ing cash around is sig­nif­i­cant.’

Paw­son says value-added ser­vices can be pro­vided us­ing mo­bile phone tech­nol­ogy. ‘They can pre-pay their util­ity bills, they can buy in­sur­ance ser­vices and a whole bunch of other things—all from the palm of their hand.’

Syd Yates, Chief Ex­ec­u­tive of Kina Bank, be­lieves tech­no­log­i­cal change will trans­form PNG’S fi­nance sec­tor.

HOUS­ING LOANS HAVE PROB­A­BLY GROWN BY ABOUT 40 TO 50 PER CENT; MAYBE A LIT­TLE BIT MORE. IT MEANS THAT OUR RE­TAIL BANK­ING HAS GROWN AND DE­VEL­OPED AND IN­CREASED ITS IN­TER­NAL MET­RICS. Robin Flem­ing

He an­tic­i­pates that banks will be­come ‘quasi-tech­nol­ogy’ com­pa­nies.

‘EFT­POS machines prob­a­bly won’t have great growth. Mo­bile tech­nol­ogy will prob­a­bly be where it all re­ally sits, and we need to think about dig­i­tal on­line. So, our cus­tomers need to be able to con­nect with us any­time, any­how and any­where.’

There are bar­ri­ers to im­prov­ing the fi­nance sec­tor in PNG, how­ever. PNG’S fi­nan­cial sys­tem is un­de­vel­oped, which means there is in­suf­fi­cient de­mand for PNG fi­nan­cial as­sets. So when in­vest­ment flows out of the coun­try be­cause of the end­ing of large re­source projects there is a lack of avail­abil­ity of over­seas cur­rency. The slow­ing econ­omy also changes the risk ap­petite of the banks and other fi­nan­cial in­sti­tu­tions. Credit im­prov­ing Land own­er­ship is based on cus­tom­ary rights, which means that it is not con­ven­tion­ally trade­able and can­not be used as an as­set to back a loan. As the World Bank’s most re­cent

Do­ing Busi­ness sur­vey notes, how­ever, the es­tab­lish­ment of a Credit and Data Bureau in PNG has been in­stru­men­tal in im­prov­ing the sit­u­a­tion for both busi­ness and con­sumer bor­row­ing. In just one year, be­tween 2016 and 2017, PNG rose from 109th in the world to 32nd for ‘get­ting credit’.

A new res­i­den­tial de­vel­op­ment in the Port Moresby sub­urb of Baruni. Sig­nif­i­cant hous­ing con­struc­tion is under way in the cap­i­tal’s outer sub­urbs.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.