- SBP Governor urges Easypaisa Bank to focus on SMEs, innovation, and cybersecurity to ensure financial growth
In a landmark ceremony held at the State Bank of Pakistan (SBP) in Karachi, the Governor of central bank Jameel Ahmad, awarded the first Digital Retail Bank (DRB) licence to Easypaisa Bank Limited (formerly Telenor Microfinance Bank Limited), authorizing it to commence commercial operations.
The DRB licence to Easypaisa Bank is expected to promote innovation, enhance financial inclusion, and ensure the availability of accessible and affordable digital financial services. The event was attended by CEOs of digital banks, members of the Executive Committee of the Pakistan Banks’ Association, the Board of Directors and the senior management of Easypaisa Bank and senior executives of SBP.
Delivering the keynote address, the Governor underscored SBP’s strategic role in establishing the framework for digital banking in Pakistan and facilitating the development of digital banks through a structured licensing process. He urged Easypaisa Bank to draw inspiration from its sponsor, Ant Group, by prioritizing the digital transformation of small and medium enterprises (SMEs) in Pakistan.
The Governor also highlighted the critical importance of achieving licensing milestones and encouraged digital banks to innovate and design customer-centric solutions tailored to the needs of individuals, micro, small, and medium enterprises (MSMEs), and other underserved segments. He emphasised that the focus would be instrumental in fostering financial inclusion and driving economic growth.
The Governor stressed upon the importance of addressing challenges associated with rapid technological advancements. He highlighted two critical areas of digital literacy of customers and cyber security measures to protect customer trust and ensure the integrity of the financial system.
He also expressed his confidence that, with the issuance of this license, Easypaisa Bank will prioritize the development of innovative, customer-focused, and affordable digital financial solutions, particularly for underserved and unserved segments of society. He emphasized that such efforts will play a pivotal role in advancing the financial inclusion and digitalization objectives.
It may be recalled that in January 2023, SBP issued No Objection Certificates (NoCs) to five successful applicants: 1) HugoBank Limited, 2) KT Bank Pakistan Limited, 3) Mashreq Bank Pakistan Limited, 4) Raqami Islamic Digital Bank Limited, and 5) Easypaisa Bank Limited.
These entities were selected following a rigorous evaluation process that assessed key criteria, including governance and fitness, industry expertise, financial capacity, business strategies, implementation frameworks, funding plans, and IT and cybersecurity infrastructure.
In September 2023, these banks received In-Principle Approval (IPA) to prepare for operational readiness. Subsequently, after fulfilling the required conditions, Easypaisa Bank Limited has now been authorized to commence commercial DRB operations.
The ceremony also featured remarks from the member of the Board of Directors of Easypaisa Bank who shared their vision and commitment to driving innovation in digital financial services. They expressed their gratitude to the State Bank of Pakistan for its support and reaffirmed their dedication to setting new benchmarks in customer-centricity and technological advancement in the financial sector.
In January 2022, SBP introduced a Licencing and Regulatory Framework for Digital Banks in line with international best practices. The Framework was the first step towards introducing full-fledged digital banks in Pakistan. The digital banks are expected to provide all the banking services through digital means without any need for their customers to visit the bank branches physically.
In response to SBP’s Licencing and Regulatory Framework for digital banks, SBP received twenty (20) applications from a diverse range of interested players such as commercial banks, microfinance banks, electronic money institutions and Fintech firms by March 31, 2022. Further, a number of foreign players including venture capital firms already operating in the digital banking space also expressed their interest to venture into Pakistani market directly or in collaboration with local partners.
Going forward, each of these five applicants will incorporate a public limited company with Securities and Exchange Commission of Pakistan. Afterwards, they will approach SBP for In-Principle Approval for demonstrating operational readiness and for commencement of operations under the pilot phase. Subsequently, they will commercially launch their operations after obtaining SBP’s approval. SBP expects that after commencement of their operations, these digital banks will promote financial inclusion by providing affordable/cost effective digital financial services including credit access to unserved and underserved segments of the society.