SBP Governor Dr. Reza Baqir's 3-Year Term Saw Expansion & Modernization of Financial Services in Pakistan

[Riaz Haq]

Pakistan's chief central banker Dr. Reza Baqir's 3-year term saw a broad expansion and modernization of the nation's financial services industry. The impact of Baqir's policies can be seen in multiple sectors including agriculture, housing, manufacturing, exports, financial digitization and record-high investments in technology startups. Supported by Dr. Baqir's accommodative monetary policy during the COVID19 pandemic, Pakistan poverty headcount, as measured at the lower-middle-income class line of US$3.20 PPP 2011 per day, declined from 37% in FY2020 to 34% in FY2021, according to the World Bank's Pakistan Development Update 2022 released this month. The report said Pakistan's real GDP shrank by 1% in FY20, followed by 5.6% growth in FY21.  Pakistan’s economy created 5.5 million jobs during the past three years –on an average 1.84 million jobs a year, which is far higher than yearly average of creation of new jobs during the 2008-18 decade, according to the Labor Force Survey (LFS) published by the Pakistan Bureau of Statistics (PBS). 

SBP Accomplishments on Dr. Reza Baqir's Watch 1. Source: SBP

State Bank of Pakistan's TERF (Temporary Economic Refinance Facility) helped drive double-digit growth in large scale manufacturing (LSM) and its RDA (Roshan Digital Accounts) simplified overseas Pakistanis' investment and boosted the nation's foreign exchange reserves. 

SBP Accomplishments on Dr. Reza Baqir's Watch 2. Source: SBP

Under Dr. Reza Baqir's leadership, the SBP supported the Rozgar Scheme, Loan Extension and Restructuring Package, and RFCC (Refinance Facility to Counter Covid) to deal with the economic impact of the COVID pandemic. To promote digital payments, the SBP waived all charges for customers using online fund transfer services. Further, to ease on-boarding of new customers to use online banking channels, the SBP waived the requirement of biometric verification to activate internet and mobile banking accounts. 

World Bank Pakistan Update 2022:

A World Bank report released in April 2022 credited the PTI government led by former Prime Minister Imran Khan for timely policy measures, particularly the Ehsaas program, for mitigating the adverse socioeconomic impacts of the COVID-19 pandemic. Here's an excerpt of the report titled Pakistan Development Update 2022: 

"The State Bank of Pakistan (SBP) lowered the policy rate and announced supportive measures for the financial sector to help businesses and the Government expanded the national cash transfer program (Ehsaas) on an emergency basis. These measures contributed to economic growth rebounding to 5.6 percent in FY21.  However, long-standing structural weaknesses of the economy, particularly consumption-led growth, low private investment rates, and weak exports have constrained productivity growth and pose risks to a sustained recovery. Aggregate demand pressures have built up, in part due to previously accommodative fiscal and monetary policies, contributing to double-digit inflation and a sharp rise in the import bill with record-high trade deficits in H1 FY22 (Jul–Dec 2021). These have diminished the real purchasing power of households and weighed on the exchange rate and the country’s limited external buffers." 

Digital Banking:

Digital transactions in Pakistan soared 31.1% to Rs. 88 trillion or $500 Billion in fiscal year 2020-21, according to the nation's top central banker. “If the figure is $500 billion now, you can imagine the pace at which we are digitizing,” said Dr. Baqir Raza, Governor of the State Bank of Pakistan, adding that those transactions showed a year-on-year growth of 30.6% in volume and 31.1% in value. The nation's central bank also reported that the large-value payments segment, known as Real-time Inter-Bank Settlement Mechanism (PRISM),  saw growth of 60% by volume and 12.8% by value to Rs. 444.6 trillion or $2.5 trillion in FY 2020-21. There are several factors driving rapid shift to digital technology, including expanding digital infrastructure, new technologies and the government's efforts to document Pakistan's huge undocumented economy. Grey-listing of Pakistan by the Financial Action Task Force (FATF) has also played a role. 

Internet & Mobile Banking in Pakistan. Source: SBP

Digital Transactions Growth: 

Growth in digital transactions was led by major uptake in mobile banking (29% increase in the number of users and 133.6% and 178.7% hike in volume and value, respectively) and internet banking (32% increase in the number of users and 65.1% and 91.7% up in volume and value, respectively), according to the State Bank of Pakistan. “If the figure is $500 billion now, you can imagine the pace at which we are digitizing,” said Dr. Baqir Raza, the head of Pakistan's central bank.“Therefore, there is a huge potential for enhancing financial inclusion,” he added. 

E-Banking in Pakistan. Source: Dawn

Pakistan's central bankers have taken the plunge into the world of digital payments with their own offering: Raast. It aims to create an instant low-cost payment system that can seamlessly and securely connect government entities, a variety of banks, including microfinance banks (MFBs),  electronic money institutions (EMIs) and State Bank authorized payment service providers (PSPs) like 1Link and NIFT which may choose to take advantage of it.  Currency and coins in circulation account for about 43% of Pakistan's total money supply. The introduction of Raast is part of the government's effort to modernize and document the nation's cash-based informal economy. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion. Digital financial services will also promote e-commerce in Pakistan. 

Raast Digital Payment System. Source: State Bank of Pakistan

Raast Digital Payments:

Raast is a system of digital payment infrastructure. It is essentially a pipe that is intended to connect government and financial institutions with consumers and merchants with each other to process payments instantly at very low cost.  

Raast will be boosted by Pakistan government's decision to use it to pay salaries, pensions and pay welfare recipients under Benazir Income Support and Ehsaas Emergency Cash programs. 

It has been developed in-house by the State Bank of Pakistan  in collaboration with Karandaaz, Bill & Melinda Gates Foundation and supported by the World Bank, the British government and the United Nations.

Private Payment Apps:

Several private payment apps, including EasyPaisa and JazzCash, are already operating in Pakistan. These apps lack interoperability with each other. Each operates in its own silo. Neither of these offer links to financial institutions and government entities. 

There are also several EMIs (Electronic Money institutions) in Pakistan. These include NayaPay, SadaPay and Finja.  EMIs are not banks, but can store deposits. These are not tied to any banks or telcos. They could all use back-end plumbing offered by Raast. 

Payment Service Providers (PSPs) :

1Link and NIFT payment and switch networks, supported by different groups of Pakistani financial institutions, currently process the bulk of credit/debit card and ATM transactions as well as e-payments in Pakistan. State Bank's Raast promises to be cheaper and faster than these networks. Raast also offers processing of e-payments by government entities. 

Raast Future Roadmap:

State Bank of Pakistan  intends to demonstrate Raast's usefulness by first processing government payments to individuals, including government employees and Ehsaas welfare beneficiaries, before expanding it for business applications.  SBP’s plan is to start person-to-person (P2P) payments using just the phone numbers in Q3/2021 and then bring merchants on board with QR codes by Q1/2022. 

Summary:

 Dr. Reza Baqir's 3 years as Pakistan's top central banker saw a broad expansion and modernization of the nation's financial services industry. The impact of Dr. Baqir's policies can been seen in multiple sectors including agriculture, housing, digitization and record-high investments in technology startups. Digital transactions in Pakistan soared 31% to $500 billion in FY 2020-21. Among the factors driving rapid shift to digital technology are: expanding digital infrastructure, new technologies and the government's efforts to document Pakistan's huge undocumented economy. Grey-listing of Pakistan by the Financial Action Task Force (FATF) has also played a role.  The State Bank of Pakistan's launch of Raast digital payment infrastructure represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

Speaking with CNN"s Julia Chatterly, the State Bank of Pakistan Governor Reza Baqar said last year that the Pakistani government is currently studying the idea of issuing central bank digital currency (CBDC). China is showing Pakistan the way with its CBDC. There will be an announcement on the country's CBDC in the next several months. Because CBDC is issued by the central bank, it can help the country fight crime and corruption. Pakistan is also promoting digital payments to enhance financial inclusion and document the economy. Eliminating digital payment fees during the covid pandemic has resulted in 100%-200% jump in such transactions. He said fintech companies and digital payment processors like Stripe are welcome to operate in Pakistan. It has the world's 5th largest population with young demographics offering tremendous growth opportunity.

Here's a brief video of Dr. Reza Baqir's CNN interview with Julia Chatterly:

https://youtu.be/BZ8MAi-_Qb4

https://www.youtube.com/embed/BZ8MAi-_Qb4"; title="YouTube video player" width="560"></iframe>" height="315" src="https://img1.blogblog.com/img/video_object.png" width="560" style="cursor: move; background-color: #b2b2b2;" />

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[Riaz Haq]

The State Bank of Pakistan (SBP) decision of allowing commercial banks to extend cheaper loans for conversion of tube-well operations to solar power for availing the net metering facility, the power distribution companies have started receiving an overwhelming response from such consumers across the country.

https://www.dawn.com/news/1679520

Under the provisions, the tube-well connections seeking net metering on a load up to 25kW will not require permission from the National Electric Power Regulatory Authority (Nepra) for the grant of generation licence, Dawn has learnt.

The facility will not only convert most such connections on solar but also enable consumers to produce and use the electricity on their own besides selling the additional/surplus to the respective Discos. It will also control the technical and commercial losses (power losses either due to theft or technical reasons).

“The tube-well connections can be converted to net-metering but the response was not good due to considerable investment (around Rs2 to 3 million on each connection), lack of loaning facility and awareness. Now the SBP has announced a loaning facility on a six per cent markup for launching such small schemes,” explained Lahore Electric Supply Company’s Market Implementation and Regulatory Affairs Director-General Altaf Qadir while talking to Dawn.

Moreover, the increasing power tariff due to fuel price adjustment and other issues have forced consumers having tube-well connections to contact us in this regard,” he added.

The net metering project had been launched in 2016 countrywide. It allows any domestic, commercial, industrial and other consumers having at least a three-phase meter connection to be part of the power generation system by installing it on his/her premises (house, shop, factory, open spaces, etc). Under the arrangements, such a consumer may sell the additional energy to the respective power distribution company and make stocktaking (calculations) with it at the end of the month.

Since the system allows the consumers to generate electricity from one kilowatt to one megawatt, Nepra issues licences to the applicants residing in the service area jurisdiction of all distribution companies. Before issuance of the licence, the respective companies are supposed to receive, scrutinise and process such applications.

According to Mr Qadir, there are hundreds of thousands of tube-well connections in the service areas of all nine Discos including Lesco, Faisalabad Electric Supply Company (Fesco), Multan Electric Power Company (Mepco), Gujaranwala Electric Power Company (Gepco), Islamabad Electric Supply Company (IESCO), Peshawar Electric Supply Company (Pesco), Tribal Area Electric Supply Company (Tesco), Quetta Electric Supply Company (Qesco), Sukkar Electric Power Company (Sepco) and Hyderabad Electric Supply Company (Hesco).

It may be mentioned that most of such connections exist in a vast rural area of Mepco. The number here ranges between 60,000 to 70,000. Similarly, Lesco has 25,000 to 30,000 connections and most exist in the areas of its Kasur and Okara circles. Qesco, Gepco, Pesco, Hesco, Sepco and other companies also have a large number of such connections.

Answering a question Mr Qadir said Lesco has so far processed as many 6,000 net metering related applications out of which most (equaling to 100MW or so) have been issued generation licence by Nepra.

[Riaz Haq]

The Indian economy is being rewired. The opportunity is immense
And so are the stakes

https://www.economist.com/leaders/2022/05/13/the-indian-economy-is-...

As the country emerges from the pandemic, however, a new pattern of growth is visible. It is unlike anything you have seen before. An indigenous tech effort is key. As the cost of technology has dropped, India has rolled out a national “tech stack”: a set of state-sponsored digital services that link ordinary Indians with an electronic identity, payments and tax systems, and bank accounts. The rapid adoption of these platforms is forcing a vast, inefficient, informal cash economy into the 21st century. It has turbocharged the world’s third-largest startup scene after America’s and China’s.

Alongside that, global trends are creating bigger business clusters. The it-services industry has doubled in size in a decade, helped by the cloud and a worldwide shortage of software workers. Where else can Western firms find half a million new engineers a year? There is a renewable-energy investment spree: India ranks third for solar installations and is pioneering green hydrogen. As firms everywhere reconfigure supply chains to lessen their reliance on China, India’s attractions as a manufacturing location have risen, helped by a $26bn subsidy scheme. Western governments are keen to forge defence and technology links. India has also found a workaround to redistribute more to ordinary folk who vote but rarely see immediate gains from economic reforms: a direct, real-time, digital welfare system that in 36 months has paid $200bn to about 950m people.

[Riaz Haq]

Pakistan to launch digital ID wallet this year
By Daniel Tost - March 8, 2022, 6:19 pm

https://www.globalgovernmentfintech.com/pakistan-to-launch-digital-...


Pakistan’s National Database and Registration Authority (NADRA) is planning to roll out a digital identity wallet later this year in a move that will end the need for physical ID.

NADRA is tasked with digitising all citizen data in the country, which – with more than 220 million citizens – is the fifth biggest in the world in terms of population.

As part of a digital push aimed at generating benefits including greater financial inclusion, the authority is working on a significant evolution of the existing ‘Pak-ID’ smartphone app – which was itself only introduced seven months ago, the authority’s chairman Tariq Malik told Pakistani media Dawn.

Launched last September, Pak-ID allows citizens to apply for a physical ID card remotely by using their Android or iOS device to scan documents and biometric data including their fingerprints and take a picture to verify their identity. When it was introduced, NADRA proclaimed that Pakistan had become ‘the first country in the world to introduce ID technology’. Two weeks later, the authority launched a similar biometric verification service for the banking and payments industry. With five banks initially participating, the service enables customers to open bank accounts and undertake biometric authenticated financial transactions using a mobile-phone camera.

Hailing Pak-ID’s debut, prime minister Imran Khan called the app “a revolutionary step in providing convenience, especially to overseas Pakistanis”. It seems these expats have at least partly driven the decision to launch the digital identity wallet by updating the Pak-ID app. “In a short span, 75,000 overseas Pakistanis have processed their national identity cards from the comfort of their homes by using the app,” Malik told Dawn. “With successful testing on 75,000 overseas Pakistanis, NADRA will go for a digital wallet.”

The wallet would be “a leap forward putting an end to the conventional physical ID” and is to be made available “later this year”, Malik said. “The digital dividends of such technology innovation will yield positive results in contactless banking, financial inclusion, ease of doing business and e-governance initiatives by offering remote identification and e-KYC [know-your-customer procedures].”

[Riaz Haq]

Pakistan to launch digital ID wallet this year
By Daniel Tost - March 8, 2022, 6:19 pm

https://www.globalgovernmentfintech.com/pakistan-to-launch-digital-...

Focus on unregistered citizens
As of January, 96 per cent of Pakistan’s adult (above 18) population, have a Computerised National Identity Card (CNIC), according to Islamabad-headquartered NADRA. Pakistan started rolling out its Smart National Identity Card (SNIC) in 2012 in a programme overseen by NADRA and aimed at replacing CNICs. Currently, both types of cards remain valid.

Recently, NADRA has focused on unregistered individuals (citizens without an identity card) by creating an ‘Inclusive Registration Department’. Its aim is to enhance registration, especially for women, minorities, transgender and unregistered persons. The agency targeted 80 districts with a gender gap of more than 10 per cent in registration figures. Eighteen female-only NADRA centres were opened to overcome socio-cultural barriers of women cautious about dealing with male staff. Additionally, 262 mobile registration vans and 80 ‘ManPack’ mobile units have been deployed countrywide for people living in remote areas or senior citizens who may struggle to travel. In total there are more than 700 registration centres operating countrywide and in all 154 districts of Pakistan. According to a NADRA press notice issued last month, the gender gap has been reduced by 40 per cent in targeted districts.

NADRA says it holds the largest biometric database of citizens in the world. The security of such a stock of citizen data is clearly important but the authority states that its SNIC is equipped with 36 security features, using a layering system to safeguard sensitive information.

Principles for interoperable ID
Pakistan’s move comes against the international backdrop of high-level principles to support the development of mutually recognised and interoperable digital ID systems and infrastructure having been drafted by a working group on digital identity comprising representatives from eight countries.

The 11 principles call for digital ID infrastructure to be open; transparent; reusable; user-centric; inclusive and accessible; multilingual; secure and private; technologically neutral and compatible with data portability; administratively simple; able to preserve information; and effective and efficient.

In its report, the Digital Identity Working Group (DIWG) said its goal is to enhance trade agreements and to ‘facilitate economic recovery from Covid-19, for example to support the opening of domestic and international borders’.

Established in 2020, DIWG comprises Australia, Canada, Finland, Israel, New Zealand, Singapore, the Netherlands and the UK. It is chaired by Australia’s Digital Transformation Agency.

[Riaz Haq]

#Pakistan’s new gov't faces a politically fraught decision on whether to remove a costly #fuel subsidy that helps #inflation-buffeted households but also has led the #IMF to suspend loans. The subsidy costs the government $600 million a month. https://www.wsj.com/articles/pakistan-faces-painful-choice-as-infla... via @WSJ

Prime Minister Shehbaz Sharif, who leads a coalition that took power in April, must decide whether to take the politically risky step of removing a fuel subsidy that was put in place by the previous government after the Ukraine war erupted in February. The subsidy costs the government $600 million a month.

The International Monetary Fund, which suspended the country’s lending program over the fuel subsidy, began talks Wednesday with Mr. Sharif’s government on restarting the loans.

Across the developing world, debt and fiscal budgets were already stretched by the Covid-19 pandemic before the Ukraine war led to a steep rise in energy and food import costs. An analysis by J.P. Morgan found that Pakistan is one of the most vulnerable developing countries to rising commodity prices, along with Egypt and Sri Lanka, where an economic crisis has led to power outages and shortages of basic goods.

So far, the government has kept the fuel subsidy, saying they can’t impose more hardship on the population. The price of flour jumped 42% in one week, according to government data released May 12. Inflation is the issue voters care most about, according to surveys. A poll by Gallup Pakistan in April found that of those who approved of the removal that month of former Prime Minister Imran Khan, 71% cited his government’s record on inflation as the reason.

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To shore up foreign-exchange reserves, the government is banking on Saudi Arabia and China providing billions of dollars in more loans, Pakistani officials say, in addition to the IMF.

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Saad Siddiqui, managing director for emerging-markets strategy at J.P. Morgan, said that while governments might think they are shielding their populations against price shocks with subsidies, delaying a return to prudent economic policies could result in greater economic hardship, as a delayed adjustment could potentially be even sharper.

“You have to ask yourself the question: how is the adjustment going to be made?” Mr. Siddiqui said. “Is it going to be made in a controlled way, by increasing fuel prices, which will reduce demand and therefore your import bill and revive the IMF program. Or will it be imposed by a weaker currency, which is going to impact the prices of everything and will be potentially much more disorderly.”

[Riaz Haq]

ZoodPay, a Switzerland-headquartered buy now pay later platform that operates in different Middle Eastern and Central Asian markets has acquired Pakistani consumer lending fintech Tez, it announced in a statement today. The financial details of transaction were not disclosed but the statement noted that it is the first M&A deal in Pakistan’s young fintech space.

https://www.menabytes.com/zoodpay-tez/

Founded in 2016 by Naureen Hyat and Humza Hussain, Tez offers nano-loans to unbanked and underbanked population across Pakistan through its digital platform. According to its website, it offers personal loans of up to PKR 10,000 ($50) that the users can pay back in installments. Tez has a fixed one-time fee for these loans, ranging between 10 to 20 percent depending on the loan amount and customer profile.

Backed by Accion, Flourish Ventures (Omidyar Network), Planet N, the startup had become the first licensed Non-Bank Financial Company (NBFC) in Pakistan in 2018, it said in a statement. It had raised over $1 million to date in financing. The Karachi-headquartered fintech had also won $100,000 in Visa Everywhere Initiative for Women competition, in 2019.

Commenting on the acqusition, co-founders of Tez said, “We started Tez with an ambition to make access to finance for the masses as easy as access to a mobile phone. We are humbled and thrilled by the confidence shown in our business model by larger regional players and look forward to the next level of development for Tez where our learnings in crafting the digital lending journey and managing risk can serve as a foundation for delivering consumer-centric lending solutions at scale, while creating credit histories for the masses.”

ZoodPay which currently operates in Joran, Iraq, Lebanon, Uzbekistan, and Kazakhstan has raised close to $50 million from Zain Ventures and Sturgeon Capital. With the acquisition of Tez, ZoodPay would expand its offerings to Pakistan.

“The company’s lending strategy is fortified by three integral elements of digital infrastructure including, (i) Acquisition of consumers and merchants via its diverse distribution channels including its own e-commerce marketplace and network of retailers and partners, (ii) Deriving rich transactional data from its internal universe of fintech, e-commerce marketplace and logistics, and (iii) Leveraging its proprietary credit scoring algorithms to assess credit risk and extend credit to both consumers and merchants,” stated the fintech in a statement.

It is not immediately clear if ZoodPay plans to launch its BNPL product in Pakistan.

Michael Khoi, CEO of ZoodPay said, “Pakistan is a market brimming with potential given the number of people seeking access to credit facilities. We’re confident that by combining ZoodPay’s unique ecosystem and experience operating in frontier markets with Tez’s local know-how, strong team and ecosystem partnerships, we’ll be able to positively impact the life of Pakistani people and empower them by giving them access to easy, affordable and reliable digital financial services.”

Nadeem Hussain, Chairman of Tez said, “The Pakistani startup ecosystem has hit its inflection point. In addition to sizable fundraises, acquisitions of local players by international players are starting to take place. This further validates the global value Pakistani startups are creating. Planet N was one of the first in the market to invest in startups. We are now seeing the first-mover advantage.”

[Riaz Haq]

SBP
@StateBank_Pak
#SBP to launch #EasyData, an interactive data portal that allows easy access to a wide range of economic data sets. Watch live on 01 June, 2022 at 4pm @
https://www.facebook.com/StateBankPakistan

https://twitter.com/StateBank_Pak/status/1531632755146203136?s=20&a...

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‘Good quality data critical for Pakistan’s sound policy making’

https://www.thenews.com.pk/amp/777020-good-quality-data-critical-fo...


Dr Shamshad, who is also the Chairperson of Karandaaz Pakistan (KRN), talking about the significance of credible data for policymakers, stated that the KRN working with the government, regulator and all stakeholders to realise the vision of the National Financial Inclusion Strategy and meet the targets of enhancing financial inclusion across gender and geography. “Timely and reliable statistics and data portal will play a critical role in the design of futuristic policies and monitoring of ground progress. Devising strategies can lead the country towards sustained financial progress”, she observed.

Dr Shamshad said the policymakers, development partners, corporates, researchers and academia, and entrepreneurs, all have a need for statistics on the financial sector for identifying trends, learning from successes, ascertaining gaps, and mapping a necessary course of action in order to make interventions that can reap the best dividends for the economy. “Informed decisions backed by metrics, facts, and figures are the best decisions so a sophisticated data portal, where information is available for sound decision making, is critical”, she added.

Speaking on the occasion, the SBP Deputy Governor Sima Kamil said that as a regulator of the financial sector of any country, the central bank’s reliance on credible data for making policies that are likely to trigger growth and progress are fundamental. Although there is a lot of data available out there, there is a definite need for a consolidated source that is perceived as unbiased, credible, and pro-growth, she observed.

She hoped that this data portal that has been developed by Karandaaz will serve as a credible resource for government agencies, the financial sector, industry associations, and development agencies to gather invaluable insights and evidence on the most important indicators for planning and policymaking.

Head of Development of UK’s Foreign, Commonwealth, and Development Office (FCDO) Annabel Gerry in Pakistan in her message stated that the good, reliable and easy-to-understand data was essential for measuring impact and formulation of evidence based policies.

CEO Karandaaz Ali Sarfraz, speaking on the occasion, said that the importance of data to make informed decision making identify effective public and private actions, set goals and targets, monitor progress, and evaluate impacts cannot be stressed enough. “We have endeavored that Karandaaz data portal offers a host of macro, financial and sectoral statistics in a user-friendly interface that can also be customised by the users”, he added.

The Karandaaz Pakistan launched an online data portal with aggregated data on financial services and selected socio-economic indicators for the country. The data on the portal covers segments such as demographics, national economic data, agriculture finance, financial access, and behaviors of individuals, banking infrastructure and transactions, micro, agri, and SME financing, housing finance, non-bank financial institutions (NBFIs), mobile money, and telecommunications statistics.

The portal is interactive, intuitive, visually appealing and easy to navigate. It also offers the capability to generate bespoke data dashboards and has filtering and layering functionality.

[Riaz Haq]

Pakistani official praises innovation as UAE-based bank opens country’s first ‘digital lifestyle branch’

https://www.arabnews.pk/node/2315156/pakistan


Launched by Bank Alfalah, the branch seeks to provide unique digital experience and meet customers’ financial needs

Among other facilities, the branch will also provide biometrically secured digital lockers that will remain available 24/7


The top central bank official in Pakistan has praised the country’s financial sector for making technological upgrades after a private commercial bank inaugurated its first “digital lifestyle branch” in the southern Karachi port city to improve the overall customer experience and reduce the brick-and-mortar footprint earlier this week.

Launched by Bank Alfalah, a Pakistani subsidiary of a company based in the United Arab Emirates (UAE), the initiative seeks to provide a unique digital experience and meet the lifestyle and financial needs of customers.

According to the bank, the state-of-the-art branch will offer a 24/7 digital self-service banking area comprising a virtual self-service machine (VSM), biometrically secured digital lockers, cash-deposit machines (CDMs), auto-teller machines (ATMs), and tech-gadget machines along with round-the-clock Wi-Fi access, among other facilities.

The branch was launched in Karachi by Pakistan’s top central bank official on June 1.

“Governor State Bank of Pakistan (SBP) Mr. Jameel Ahmad has said that Pakistan’s banking industry was investing in technological upgrades to facilitate its customers and improve their overall banking experience,” said a statement circulated by the bank.

“He was optimistic that exciting projects like Bank Alfalah’s first digital lifestyle branch will unlock new opportunities, making banking easier to access and leading to a more financially inclusive and digitally empowered nation.”

According to the statement, Ahmad said that digitalization would entail a reduction in the brick-and-mortar footprint of the banking industry globally, adding that Pakistan was no exception.

“The governor of SBP was confident that the successful implementation of this model will show the way forward to the new entrants of the banking industry in Pakistan. In his concluding remarks, he stressed the need for a proactive approach by the banking industry in tailoring customers’ products and services based on their specific preferences and changing behavior,” it added.

The top SBP official further maintained that customers’ fair treatment and protection should be a top priority of banks.

The virtual self-service machine will allow customers to instantly open accounts, receive debit cards swiftly, and get statements printed by a video teller immediately after a transaction, the bank said.

The facility will also provide “easy-to-use and biometrically secured digital lockers” which will be accessible to customers at any time of the day or night without any staff interaction.

Bank Alfalah witnessed an exponential growth of over 95 percent in digital banking transactions with an annualized volume of over Rs3.5 trillion. The bank’s record further reveals that 77 percent of new-to-bank (NTB) account holders prefer digital transactions over conventional methods.

Over 75 percent of the bank’s transactions are now online, and 70 percent of bank accounts are opened via digital channels.