In case you missed it, a great battle has been underway in Pakistan’s banking sector for nearly three years now. It started in March 2022, when the State Bank of Pakistan (SBP) announced it had created a digital banking framework.
The announcement had the entire banking sector on its toes. This was a chance to be an early mover in the future of banking. Everything about digital payments and EMIs in Pakistan had shown commercial banks that digital was the way to go in the future. And what is the harm if you can have a full-fledged bank without incurring the massive capital cost of opening branches?
Everyone scrambled to put together propositions to the central bank. They received as many as 20 applications from leading banks such as HBL, UBL, Alfalah and JS, microfinance banks, domestic fintech companies, foreign fintech companies and large business groups that formed a consortium with partners that know banking.
From this initial glut of applicants, the SBP began a weeding process. It took them nine months, but in January 2023 they whittled this down to five candidates. The state bank granted NOCs to five institutions — namely Easypaisa, Hugo Bank, KT Bank, Mashreq Bank, and Raqami Bank — to set up digital banks. It would take another nine months, but in September 2023, these institutions were subsequently granted in-principle approval. Up until this place the chosen-five were neck and neck.
Now, nearly two whole years after the shortlisting, a frontrunner has emerged. Mashreq Bank has been granted the first restricted license to begin pilot operations in the country this past week. This means that within an enclosed group of people, the bank can begin its operations with the SBP closely observing how it goes.
Mashreq Bank has always been a strong contender. While it is not a name as recognisable as Easypaisa, probably the most household name in the entire list, it has some strong backing. It is one of the largest conventional banks in the Middle East and also has a brick-and-mortar presence in Pakistan. Mashreq Bank’s digital bank offerings in the Middle East include specialised banking solutions for startups and SMEs, and calls itself the “Best Digital Bank” in the MiddleEast. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
