ISLAMABAD, Pakistan – Earlier this month, the State Bank of Pakistan (SBP) announced the “Licensing and Regulatory Framework for Digital Banks.” SBP hosted an online event titled “Digital Banks – A New Era in Banking” to raise awareness of this significant regulatory breakthrough. The webinar’s primary goal was to raise awareness about the future generation of banks, namely digital banks, and the potential they provide for financial inclusion in the country. It was also intended to provide information on the digital banking framework with market participants and prospective investors, as well as to answer their questions.
In his keynote talk, Dr. Reza Baqir, Governor of the State Bank of Pakistan, emphasised the potential of digital financial services to become ubiquitous in the banking industry, as well as their importance in terms of inclusion and innovation. When discussing the potential of digital banks in Pakistan, he stressed that one of the State Bank of Pakistan’s primary priorities was to encourage inclusiveness, innovation, and modernization of Pakistan’s financial system. He underscored SBP’s expectations from digital banks in terms of encouraging financial inclusion through the provision of affordable financial services to unserved and underserved elements of society, as well as nurturing a new set of customer experiences.
Dr. Baqir emphasised how the digitalization of financial services is accelerating and redefining the way people and companies bank. He stated that Pakistan’s digital financial services journey began in the early 2000s, and that since then, a number of enabling regulatory initiatives have been launched, including the Branchless Banking Regulatory Framework, Electronic Money Institutions Regulations, Roshan Digital Account, RAAST, Customers’ Digital Onboarding Framework, and Asaan Mobile Accounts, among others. He went on to say that the Licensing and Regulatory Framework for Digital Banks is another another step toward digital transformation and a significant step toward modernising our banking services business.
Prominent representatives of the banking community, fintechs, the business community, and government organisations all attended the event. Mr. Arshad Mehmood Bhatti, Executive Director, Banking Policy and Regulation Group, informed the audience during his welcome address that SBP will grant up to five (05) licences for digital banks, as SBP intends to bring digital banks with strong value propositions, robust technological infrastructure, sufficient financial strength, technical expertise, and an effective risk management culture. He informed market players and potential investors that his team would continue to be accessible to give any required advise in this respect.
Mr. Nadeem Hussain, founder of Planet-N, moderated a panel discussion with Mr. Muhammad Aurangzeb, Chairman Pakistan Banks’ Association, Ms. Tania Aidrus, former Executive of Google and Special Assistant to the Prime Minister, Mr. Qasif Shahid, CEO & Co-Founder of M/s Finja, and Mr. Muhammad Akhtar Javed, Director Banking Policy & Regulations Department of SBP as panellists.
The panellists were subjected to numerous rounds of questioning that not only addressed the true potential of digital banks in terms of solving the financial requirements of the average person, but also provided more clarification on many facets of this crucial regulatory undertaking. The panel also discussed the potential benefits and compelling reasons for current banks and MFBs to apply for digital bank licences, as well as the pertinent issues experienced by various digital banks worldwide. The panellists agreed that digital banks will provide a faster, cheaper, and more efficient alternative for serving the financial needs of unserved and underprivileged elements of society, and they applauded SBP’s historic endeavour.
in particular, and lauded SBP’s historic initiative The panellists were optimistic that digital banks will become a vital element of the financial ecosystem, improving market efficiency, giving access to a greater variety of financial services, and therefore promoting the broader mission of financial inclusion.