Credit Corporation was one of two financial institutions to receive PNG commercial banking licences this month, with more new banks planned. Credit Corp’s Chief Executive Danny Robinson outlines his bank’s digital-first approach, while the IFC’s Kevin Gani explains the path forward for other prospective banks.

Danny Robinson, speaking to the 2024 Business Advantage PNG Investment Conference. Credit: BAI

After 45 years of operating as a financial institution, Credit Corporation PNG has launched a commercial bank. And, in the opinion of Chief Executive Danny Robinson, it is an opportunity “to change the game” in Papua New Guinea’s banking system.

CreditBank launched on 5 August and is one of two new commercial banking licences granted by the Bank of Papua New Guinea, alongside TISA Bank, which is operated by the Teachers Savings and Loan Society. State-owned National Banking Corporation, formerly People’s Microbank, is also close to being approved for a commercial banking license, and it may not be the last.

According to Robinson, CreditBank’s new product suite will contain banking and lending products, as well as a range of payment cards and digital channels, including mobile and WhatsApp banking.

“We are changing the game in banking by adopting a digital-first approach in everything we do: from our channels, to how we deliver our products, to simplifying our business processes, which will ultimately reduce our cost of delivery and improve our services,” Robinson told the 2024 Business Advantage PNG Investment Conference earlier this month.

“We saw the market potential of another K14 billion in the micro, small and medium enterprise (MSME) space”

With just four branches, CreditBank will rely on a digital self-onboarding platform that allows new customers to open an account from anywhere.

“Many of our customers in the past were start-up operations,” said Robinson. “We lent them their first piece of equipment to start their businesses and they were successful enough to be banked by the existing banks within PNG. We see a vision of those customers coming back to CreditBank, where they started their financial services operation.”

TISA Bank’s approach will be slightly different, according to Chairman Gabriel Tai:

“Our strategic focus is on providing comprehensive banking services through digital platforms, mobile banking solutions, and an agency banking model.”

Sector-wide change

The move to increase the number of banks in PNG arguably had its genesis in 2019, when the International Finance Corporation (IFC) studied the country’s financial services sector. At the time, ANZ’s retail operations had just been integrated into Kina Bank, and the IFC recognised a need for more competition.

The IFC’s Kevin Gani. Credit: BAI

Kevin Gani, the IFC’s Country Leader for Australia, New Zealand and Pacific Countries, said the study saw a sector that was too focused on large corporations.

“We saw the market potential of another K14 billion in the micro, small and medium enterprise (MSME) space,” Gani told the Business Advantage PNG Investment Conference.

“The key is to look beyond Port Moresby, Lae, Madang and all of those cities to sole proprietors who are the same nature and size of business as MSMEs but in rural and remote areas.”

To help finance companies become banks, the IFC established a long-term strategic partnership to make them “more bankable”. This included creating a road map, assessing risk, planning HR and talent management and finding strategic investors.

This was the path taken by CreditBank and TISA, which is also open to PNG’s other licenced financial institutions.

Gani believes that if PNG unlocks the potential of this MSME market and uses PNG-owned banks to grow it, it will be a win for both the banking sector and the economy.

“We would like to bring our local partners from the embryonic stage all the way to being a significant domestic market player and to be recognised as a reputable regional, if not international, market player,” Gani said.