On January 3, 2022, the SBP published “Licensing and Regulatory Framework for Digital Banks.” SBP hosted an online event called “Digital Banks – A New Era in Banking” to raise awareness of this significant regulatory breakthrough. The webinar’s main goal was to raise awareness of the future generation of banks, known as digital banks, and the opportunities they present for financial inclusion in the country. It was also intended to provide information on the digital banking system to market players and potential 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 for digital financial services to become widespread in the banking industry, as well as their importance in terms of inclusion and innovation. He stressed that one of the primary priorities of the State Bank of Pakistan was to encourage inclusivity, innovation, and modernization of Pakistan’s financial system while discussing the potential of digital banks. He underscored the SBP’s expectations of digital banks in terms of encouraging financial inclusion by offering inexpensive financial services to underprivileged and unserved parts of society, as well as developing innovative customer experiences.
Dr. Baqir discussed how the digitalization of financial services is accelerating and redefining the way people and companies finance. He said Pakistan’s digital financial services journey began in the early 2000s, and since then, a number of enabling regulatory initiatives have been implemented, 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 step forward in the digital transformation of our banking services business.
Prominent representatives of the banking community, fintechs, the business community, and government organisations attended the event. Mr. Arshad Mehmood Bhatti, Executive Director, Banking Policy and Regulation Group, announced to the audience during his welcome address that the SBP will grant up to five (05) licences to digital banks, with the goal of bringing digital banks with a strong value proposition, robust technological infrastructure, sufficient financial strength, technical expertise, and an effective risk management culture. He reassured market participants and potential investors that his staff will be available to offer any assistance needed.
Mr. Nadeem Hussain, founder of Planet-N, moderated a panel discussion with Mr. Muhammad Aurangzeb, Chairman Pakistan Banks’ Association, Ms. Tania Aidrus, former Executive Director 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 asked a series of questions that covered not only the true potential of digital banks in terms of meeting the financial requirements of the average person, but also provided further insight into 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 problems that digital banks face across the world.The panellists agreed that digital banks will provide a speedier, cheaper, and more efficient option for serving the financial needs of society’s unserved and neglected groups, and praised SBP’s groundbreaking effort. Digital banks, according to the panel, will become an important element of the financial ecosystem, boosting market efficiency, offering access to a larger range of financial services, and furthering the broader mission of financial inclusion.