20 banks in race for digital licence

State Bank will award five licences to financial institutions soon

KARACHI:

(SBP) has so far received 20 applications for digital banking, of which five licences will be awarded to the successful institutions soon, as banks are on the cusp of second digital revolution in the country. “Due diligence (of banks and financial institutions which applied for the digital banking licence) is underway and we will hopefully be issuing licences pretty soon,” said Syed Irfan Ali, Managing Director of SBP subsidiary Deposit Protection Corporation (DPC).

The central bank has decided to issue only five licences in the beginning to kick-start the digital banking journey, he said while speaking at the 15th international conference on “Mobile Commerce 2022”, organised by Total Communications on Wednesday. The financial institutions, which have applied for the digital banking licence, include the top five banks operating in the country. “Twenty digital banking applications … where do we end?” Ali questioned and answered in the same breath “There is no end. This is just the beginning (of digital baking in Pakistan).”

“QR code, thumb impression or hands in the air (for conducting financial transactions) may be the next level of future banking,” he said. He voiced hope that the forthcoming digital banks may offer banking services to the unbanked people and businesses in remote areas including Balochistan, Khyber-Pakhtunkhwa, border regions, Thatta, Thar, Cholistan, Gilgit, Hunza and Skardu. “They are not out of Pakistan, but are part of the country,” he said at the conference. Former prime minister Imran Khan wanted to connect the non-resident Pakistanis with the banks operating in the country.

“So, the SBP, (the then) governor Reza Baqir, I (Ali himself) and the team embarked on a journey of digitisation and we said that we can get to the non-resident Pakistanis (through the Roshan Digital Account - RDA) and we will make life easier for them.” RDA inflows crossed the $4.5 billion mark with a record one-day inflow of $57 million on June 21, he said. Ali claimed that it was Pakistan which first framed rules and regulations for branchless banking and achieved fantastic results.

“Branchless banking was … something out of the box. That was the first time when we came up with regulations, no one had such regulations in the world (at that time).” UBL President and CEO Shazad G Dada said in a video message that Pakistan was about to embark on the second digital revolution in the banking sector ahead of the award of digital banking licences. “Pakistan is on the cusp of second digital revolution … amid a lot of happenings in the economy,” he said.

Banks, telecom and technology firms have formed a fantastic collaboration under the first digital revolution in Pakistan. Egypt’s Paymob SVP Global Business Development Omar El Gammal announced that Paymob had entered into Pakistani market to provide online and digital banking services to the small and medium enterprise (SME) sector.

The Egyptian digital payment company “will deploy 100,000 merchants over the next two years in Pakistan”, he said. Finja Co-founder and CEO Qasif Shahid said PWC had placed Pakistan’s economy among top 32 countries around the world by 2030.