Dear banks – It’s time to go ‘digital first’

The Times They Are a-Changin'

The talk of a digital Pakistan is not just talk. We do not say this because there has been some seismic shift in the country because of government policies that have encouraged the use of technology but because the people of Pakistan have adopted tech more with curiosity than with caution. 

Only a few years ago sceptics were abound claiming that Pakistan had no future in the digital payments market because people were too used to cash only transactions. The numbers have since proven this theory wrong. With digitalization at its early stages, the 3G/4G penetration rate in the country stands at more than 51%, which means more than 113 million subscribers are connected – numbers that are supposed to continue to swell. Only a few years ago this number stood at 74 million users which meant just around 35% permeability. This permeability has meant that banking through phone applications has become more common too. 

Pakistan’s digital economy is growing fast and consumers might be catching up with the trend faster than designers and digital departments have the capacity to keep up with. According to the State Bank of Pakistan, FY 2020-21 witnessed 287 million mobile and internet transactions, with a value of PKR 10.5 trillion. Compared to the previous year, this was an increase of 106% and 124% in volume and value of transactions respectively. In this same time-period, the volume of e-commerce transactions also doubled.

 In Pakistan, 27 banks are currently offering internet and mobile banking services. The number of registered users increased almost 7% to 3.8 million in the quarter (Jan-Mar 2020) compared to 3.6 million in the previous quarter ended December 2019. The trend has only grown since then. 

This, of course, is nothing other than credit to the spirit of the Pakistani consumer. In a country where financial security and fraud are rampant, it is expected that people take time to accept financial technology and the digitisation of money. It is hard to let go of the comfort and security of cold, hard, cash when it is all you have known for a very long time. Despite this, the populus has been lining up for financial services. 

It is very common now that if a Foodpanda rider delivering to your home does not have change for a Rs 5000 note, they will simply ask you to send them the money through Easypaisa – a process that takes only a few minutes. Similarly, if you do not have enough cash at a hardware store it is no longer uncommon that the storekeep will show you a bank account number taped to the counter where you can simply transfer the money. 

But how is our financial services industry repaying this faith? For starters, JazzCash and Easypaisay have both found very specific niches. Mobile wallets have somewhat eliminated barriers that traditional commercial banks put up for possible customers and have banked a large segment of the population. Two of the country’s most prominent startups, Sadapay and Nayapay (which have also been featured in this week’s cover story), have been granted Electronic Monetary Institution licences and have found a steady base of customers. 

And then there are the banks. Some of them have dived headfirst into the realm of digital, focusing on their digital portfolio and creating products that are high quality and in high demand. Others, however, have not caught up. This is strange. As our cover story this week posit’s, for anyone opening a bank account now one of the biggest questions will be how good is the app? For any bank that wants a healthy slice of consumer deposits, they will be wise to focus on their digital products and market them aggressively. 

Laziness will  not suffice here, especially from larger and more established banks. Times are changing – and the banks must keep up with them or suffer the consequences. In any case, the Pakistani consumer deserves better for their reliance on digital banking. And Pakistan will only benefit from this change. 

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