In Pakistan, digital banking in its nascent form started through the promulgation of the Electronic Transaction Ordinance 2002 after which banks started dispensing financial services through POS machines and ATMs. After that, electronic payments were institutionalised through PSEFT Act 2007 and since then there has been no looking back. Some of the important milestones achieved in this regard are as under in chronological order:
- Introduction of PRISM or RTGS in 2008
- Rules for PSOs and PSPs in 2012
- Launch of EMIs and e-wallets in 2019
- Launch of RAAST payment gateway in 2021
- Rules for opening digital accounts in 2022
- Licensing of five digital banks in 2023
- Launch of Person-to-Merchant (P2M) payment gateway in 2024
Digital banking is playing a significant role in shaping the future of the banking industry. These trends could help banks understand and serve their customers in an efficient and convenient manner through mobile apps and portals. They are also helping banks to innovate and adopt new technologies like Artificial Intelligence and the creation of new digital financial products. Overall, digital banking trends reflect the shift towards a more digitised and connected banking industry as banks seek to meet the needs of their customers in an increasingly digital world. Following are the emerging digital banking trends for 2024 and beyond:
- Chatbots
- Blockchain
- Use of AI
- Rise of digital banks
- Growth in digital lending
- Introduction of metaverse in banks
- Faster banking services through zero coding
- Big data and analytics
- Privacy and cyber security
- Mobile banking
Chatbots – Providing personalised, interactive solutions to customers beyond banking hours by anticipating their queries and problems can be done through chatbots which may improve overall customer experience and build trust and loyalty.
Blockchain – Blockchain banking could be applied in payment processing, trade finance, identity verification, asset tracking, settlement and clearing and supply chain finance.
Artificial Intelligence (AI) – AI in banks could be used for providing top-of-the-line customer service, fraud detection, risk assessment, wealth management and process automation
Digital banks – By abolishing the brick-and-mortar structure, the provision of a range of banking services is now possible through an app or website which is exactly what a digital bank does. The increasing popularity of mobile banking, the desire for convenient and flexible banking at lower fees and the emergence of new technology are some of the factors that are driving the rise of digital banks.
Digital lending – Digital lending platforms could reduce loan processing time as they are able to automate many manual processes that are involved in loan origination and underwriting.
Metaverse – Metaverse or virtual space provides various opportunities to customers in real-time such as virtual branch banking, virtual financial planning and advice, virtual events and virtual product demos and trials etc.
Zero Coding – By establishing product factories, banks are developing new products with the help of zero coding that is helping them to save costs, automate processes and ease customization and integration.
Big Data Analytics – Big data helps in understanding customer needs and making informed decisions. It may be applied in segmentation and target market selection, personalisation, sales and marketing, risk assessment and fraud detection and increasing operational efficiency.
Cybersecurity – The role of data privacy and cybersecurity in banks includes protecting customer data, preventing cyberattacks, complying with regulations and maintaining customer integrity and trust.
Mobile banking – The increased penetration of mobile banking rests on the widespread adoption of smartphones and new technology and the growing popularity and convenience of digital payment options.