The Managing Director of Deposit Protection Corporation, a division of the State Bank of Pakistan, Syed Irfan Ali, attended and spoke at the 20th annual Future Banking Summit 2022, hosted by Total Communications in a Karachi hotel. At the Summit, Ali discussed the significance of the digitalization of banking and the need for banks to provide enhanced and faster services to their customers. To promote the safety and development of society, it is necessary to eliminate cash transactions. Syed Irfan Ali stated at the conference:
“We proclaim that we oppose cash transactions. However, our actions demonstrate the contrary. The world is in flux. It is going digital. If we do not accept the change, we shall continue as we are now.”
Ali cited the digitalization strategies taken by Iran and India for their financial systems and suggested that Pakistan may need to adopt similar strategies in order to achieve a successful transformation. He said;
“Economic sanctions on Iran and India’s desire to combat corruption and eliminate the illicit market have changed their economies into digital ones. Pakistan has two alternatives to accelerate its transition to a digital economy: either it may follow India’s lead or it can adopt a different strategy (abruptly changed currency, remained in pain and it took it around two years to achieve success). Alternatively, we could accelerate evolution through teamwork.”
He frequently urged stakeholders and regulators (the central bank) to strengthen partnerships in order to achieve the objective of changing Pakistan into a digital economy, which Pakistan would need to acquire eventually, therefore the sooner it occurs, the better the benefits.
In addition, Ali emphasized the significance of being removed from the Financial Action Task Force’s (FATF) blacklist and expressed gratitude that Pakistan is not on the greylist since FATF has decided to improve Pakistan. Being removed from greylisting is vital for any country to achieve success and evolve into a developed nation, but especially for Pakistan, which has a history of debt and export potential via manufacturing or ports.
“We are fortunate to not be on the blacklist. “We have recently transformed, and we hope to be removed from the grey list (to the white list) in the near future,” he said.
He provided examples of two government-owned organizations that offer the greatest online transactional services and can serve as a model for other commercial banks. First, he suggested Raast, a service controlled by the State Bank that is likely the quickest method of digital payment. Standard Charted of Pakistan is the owner of Roshan Digital Account (RDA), which is the fastest remittance processing facility for foreign Pakistanis. These institutions should inspire Pakistan’s private banks to produce their finest work.
The RDA inflows from overseas Pakistanis reached $5 billion last week. “Non-resident Pakistanis are remitting an average of $250 million per month through their digital accounts, and the uptime of ATM machines has increased from 94 percent ten years ago to 99.6 percent at the present time,” he stated.
Innovative’s CEO Naveed Ali Baig was also present at the summit, and he noted that the use of cash as a transactional medium has expanded over the past several years and that if Pakistani banks do not take prompt action, the problem will only worsen. Baig said that;
“The use of cash increased further in Pakistan in the past year. In comparison to the average of the previous five years, the volume of cash transactions conducted in 2012 was significantly more. The lack of educated human resources is a key obstacle to rapid digitalization worldwide, especially in Pakistan.
M Mudassar Aqil, the chief executive officer of Telenor Microfinance Bank, one of the largest digital banking chains in Pakistan with millions of customers, stated that currency is detrimental to the economy. This is occurring due to the fact that digital services offered in Pakistan currently cost more than cash transactions, prompting individuals to opt for the latter. In order to standardize digital banking in Pakistan, digital banking companies should consider cheaper business strategies.
Regional Director for the Middle East and Africa is Abdulkader Abousaleh. According to Cisco AppDynamics, the digital banking business in Pakistan has the potential to expand, as the country’s young population is tech-savvy and can easily adapt to new technologies, but will demand digital financial solutions. To be exact, he stated;
Everything that can be digitally delivered must be delivered digitally.
