Digital Banks targeting Pakistan’s unbanked population.
KARACHI: Despite global investors’ general caution in Pakistan, digital banks are quietly moving forward with plans to reach the country’s vast unbanked population.
Pakistan’s central bank approved the establishment of full-fledged digital banks by five global and local financial institutions in January 2023. With over 220 million people, Pakistan has the world’s third largest unbanked adult population, with approximately 100 million adults lacking a bank account.
Sharmeen Niaz, the Head of Mashreq Global Network-Pakistan in the United Arab Emirates (UAE), highlighted the significant potential for digital banking in Pakistan: “I believe Pakistan’s banking sector has enormous potential and is on the verge of massive transformation.” The shift to digital banking, fueled by technology, data, and analytics, is transforming Pakistan’s banking industry into an always-on one, providing customers with on-demand services and convenience 24 hours a day, seven days a week.”
Pakistan is transitioning to a mobile-first economy, with a smartphone penetration rate of 82%. Furthermore, according to the UN’s Global Innovation Index, the country has been identified as an appealing global innovation hub. The favourable regulatory environment, which includes digital bank licencing, digital customer onboarding, and RAAST, among other things, encourages innovation.
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Mashreq Bank is one of five financial institutions to be granted a no-objection certificate (NOC) by the State Bank of Pakistan (SBP) for the establishment of a digital bank. Niaz emphasised that the bank is investing in Pakistan to help the economy, and that the NOC for digital banking will contribute to the country’s banking sector’s transformation. Easy Paisa DB, Hugo Bank, KT Bank, and Raqami are the other four banks that have received NOCs.
“With Mashreq Global Network (MGN), Mashreq has been quietly investing in the country, channelling efforts to help bolster the economy…
“By acquiring NOC for digital banking, we will be contributing to Pakistan’s banking sector and its transformation,” Niaz added.
Digital banking, in addition to providing convenience for customers, enables a distributed workforce model, as demonstrated by MGN’s 100% work-from-anywhere model. “At the moment, all of our employees are working from anywhere,” she explained. The bank employs over 1,800 people in India, Pakistan, and Egypt, with over 250 professionals based in Pakistan. The bank’s workforce is made up of 40% women.
“With over 61 million internet users and a robust payment and security infrastructure already in place, operating digitally in the country is simple.” This, combined with our robust technology infrastructure and distributed workforce module, has enabled us to provide flexibility in working and collaborating with our global teams from anywhere,” she explained.
