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AwardsBest Bank Awards

Pakistan's best bank for SMEs 2022: Allied Bank

Allied Bank

In January, local media buzzed with news of a partnership between Allied Bank, non-profit finance outfit Karandaaz Pakistan and tech firm Techlogix Mobility. The plan was to increase financial inclusion, one small and medium-sized enterprise at a time.

The motivation, says ABL’s chief executive, Aizid Razzaq Gill, was to supersize efforts to support SMEs digitally. Written between the lines was the point that the leaders of Karandaaz, Techlogix and other innovators in Pakistan know that to tap the all-important SME segment, there’s arguably no better connector than ABL.

The market share and growth that ABL brings to the table – its SME portfolio grew 25% in the nine months ending December 31, 2021 – is one thing. Just as important is its Allied Easy Finance platform and its innovative credit-scoring capabilities.

The platform began with a focus on auto-parts manufacturers, a volatile industry that has always presented lenders with big risk-assessment challenges. It is now expanding into other industries.

Together with Karandaaz, ABL is administering a fund for small distributor financing. The central idea: fill credit gaps faced by small distributors with financing directed largely at the supply-chain process.

The project provides collateral-free lending to SMEs using digital channels. It has ABL working in collaboration with local fintech companies to devise more innovative and cost-efficient lending platforms. Its in-house credit approval system will, in theory, eventually be accessible throughout the industry to increase the quality of decision-making.

Over time, ABL says, it will become a model for fully automated, data-driven lending from loan application to funds disbursement. The more instantaneous the process, the better.

Short-term challenges abound, of course. During the pandemic, ABL scrambled to help clients meet additional funding requirements to support cash flows and preserve basic business operations.

ABL stepped up to help the State Bank of Pakistan implement various support schemes. This all-hands-on-deck response, with ABL playing a pivotal role, helped to save jobs and support the livelihoods of families around the nation.

But ABL wins Asiamoney’s award for best bank for SMEs because of the detailed and targeted way it is expanding its business. Case in point: stepping up efforts to lend to female entrepreneurs, especially young ones. ABL is working to amplify the effects of a government drive to channel credit to this oft under-served segment.

ABL is also redoubling efforts to finance SMEs in the construction and housing sectors. The hope is this will boost job creation and indirectly support a large number of other businesses linked to the sectors.

The bank is a pioneer in setting up so-called 'commodity warehouses' in goods trading hubs. This provides ABL with direct access to SMEs in commodity-producing areas in a country of 220 million people. The principal focus is traders who lack collateral.

The management is taking financial literacy seriously, too. ABL has long played an active role in providing non-financial advisory services to SMEs via seminars and awareness sessions to educate them about best-management practices, product knowledge, socio-economic development, sustainability and other issues relevant to Pakistan – helping to build a more vibrant economic system from the ground up.