￼Over the past 22 years, Baiduri Bank, a premier banking institution in Brunei Darussalam, has seen tremendous profit growth, thanks to its business structure based on three pillars: Corporate Banking, Retail Banking and Consumer Financing.
Its success can also be attributed to its strong commitment to helping locals, be it individuals or businesses, to grow; combined with global expertise brought about by its international connection to BNP Paribas, which holds interests in the bank. Other shareholders include majority shareholder Baiduri Holdings and Darussalam Assets.
During an interview with Pierre Imhof, the CEO of Baiduri Bank, the Bulletin learnt that the bank’s success has primarily been due to its ability to provide a wide array of banking products and services suitable for a small market – a business model pivotal to ensuring sustainability through good and bad times alike.
“Being a local bank in Brunei, we have a duty to respond to the needs of the customers, and we found that through these three pillars, we are able to respond to their needs in a more focused and innovative way, putting us at the forefront of the local banking environment,” said Imhof.
Corporate and Retail Banking fall directly under the purview of Baiduri Bank whilst Consumer Financing is managed by its wholly-owned subsidiary, Baiduri Finance, which mainly focuses on Hire Purchase car financing.
The three pillars, added Imhof, are adaptive – they are flexible enough to change to suit the diverse needs of the clients. He elaborated that one of the business lines – Wealth Management, which previ- ously fell under the umbrella of Retail Banking – had to be divided into two for regulation purposes.
As a result, Baiduri Capital, a wholly-owned subsidi- ary of Baiduri Bank specializing in securities trading, was launched in 2015 to cater to the investment needs of Bruneians.
“We felt the time was right for us to go into securities trading as Bruneians are looking for alternative forms of investment besides the traditional savings and fixed deposits” said Baiduri Bank’s CEO, a year on. “The establishment of Baiduri Capital is in line with our long-term strategy of playing a leading role in the development of Brunei’s financial sector” he added.
A pioneer in Brunei’s financial industry, the bank was the first to introduce a wide range of new banking products and services to the market. These include internet banking, in-store and in-mall banking 7-days-a-wee, the cafe branch concept, the Visa payWave debit card, the American Express and UnionPay payment card brands, instant card issuance and corporate payment cards.
“People all around the world, including Brunei, are getting more and more educated and are very comfortable with technology, carrying out their banking needs via electronic channels. This group of people are constantly ready for advancements in digital banking services and so the bank must constantly move in that direction,” Imhof said.
Speaking on the challenges specific to the country, he stated that as a local bank, it is difficult to grow, with Brunei being a small and intimate market highly-sensitive to fluctuating oil and gas prices. “In any business, there are good times and there are bad times – we are currently in a challenging environment as the price of oil and gas has gone down; government spending is lower; government income is lower – and so, in such an environment and with a limited population, it is difficult to grow our business, but we have been doing alright, so far.”
In a way, the recent restructuring of the local banking system, when a leading international bank announced its departure, has helped Baiduri get through this challenging time without as great of an impact as anticipated, due to the bank’s dynamic takeover of accounts of the departing bank.
“For many of the outgoing bank’s corporate or retail clients, Baiduri is coming across as an appealing alternative for their banking needs due to our wide range of products and services as well as our commitment to the highest level of security,” Pierre Imhof, CEO, Baiduri Bank Imhof said, adding, “For example, Baiduri Bank was the first bank in Brunei to have been awarded Payment Card Industry Data Security Standard (PCI- DSS) certification for card payment systems and processes in 2014, and remains the only local bank in Brunei today to have received such certification”.
He added that the bank will continue developing and improving its three pillars, focusing on new technologies and taking full advantage of the influx of new customers.
Speaking on Autoriti Monetari Brunei Darussalam’s credit regulations, the CEO said that he fully understands their efforts at preventing Bruneians from falling into excessive debt.
“Though it affects our ability to grow our loan portfolio, I totally support this approach. What I hope to see are the right measures being taken to educate those people who are most vulnerable in times of economic downturns, such as those in the lower income bracket in the area of personal money management and to nurture a culture of saving amongst them”, commented Imhof.
A key customer segment for Baiduri Bank is MSMEs which make up about 90 percent of all businesses in Brunei. Among the services offered by the bank include advice on financial plans, complimentary payroll processing service, bulk deposit service, day and night safe, an interest bearing checking account and business internet banking, to assist companies in managing their funds more efficiently so that they can have more time to focus on building their business.
Under Corporate Banking, Baiduri Bank intends to participate in schemes designed by the Government, in particular, Darussalam Enterprise (DARe) to help this customer segment. These include supporting them in financing, helping them develop skills in creating business plans and financial statements to ensure organisational success in the increasingly complex and volatile business environment.
To cater to the growing needs of business account holders, a new unit, the Business Banking Unit was set up in 2015 to complement services offered by Corporate Banking, targeted at the non-borrowing or very small borrowing accounts. Services offered include card merchant services for retailers, setting up Baiduri Internet Gateway System (BIGs) to allow retailers to accept payment from their online customers, introducing the businesses to Baiduri’s Business i-Banking (BIB) to assist them in paperless transactions and assisting them in MSME credit facilities.
In August 2016, Baiduri Bank launched “MerchantSuite”, an affordable online payment platform for MSMEs that allows very small businesses or individual sellers to issue invoices and receive payments online without the need to have an established website.
On the future outlook of the bank, Imhof said, “We want to maintain two key drivers for the future of the Bank,” referring to, first, the diversified business model i.e. the three pillars, and second, being the local bank for the Bruneians. “We will continue to develop our three pillars to better suit the needs of the Brunei market. Couple that with being a local bank, we have the edge of being able to respond to the needs of the customers swiftly with a certain degree of autonomy.”
He added that the bank’s future hinges on innovation and the latest technologies. “With technology advancing at an ever-increasing rate, this drive to bring the newest technology to the banking environment is part of our sustainability plan. Our focus will be to further develop our digital banking services. We are always looking outside of Brunei to see what other banks from around the world are doing. This enables us to adopt a more international approach to banking thus cementing our position as the leading conventional bank in Brunei.”
On future development plans, Imhof noted that the bank will continue to play an active role in the industry by introducing a wider range of banking services suited to the Brunei market.
“Client satisfaction is pertinent in the service in- dustry so we anticipate their needs ahead of time and employ the latest technologies in the banking environment,” Imhof said. “We strive to maintain this approach of having something new in terms of technology and this will be our driving force in the coming few years.”
Speaking about the Government’s plan on the establishment of a stock exchange in Brunei Darussalam in the near future, Imhof said, “Baiduri Capital, which provides an online platform to trade in 6 major international exchanges (Hong Kong HKEx, Bursa Malaysia, Singapore SGX, United States NASDAQ, NYSE and NYSE MKT LLC), is well positioned to offer customers the option to trade in stock and shares issued by Brunei companies when the stock exchange is set up.”
Imhof added, “We are shifting towards more and more non cash-based payments and there is a growing trend towards the use of online platforms for an increasing number of banking services. In response to that, we continually look at ways to provide user-friendlier ways of banking such as mobile banking, payWave technologies and more.”
Today, Baiduri Bank is regarded as the leading conventional bank in Brunei with numerous awards to its name – most recently, The Bank of the Year 2016 from The Banker magazine. Other awards include the Best Banking Group for Brunei 2016 from World Finance, the Domestic Retail Bank of the Year for Brunei 2016 from the Asian Banking and Finance Magazine and the World’s Best Emerging Markets Bank in Asia-Pacific 2016 for Brunei.
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