Tajikistan's Alif Bank plans entry into Pakistani market

In Punjab's rural south, landlords of nobility stature and ones that are moneyed are received by bank managers at their respective branches.

Donning boski suits with a coterie of servants around, these landlords are escorted to the manager's office instead of queuing up at the branches. Drinks are served and the manager treats them with respect deserving of their nobility, and money.

Their paperwork is filled on priority, their loans approved in an instant and the manager will favour them in matters outside the bank as well. Building a personal relationship with such customers helps the manager get deposits from these landowners who are wealthier than many of the other bank customers.

Outside the manager's office, the average farmer stands in line to deposit his cash and his loans are most likely not going to be approved because of an uncertain income. Outside the bank, a farmer would not even be allowed entry into the bank because of how he looks.

Barring the landlord, the other two types of customers are what keeps the policymakers at the central bank up at nights. One of these is the underbanked which gets to have an account at the bank but has limited access to financial services. The other is unbanked, which has no account at all for one reason or the other. So if you are a central bank that has to ensure that constraints for both these types of customers are removed, what do you do?

In 2022, the answer to everything seems to be technology. In the financial sector too, financial technology companies have entered the foray to solve problems related to banking the unbanked. In Pakistan, the fintech companies are only starting.

In January this year, the State Bank of Pakistan introduced the Digital Banks Regulatory Framework to solve the problem of financial inclusion which is broadly caused by the unbanked and the underbanked segments of the population.

Following the regulations, the SBP received twenty applications for a digital banking licence.

The applicants include domestic commercial banks, microfinance banks, electronic money institutions and fintech companies, as well as foreign financial institutions already operating in the digital banking space in other markets.

One of these applicants is Tajikistan-based financial technology company Alif Bank which operates as a digital bank in the home country and has a presence in Uzbekistan where it offers digital financial services. It now seeks entry into the Pakistani market and aspires to get a digital banking licence. Alif is in-fact the only fintech company to come out openly with what it plans to do under the newly introduced digital banks regulations. Alif's plans for the Pakistani market also give a glimpse into the good and bad for digital banks and what the Pakistani market holds for not only Alif but rest of the aspirants as well.

Alif Bank was founded in 2014 by Abdullo Kurbanov, Firdavs Mirzoev and Zuhursho Rehmatulloev as a microcredit organisation in 2014.