Twenty banks in a race to win digital banking license in Pakistan: SBP

June 22, 2022: State Bank of Pakistan (SBP) has so far received 20 applications for digital banking against the announced five licenses to be awarded soon to the successful institutions, as banks are at the crux of the second digital revolution in the country.

"Due diligence (of banks and financial institutions applied for digital banking license) is underway and we will be hopefully issuing licenses pretty soon," said Syed Irfan Ali, who is Managing Director of SBP subsidiary Deposit Protection Corporation (DPC).

The central bank has decided to issue only five licenses in the beginning to kick-start the journey in digital banking, he said while speaking at the 15th international conference on 'Mobile Commerce 2022' organized by Total Communications in Karachi on Wednesday.

The financial institutions, that have applied for a digital banking license, are including the top five banks operating in the country. "20 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)." "Maybe the QR code, thumb impression, or hands in the air (to conduct financial transactions) may be the next level of future banking," he said.

He hoped the forthcoming digital banks may offer banking services to unbanked people and businesses in remote areas including Balochistan, Khyber Pakhtunkhwa, bordering areas, Thatta, Thar, Cholistan, Gilgit, Hunza, Skardu. "They are not out of Pakistan, but the party of the country," he said while adding bankers at the conference. Former Prime Minister Imran Khan wanted to connect non-resident Pakistanis with banks operating in the country.

"So, SBP, (the then) governor Reza Baqir, I (Ali himself) and the team, we embarked on a journey of digitization and we said that we can get to non-resident Pakistanis (through Roshan Digital Account / RDA) and we will make life easier for them." Accordingly, RDA inflows crossed the $4.5 billion mark with a record one-day inflows of $57 million yesterday (Tuesday, June 21), he said.

Ali claimed it was Pakistani who first formed rules and regulations for branchless banking in the world and acquired a fantastic result of that. "Branchless banking was…something out of the box. That was the first time that we came out with regulations, no one has such regulations in the world (at that time)."

Shazad G. Dada, President, and CEO, of UBL Bank, said in his video message that Pakistan is about to embark second digital revolution in the banking sector ahead of the award of digital banking licenses. "Pakistan is at the crux of the second digital revolution…amid a lot of happening in the domestic economy," he said. Banks, telecom, and technology firms have formed a fantastic collaboration under the first digital revolution in Pakistan.

Omar El Gammal, SVP Global Business Development, Paymob, Egypt, announced that Paymob has entered into Pakistani market to primarily provide online and digital banking services to the SME sector.

The Egyptian digital payment company "would deploy 100,000 merchants over the next two years in Pakistan," he said. Qasif Shahid, Co-founder & CEO of Finja said PWC has placed Pakistan's economy among the top 32 countries around the world by 2030. Other speakers said digital banking may appear challenging.

At the same time, major benefits of banking would be including accelerating the drive for financial inclusion, reduction in banking costs and getting rid of paper-based banking. The one-day conference also featured four-panel discussions including Digital Banks: The Dawn of a New Era?; Digital Lending: Insights from Actual Practice, How is Fintech Disrupting Commerce and Islamic and Digital Finance.

Press Release