Hajra Naz
The Journey Begins: SBP’s Digital Banking Framework
In March 2022, the State Bank of Pakistan (SBP) revealed its digital banking system. This declaration set the stage for a warm competition, as commercial banks and fintech companies recognized the immense potential of digital banking.
A Race to Innovate
The SBP’s activity created a sense of urgency among partners. Traditional banks, microfinance institutions, fintech companies, and business consortiums mixed to submit propositions to the central bank. The allure of operating a full-fledged digital bank without the massive costs of physical branches drove this enthusiasm.
Overwhelming Response from Industry Players
The SBP received 20 applications from major players, including:
- HBL
- UBL
- Alfalah
- JS Bank
- Prominent fintech companies.
This marked the beginning of a competitive process that saw traditional banking giants competing with emerging fintech firms and international banking leaders.
Narrowing Down the Contenders
After nine months of rigorous evaluation, the SBP shortlisted five institutions in January 2023:
- Easypaisa
- Hugo Bank
- KT Bank
- Mashreq Bank
- Raqami Bank
These institutions were granted No Objection Certificates (NOCs) to set up digital banks, setting the stage for the next phase of approvals.
Read More: How Freelancers get International Payments in Pakistan?
In-Principle Approvals and Progress
By September 2023, the SBP granted in-principle approvals to the shortlisted candidates, allowing them to move closer to launching their operations. At this stage, all five institutions were on an equal footing, each vying to be the first to operate.
The Frontrunner Emerges: Mashreq Bank
Fast forward to January 2025, and Mashreq Bank has emerged as the frontrunner. It recently received the first restricted license to initiate pilot operations under SBP supervision. This milestone marks a significant step forward for digital banking in Pakistan.
Why Mashreq Bank Stands Out
Mashreq Bank, though less recognizable than Easypaisa, brings a strong track record and solid backing.
It is one of the biggest conventional banks in the Middle East and has a set-up presence in Pakistan. In the Middle East, Mashreq Bank is eminent for its specialized banking solutions for new businesses and SMEs and is regularly referred to as the “Best Digital Bank” in the region.
A New Era for Banking in Pakistan
With Mashreq Bank leading the way, Pakistan is balanced to grasp a new era of digital banking. The move towards advanced arrangements reflects the developing significance of inventive financial services that cater to the advancing needs of businesses and customers alike.
