Former SAPM on Digital Pakistan Tania Aidrus is launching a digital bank with the help of foreign venture capital company Kleiner Perkins, and she may be one of the top contenders for an early digital banking licence from the State Bank of Pakistan (SBP).
Tania’s new startup, D-Bank, has also reportedly received financing from Sequoia Capital, a legendary venture capital firm that will be making its first investment in Pakistan in D-Bank. Tania said in a recent tweet that Nubank, a Brazilian bank, was also investing in her fintech firm in the seed round, without revealing that her new venture is a digital bank.
Tania is a Pakistani-American IT powerhouse with an MBA from MIT Sloan School of Management and a bachelor’s degree from Brandeis University in the United States. She was the Chief of Staff and Head of Strategic Initiatives for Google’s Next Billion Users unit. Tania’s big break came in 2019 when the PTI administration named her the head of the Digital Pakistan Initiative (DPI).
Tania popularised the slogan ‘Roti, Kapra, Makan aur Internet’ as the head of the Digital Pakistan Initiative. She was appointed as the Special Assistant to the Prime Minister (SAPM) on Digital Pakistan in February 2020, a position she maintained until July 2020, when she resigned due to dual citizenship.
Tania, however, did not voluntarily quit her post, according to a previous report by Profit, and was requested to depart immediately after Jahangir Tareen was expelled from the party owing to the sugar crisis. Tania’s meeting with Prime Minister Imran Khan in 2019 was planned by Jahangir Tareen, and the discussion resulted in the Prime Minister’s vision for Digital Pakistan.
When it was revealed that Tania was on the board of the Digital Pakistan Foundation, numerous groups claimed a conflict of interest (DPF). The DPF was established to supplement the Prime Minister’s Office’s Digital Pakistan Initiative (DPI), which will be led by Tania Aidrus. Tania was removed from her SAPM post when she was unable to convince the PM about the role and circumstances under which the DPF was created, according to an ARY report.
Tania co-founded Rayn Group, a technology advising and investment firm, in December 2020, which will be the parent company of the digital bank she hopes to build. Former Google, global payments giant Stripe, and cryptocurrency trading platform Coinbase employees are among the angel investors and advisors of D-Bank, which was co-founded by Tania Aidrus and Khurram Jamali, both of whom worked at Google and later joined the Digital Pakistan Initiative.
Tania has been a regular on the State Bank’s digital bank panels since the requirements for digital banks were revealed, even though she is a candidate for a digital banking licence. Surprisingly, neither Tania nor the SBP mentions that she is seeking a licence for her digital bank in any of the panels. The inner workings and lobbying that go on in Pakistan’s tech sector are well-known, and Ms Aidrus is in a position where she doesn’t need to use underhanded tactics to get a foot in the door at the SBP because she already has a relationship with the central bank thanks to her time on the federal cabinet.
D-Bank investment Kleiner Perkins’ General Partner Mamoon Hamid was one of the speakers at a recent panel conducted by Tania and attended by Governor Reza Baqir. According to the central bank, 5,000 people registered for the event, titled “The Promise of Digital Banks,” which was a webcast online.
Tania used the chance to question Omer Ismail, the incoming CEO of NewCo, a US-based fintech startup sponsored by Walmart, what kind of companies should acquire the digital banking licence during the panel, which she chaired. Omer responded by saying that he would be overstepping his bounds if he indicated who should be granted a licence and that the decision was entirely up to the State Bank of Pakistan.
Critics worry that without adequate disclosures, the central bank may appear to be operating as a biassed regulator, favouring one candidate over another for a digital banking licence.
The SBP is required to give five digital bank licences this year, and while each application must be evaluated on a competitive basis, the governor’s participation in a panel with only one of the applicants is being interpreted as tacit support for that applicant.
So, if a digital bank receives preferential consideration and thereby receives a licence ahead of others, that bank will have an unfair first-mover advantage. “Because Tania is an aspirant, putting her on a panel sends the market the message that she is stronger, which is unworthy,” a source said.
“The SBP should have invited all of the fintech firms and aspirants to the event.” Another person commented, “Tania or anyone else on the panel looks like a pitch session for that specific candidate only.”
Tania’s participation on SBP’s panels drew no response from the central bank.
The central bank has also been chastised for allowing incumbent brick-and-mortar banks to compete for the digital banking licence. These incumbents’ full banking licence does not prevent them from expanding the breadth of digital banking services.
According to a fintech expert, having incumbent banks compete for a digital banking licence alongside fintech startups limits the area available to fintech companies from the start, especially since the digital banking licence will not be granted to all applicants.
HBL, Bank Alfalah, JS Bank, South African digital retail bank TymeBank, JazzCash, TAG, and D-Bank are among the names that have emerged as potential licensees. When Profit contacted the central bank, they refused to reveal the number of applications received for the digital banking licence this year, nor did they confirm who the applicants were.
The State Bank of Pakistan proposed a regulatory framework for digital banks in January 2022, under which it may grant two types of licences for conventional and Islamic banking: Digital Retail Bank (DRB) and Digital Full Bank (DFB).
DRBs will predominantly serve retail consumers, but DFBs can serve both retail and commercial and corporate clients.
The first step in getting a digital banking licence is to get a no-objection certificate from the central bank, which is followed by an in-principle approval. The qualified applicants will then seek approval for a pilot launch, which will be followed by a commercial launch, pending SBP approval.