Good time to keep up with digital transformation for promising future

Interview with Mr Saad Hassan — Wing Head Management Audit, National Bank of Pakistan

PAGE: Tell me something about yourself, please:

Saad Hassan: I work at NBP as Wing Head, Management Audit. I have gotten working experience in the areas of Regulatory Compliance, Service Quality, Training & Development and Audit & Inspection. I am an MBA from IBA coupled with Masters in Economics and Masters in Islamic Banking & Finance besides Associate of Institute of Bankers, Pakistan (IBP).

PAGE: Creating better digital experiences for banking sector consumers is of paramount importance. How would you comment?

Saad Hassan: This is of utmost importance in the banking sector especially in the era of Information Technology. Continuously evolving landscape, cutting-edge competition, and rising consumer expectations have become a general thumb rule to adapt to in almost every industry including banking & financial institutions. This is why banks have to keep up with the new trends to tend to their customers promptly. Through Digital Banking, consumers can now easily make transactions, check their account balance or even make transfers just with a single click of a button on their smartphone, desktop or any other digital device. No requesting or looking over paper statements or withdrawal slips, any longer.

PAGE: Could you tell me about the use of telecom services by NBP?

Saad Hassan: NBP has launched Mobile Banking Application (NBP Digital and Internet Banking) to bring convenience for its both conventional & Aitemaad Islamic banking customers. By using NBP Mobile Banking Application, our customers may utilize banking services anywhere any time. Through its state-of-art digital banking, NBP is providing enhanced customer services as this provides convenience to customers and helps in saving time.

PAGE: Are Pakistani Banks leaders in digitalization in banking through investment and innovation?

Saad Hassan: Digital transformation in banking is a strategic imperative that everyone in Pakistan’s banking industry understands. The majority (55%) of Pakistan’s 240 million population is less than 25 years of age with even gender split and mostly (61%) living in rural areas.

The country has around 45 million bank accounts and 90 million unique subscribers out of 135 million SIMs. This implies that the mobile subscribers have outnumbered the bank account holders by the ratio of 2:1. Since the birth of Pakistan, the banking has come a long way from nationalization to privatization. The industry has expanded its branch footprint, provided baseline DFS infrastructure and enabled interoperability through interbank switches.

There are a total of 46 commercial and microfinance banks in the country today. However, for every 100,000 people there are only six online branches (12,424 in total). Similarly, there are only six ATMs (total 11,381) and 26 POS terminals (total 50,769) for every 100,000 people. In contrast, only nine branchless banking service providers have created around 210,536 active agents, in only eight years. This number is around three times the size of online branches, ATM and POS terminals–all combined. For a digital financial digital revolution to happen in Pakistan, millions of people will need to change their behavior towards banking.

Our country is yet to experience a more intense financial digital transformation. Pakistan is still heavily reliant on cash transactions as customers prefer to use cash on delivery (COD) options rather than digital financial services. However, the growing popularity of digital financial services in the country shows a promising future for the digital financial services transmission. While the banks need to work on the pricing and fee structures for all government-to-person (G2P) and person-to-government (P2G) payments to include more people to be banked.

PAGE: How could digital transformation in the banking sector be further accelerated?

Saad Hassan: In-order to further accelerate the digital transformation in the banking sector, banks must give incentives to customers over their personal data rights, synergize digitization with green development and safeguard the financial needs of long-tail consumers, i.e. the unbanked and underbanked population. International banking industry can advance digital transformation in banking by opening and sharing software solutions, regularizing the application of digital technology across jurisdictions, and by recognizing and mitigating against the process’s inherent risks.

PAGE: Traditional banks are not known for their expertise in digital technology. What is your perspective?

Saad Hassan: This is true that traditional banks are not known for their expertise in digital technology. So, in many ways, open-source solutions are the practical path to following the rapidly evolving trend of digitalization in banking. Openness and sharing can pool ideas across sectors to identify problems and innovate solutions. In particular, the cutting-edge digital technology out there needs dialogue, research, and buy-in. Those who work in IT tend to be more open-minded about sharing technology.