Retail Banking Institute | Pakistan taps massive potential of digital retail banks

Pakistan taps massive potential of digital retail banks

Pakistan’s banking authority is approving several new digital retail banks with the goal of providing modern digital retail banking services to its largely underserved and underbanked population. News this weekend is that the State Bank of Pakistan has awarded Mashreq Bank Pakistan, a subsidiary of Mashreq, a pilot licence to operate as a digital retail bank. Mashreq bank already has its biggest market outside the UAE in India. SPB had introduced frameworks in 2022 to attract both fintechs and banks to create modern digital retail banks under either Digital Retail Bank or Digital Full Bank licences doing operations exclusively through digital channels. The expectation is that new banks using cloud computing and artificial intelligence will be able to offer personalised banking services to the population, and in particular, drive the MSME sector. “Pakistan has the third largest unbanked adult population globally, with about 100 million adults without a bank account and 82 percent of women without any access to financial services, reports Arabian Gulf Business Insight. The State Bank of Pakistan has now issued No-Objection Certificates (NOCs) to five institutions: Easypaisa Bank Limited, Mashreq Bank Pakistan Limited (MBPL), Raqami Islamic Digital Bank Limited (RIDBL), HugoBank Limited, and KT Bank Limited. EasyPaisa began life as a money transfer service of microfinance bank Telenor, which was created by former Citibanker Nadeem Hussain. In 2018, Ant Financial took a minority share and it became the first of the digital banks to get a licence in 2025. Alibaba announced in the last few days that it will invest upwards of $50 billion into cloud and AI in the next years.