We are living in a digital world where internet has become an indispensable need for many individuals. However, there’s still a dire need of digital services to be introduced in the country’s banking sector. To address the issue, the State Bank of Pakistan (SBP) is reportedly working to launch a separate category of banking services that they are referring to as Digital Banks.
If the State Bank of Pakistan succeeds in introducing digital banks in Pakistan, banks will soon be allowed to operate through internet only. To be more specific, they’ll be allowed to create traction among the customers to use their services through internet- without having to pay visit to any brick and mortar branches. Also, customers will be allowed to perform all sorts of financial transactions while staying online via mobile apps or websites.
The Regulatory Framework that SBP has yet to draft will certainly include following areas among others:
- A specific criteria to establish Digital Banks.
- Minimum capital required to establish a Digital Bank
- Customer on-boarding criteria along with digitization support for an Omni Channel Banking Paradigm
“Digital bank incorporates new and developing technologies throughout a financial services entity, in concert with associated changes in internal and external relationships, to provide enhanced customer services and experiences effectively and efficiently”, the SBP director said.
As the world moves towards implementing modern technology in every walk of life, the demand for conventional banking services continues to fall, since people need more choices, instant availability and direct access to ready-to-use services, said Syed Irfan Ali, Executive Director of SBP.
Pakistan is finally making progress in various sectors but there’s still a long way to go for banks to introduce modern banking services that can shape the digital future.
“SBP is working on development of a concept paper on Digital Banks. This concept paper would include the international experiences of Digital Banks, regulatory framework available, best international practices etc”, told us Syed Irfan Ali.
It is important to note that a huge number of banking customers in Pakistan opt to use mobile banking services especially after the launch of branchless banking. Also, the numbers of users is currently on the rise as the adoption of new services and availability of 3G and 4G services in different cities of the country.
For those who are not familiar, the concept of digital banking in Pakistan has already been introduced in the country. United Bank Limited (UBL) and Standard Chartered Bank are already operating their digital branches separately in Karachi. The financial institutions also plan to add more digital branches in the future.
In any case, this would be the first initiative taken by SBP to promote digital banking services in the country. We hope that the plan devised by SBP will do wonders in proliferation of technology throughout the banking sector and will help our banking industry experience further growth.