KARACHI: State Bank Governor Jameel Ahmed Khan has expressed serious concerns over the continuity of safe banking in Pakistan in view of the deteriorating geopolitical situation in the region, as 20 financial institutions including the State Bank of Pakistan, provided by a global banking software company Teminos using the core banking system, which has no office in Pakistan.
Addressing the thirteenth ‘Bank of the Future Forum’ on the topic of ‘Future of Banking’, he asked the IT company to set up a support center in Pakistan instead of running its operations from foreign countries. In view of the deteriorating political conditions, safe banking is imperative.
He said that as a regulator we not only want to make our banking system strong and secure, but we also want to increase the skills of our local workers. It started in 2002, when it implemented the Temenos banking system and an ERP system for non-banking transactions, while building a data warehouse to meet big data requirements.
State Bank implemented a real-time gross settlement system called ‘Prism’ in 2008 to process large-scale, high-value institutional payments. Recently, State Bank has built its state-of-the-art Tier-3 data center which is the first of its kind in Pakistan.
The Governor said that the State Bank issued Branchless Banking Facility Regulations in 2008 to provide basic banking facilities through retailers and grocery stores. This initiative has significantly increased the number of unique bank accounts, which has increased to 64 percent of the adult population in 2024, compared to 16 percent in 2018. He said that the State Bank issued a framework for setting up a digital bank in Pakistan to further facilitate the entry of IT-related, non-banking institutions into the financial services industry.
Accordingly, in-principle approval has been given to five applicants who are soon to start pilot operations in the country. The governor said that the State Bank has embarked on transforming its retail payment industry in line with international trends by implementing the state-of-the-art ISO 2022 payment standards. Our national instant payment system ‘Raast’ was launched in 2021 which is based on ISO 2022 standards.
In a short span of about three years, the system has processed an estimated 850 million transactions worth over Rs 19 trillion. Rasat currently has 38 million unique IDs and processes an average of 2.5 million transactions per day. The governor said that the State Bank is also working on integrating ‘Rast’ with the Arab Monetary Fund’s instant payment system ‘Buna’ to help millions of Pakistanis living in Arab countries send their remittances to Pakistan easily and conveniently. .
The governor told the audience that as a result of State Bank’s efforts, Pakistan today has 59 million branchless banking wallets, 19 million mobile banking apps, another 3.7 million e-money wallets, and 112 million users using internet banking. The total number of retail transactions processed digitally has increased by 30% since 2020 and the proportion of digital payments in total retail transactions has increased from 76% in FY23 to 84% in FY24.
The annual number of transactions processed through mobile phone and internet banking is growing at the rate of 70 percent and 30 percent respectively. This is not surprising as the majority of our population is young people who are adept at using mobile apps. The governor said that the arrival of a vibrant fintech sector in Pakistan is encouraging. These fintech companies are working hard to explore new markets and use cases. He encouraged the IT sector to play a key role in this transformation process.
