Digital banking for a digital Pakistan
JS Bank's Group Head & Chief Digital Officer explains why digital banking is essential for Pakistan.
How to grow this market and how they are attracting millennials to jump directly onto this platform.
Q: Why is digital banking essential for Pakistan?
Noman Azhar: Offering the ability to access, use and move money via mobile devices, digital banking apps lets you as a user make financial decisions and transactions on the go. There's no need to sit in front of a computer to make online payments or come into a branch. Digital banking is the answer to many
problems that we face today as a customer as well as state. While digital banking ensures easy access of financial needs to customers it also helps in digitizing the economy which ultimately is beneficial for the state.
Q: What makes a digital bank different to traditional bank? Can anyone offer these services?
Noman Azhar: So, the first and foremost difference is the fact that traditional banks work on a brick & mortar model whereby they are dependent on a branch infrastructure to offer services to their customers. On the other hand, in digital or neobanks, the journey starts with the offering of full-scope innovative digital banking services at the doorstep to the customers and without a need of visiting any physical location. Many players are offering partial digital banking services in the market under either branchless banking license or EMI license. What sets Zindigi apart is that it aspires to be the first fullservice digital bank of Pakistan. Advancing to a more technologically sophisticated way of doing things, it goes without saying that the benefits make life easier for the customer.
Q: Why is SBP issuing digital licenses- what will these specifically allow banks/other institutions to do which they cannot do otherwise?
Noman Azhar: So, the purpose of License is to allow new players and existing players to build a new entity which works as only a digital bank in Pakistan without having any dependency on either a commercial or microfinance bank to run its operations which is mainly the case currently. Also without having a digital banking license most of the players can only offer a smaller/limited value accounts to their customers along with limited set of services. With digital banking license, their will be no limitation on the type of account or services that a bank can offer including lending, corporate, treasury services etc. However, it will surely depend upon the type of license you apply and receive. At minimum, a digital bank will be allowed to provide all kind of services of deposit mobilization and transactional banking without any limitations to its customers.
Q: Where are the key growth areas in digital banking?
Noman Azhar: The sky is the limit when it comes to digital banking. The banking industry is undergoing massive digital disruption, with online deposits, mobile apps, and e-bill payments fundamentally becoming the norm. In Pakistan, there are many areas where digital banks can grow quickly. We are a population of 220 Mn people and only around 12 Mn account holders with full banking access. For me though personally, savings & lending remains the key growth for Digital Banks in Pakistan.
Q: What are the big issues in digital banking that Pakistani banks are facing?
Noman Azhar: I will say our challenges are common to any industry and organization which are trying to embrace change. Technology intervention is not only a change at operational level for processes it requires a major change in the mindset of resources which is not a very easy task to achieve. Change management at its best is required to transform Human Resource of a decade or more old organization from a purely paper-based risk averse model into a pro tech aggressively changing organization.