In an effort to modernize Pakistan’s economy and foster financial inclusion, the State Bank of Pakistan (SBP) has launched a retail digital bank license. Pakistan’s paper-based economy and manual processes have posed challenges in embracing digitalization and hindered efficient customer interactions.
The SBP’s threefold objective with the new license is to significantly increase financial inclusion, as the commercial and microfinance industry currently has only 11 million active loan customers in a population of 220 million. Secondly, the SBP aims to revolutionize customer journeys and engagement with the financial industry, considering that out of over 50 million mobile wallets, less than 10 percent are active.
By granting digital bank licenses, the SBP intends to set a precedent for traditional banks to follow suit, similar to the impact of Easypaisa in domestic transfers, utility bill payments, and branchless banking. Digital banks leveraging data-driven, paperless processes powered by artificial intelligence, big data, and blockchain are expected to lead the way towards digital transformation.
However, storing vast amounts of data for digital banks presents a challenge. Those starting from scratch without legacy tech software can adopt advanced data warehousing solutions. For institutions with legacy systems, creating data warehouses or data lakes is a complex task.
Global trends show a preference for cloud computing over physical on-premises data centers in the digital banking sector. Cloud computing offers advantages such as customer-focused software improvements, reduced latency, and scalability for transaction volumes. Moreover, top-tier cloud services provide superior cyber security and recovery plans compared to traditional banks.
Recognizing the significance of cloud computing, the SBP allows banks to store all customer information in an in-country cloud computing service, ensuring compliance with customer data protection regulations. Recently, an international cloud service provider collaborated with a local group to offer an in-country cloud service, marking a significant step in Pakistan’s digital transformation journey.
The SBP’s initiative aims to propel Pakistan into the digital era, enhance financial services, and streamline customer experiences, ultimately benefiting the nation’s economy. Stay updated on Pakistan’s digital revolution and financial inclusion with the State Bank of Pakistan’s retail digital bank licenses.
