Banking on innovation: setting new standards in Mongolia

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Golomt Bank’s deputy chief executive officer, Odonbaatar Amarzaya: Golomt Bank is building on the solid foundations of its track record over nearly 30 years, striving every day for good via sustainable development while also creating new digital value.

April 09, 2024

After nearly three decades of pursuing its mission to deliver cutting-edge banking products and services in Mongolia, Golomt Bank is bringing best practices in digitalisation and sustainability to its corporate and retail customers, plus to its partners.

It is well-positioned to do so, having already notched up a series of firsts domestically after identifying the potential for mobile banking as early as 2012. Among several milestones, the bank was the first in Mongolia to introduce the Smart Bank app amid its fintech-focused, digital-first mindset.

Further reflecting the institution’s innovative spirit is the role it has played in spurring the development of the country’s banking and financial sector by introducing an international payment card system in 1997. The first internet banking, SWIFT, Western Union and 24-hour banking services then followed several years later. More recently, in 2022, Golomt Bank completed its initial public offering.

While continuing to drive digital transformation, Golomt Bank also has its sights set on investing for a brighter future. This involves raising levels of awareness and consciousness around sustainability-linked themes in a developing economy.

“We’re keen to take a lead in the sustainable development of Mongolia,” said Odonbaatar Amarzaya, the bank’s deputy chief executive officer. “As we drive social and sustainability programmes, our financial future looks bright.”

Fostering positive change

Since its inception in 1995, Golomt Bank – now one of the top three banks in Mongolia – has been an integral part of the country’s economic development. Yet as a leading commercial bank with about 2,300 employees and 1 million customers, accounting for 20% of the domestic banking sector, financing those businesses which have contributed to national progress isn’t just about profit and growth.

Instead, Golomt Bank focuses on environmentally friendly, community focused, positive change. It supports socially responsible projects and programmes, and improves financial education.

This approach has its roots in a sustainability policy first approved and implemented in 2015. “We aim to spearhead the economic changes needed to achieve a better climate balance through our products and services, and to make our internal operations more environmentally friendly,” Odonbaatar explained.

For example, the bank has been cooperating with over 40 national and international projects driving more positive environmental and social impacts. And as of 2023, Golomt Bank accounted for 22.9% of the total green loan portfolio of Mongolia’s banking sector.

“In addition, we have learned how to measure the greenhouse gas (GHG) emissions and water impact of our business portfolio, defined the methodology and implemented it in our operations, analysed the impact on the environment, and identified the sectors and areas that require attention,” added Odonbaatar.

Highlighting this commitment is the fact that the institution was one of the founding signatories of the UN Environment Programme Finance Initiative, and the only one from Mongolia.

This helps Golomt Bank play a key part in Mongolia’s Nationally Determined Contribution (NDC) targets – to make 30% of all energy renewable by 2030 and to reduce GHG by 22.7% from the projected level of 2030.

Innovating for a new tomorrow

In parallel with its sustainability agenda, Golomt Bank’s efforts to modernise the banking landscape in Mongolia includes artificial intelligence-based algorithms, big data and advanced analytics.

An early success was the SocialPay digital wallet, the first fintech service in Mongolia. Introduced in 2017 and regularly updated with ever-smarter solutions, the app has simplified the financial lifestyle of over 480,000 people.

More broadly, from 2020, Golomt Bank has redefined Mongolia’s banking and financial sector via its Open Bank business model, based on its digitally-led innovation. “We are an open bank that contributes to the prosperity of our country and people through creating new value by openly sharing our experience, know-how and state-of-the-art infrastructure with our customers. This will be the main direction of our bank's future,” said Odonbaatar.

Further, as part of the goal to support small and medium-sized businesses (SMEs), which comprise around 97% of the roughly 90,000 enterprises operating in Mongolia, it provides female entrepreneurs with loan products to meet financial needs, increase jobs, support sustainable livelihoods, and finance businesses that will have a long-term impact on society.

“Women occupy 68% of small and medium-sized industries and service providers,” said Odonbaatar. “Increasing their access to finance is not only a social responsibility, but will also make a significant contribution to the economic cycle.”

Setting higher standards

Golomt Bank's transition to a publicly listed company in 2022 has spurred further enhancements for the institution, notably in its governance and transparency framework. “These improvements aim to strengthen investor confidence and public trust,” Odonbaatar added.

A cornerstone of the enhanced structure is the composition of the Board of Directors. Golomt Bank has not only increased the total number of board members but has also established one of the most independent decision-making bodies within the Mongolian banking sector – with six of the nine board members independent from controlling shareholders.

“These measures demonstrate our commitment to aligning with international best practices and fostering a culture of accountability and trust with all stakeholders,” said Odonbaatar.

This all tallies with an approach and vision that carve a clear strategic growth path for the next decade.

Indeed, sustainability is top of the bank’s agenda over this timeframe. “We want to increase our green finance loans and develop stronger ESG risk management practices,” said Odonbaatar.

This focus on higher standards will include ensuring the bank’s loans are not used in connection with businesses or projects that cause any environmental or social harm. Profits will be secondary.

“Even though the bank may miss some short-term commercial gains, we will refrain from supporting negative businesses and projects,” he added.

This may mean reducing its exposure to the transport sector, which the bank’s study identified as contributing the most to GHG emissions in its business portfolio. The bank would rather work more closely with small businesses / SMEs which are willing to invest more in new facilities and technologies to decarbonise their operations.

The ultimate objective, said Odonbaatar, is to contribute to the development of Mongolia by expanding the economy, supporting customers, developing together and proving itself as the best and Mongolia’s global benchmark bank.

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