The State Bank encourages banks to increase the adoption of online banking services by collaborating with technology companies.

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Managing Director, Syed Irfan Ali of Deposit Protection Corporation, a department of the State Bank of Pakistan, attended and spoke at the 20th “Future Banking Summit 2022”, hosted by Total Communications at a local hotel in Karachi on 2022-09-15 (yesterday). At the summit, Ali explained the importance of digitizing banking operations and that banks should provide better and faster services to their users. Cash transactions should be reduced in order to promote the security and progress of society. Syed Irfan Ali said at the conference that;

“We have the slogan that we are against cash transactions. However, our actions speak otherwise. The world changes. It’s going digital. If we don’t embrace change, we will stay where we are today,”

Ali mentioned the ways that Iran and India have adopted for their banking digitalization and said Pakistan may need to take similar steps to succeed in its transformation. He said;

“Economic sanctions against Iran and India’s drive to control corruption and eradicate the black economy have turned them into digital economies. Pakistan has two options to accelerate the transformation to a digital economy; or do what India did (suddenly changed currency, remained in pain and took about two years to achieve success). Or we should accelerate evolution through collaboration,”

He repeatedly encouraged stakeholders and regulators (the central bank) to increase collaborations in order to achieve the goal of transforming Pakistan into a digital economy which Pakistan should get anyway so sooner that would happen, the better the results.

Additionally, Ali also mentioned the importance of being removed from the bad books of the Financial Action Task Force (FATF) and showed that cherished Pakistan is not on the gray list as FATF has decided to transform Pakistan. Coming out of the gray list is very important for any country to succeed and become a developed country and especially Pakistan which has a history of debt and export potential through manufacturing or ports.

“Fortunately, we are not blacklisted. We have just transformed and hopefully we will be de-greylisted (whitelisted) very soon,” he said.

He gave examples of two government owned entities that provide the best online transactional services that may prove to be a source of inspiration for other private banks. First, he mentioned Raast, which is a service owned by the State Bank that is likely the fasted digital payment method. Second, he mentioned Roshan Digital Account (RDA), which is the fastest money transfer service for Pakistanis abroad and is owned by Standard Chartered of Pakistan. Pakistani private banks should be motivated by these institutes to do their best

“Inflows of overseas Pakistanis via RDA topped the $5 billion mark last week. Non-resident Pakistanis transfer an average of $250 million per month through their digital accounts, ATM availability (duration average for a machine to remain operational) has increased to 99.6% currently, compared to 94% around 10 years ago”, he said.

Naveed Ali Baig the CEO of Innovative was also part of the summit and he also mentioned that the growth of cash as a transactional medium has increased over the past few years and the situation will get worse rather than better if Pakistani banks do not take immediate action. Baig said that;

“The use of cash has further increased in Pakistan over the past year. Financial transactions conducted in cash last year were higher than those conducted (on average) over the past five years. Lack of skilled human resources is a major barrier to rapid digitalization globally, including in Pakistan”

Mr Mudassar Aqil the CEO of Telenor Microfinance Bank, one of the largest digital banking chains with millions of users in Pakistan, said cash is hurting the economy. This is happening because the digital services offered in Pakistan now cost more than the physical cash transaction, so people are opting for the cash option. Digital bakery companies should think of cheaper business models to standardize digital banking in Pakistan.

Abdulkader AbousalehRegional director, Middle East and Africa Cisco AppDynamics, said that there is potential for the growth of digital banking in Pakistan as the young population is tech-savvy and can easily adapt to any technology, but they will demand digital financial solutions. To be precise, he said this;

“Anything that can be delivered digitally should be delivered digitally.”

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