Thursday, April 8, 2021

Pakistan State Bank Governor on Fintech, Digital Currency and Stripe

State Bank of Pakistan is studying the issuance of central bank digital currency (CBDC), according to the country's central bank chief Dr. Reza Baqir. Recognizing Pakistan's growth potential, the San Francisco-based Stripe, valued at $95 billion, has recently invested in Safepay, a fintech startup in Karachi, Pakistan. Dr. Baqir spoke of both of these developments in an interview with CNN's Julia Chatterly. 

Central Bank Digital Currency (CBDC):

China's central bank is testing its digital currency in several major Chinese cities. The chairman of the US Federal Reserve has recently confirmed that the US Central Bank is working on digital dollar. The State Bank of Pakistan announced in 2019 that it was developing a digital currency. It seems that the popularity of Bitcoin has triggered serious worries of loss of control of the official financial systems among the central bankers around the world. China's substantial lead in digital currency could put it far ahead of the US in the future of global payments and financial settlement. It could eventually displace the US dollar and provide China with the immense global financial power that the US currently enjoys. 

Dr. Reza Baqir has recently confirmed to CNN what a top official of the State Bank of Pakistan, the nation's central bank, announced in April 2019: the institution aims to issue a digital currency (Central Bank Digital Currency or CBDC) by 2025.  Speaking at the launch of regulations of Electronic Money Institutions (EMIs), central bank officials said in 2019 that EMIs will be non-bank entities to be licensed by the central bank to issue e-money for the purpose of digital payments. Pakistan's finance minister Asad Umar and the central bankers said they are targeting Pakistan's economy to go fully digital by 2030. Here's what Governor Reza Baqir told CNN's Julia Chatterly:

“The benefit for us is twofold: Not only does [potential CBDC issuance] give another boost to our efforts for financial inclusion but, second, if the central bank issues a digital currency, it allows us to make further progress in our fight towards Anti-Money Laundering, towards countering terrorism financing. So, we are at a stage where we are studying it. We hope to be able to make an announcement on that in the coming months.” 

More recently, the State Bank of Pakistan launched Raast, a digital payment system.  It is essentially a pipe that is intended to connect government and financial institutions with consumers and merchants with each other to process payments instantly at very low cost. Raast will be boosted by Pakistan government's decision to use it to pay salaries, pensions and pay welfare recipients under Benazir Income Support and Ehsaas Emergency Cash programs. 

Stripe's Entry in Pakistan:

Stripe, a San Francisco fintech firm valued $95 billion, announced last month that it is entering the Pakistan market with an investment in Karachi-based Pakistani startup Safepay. Founders Ziyad Parekh and Raza Naqvi told Rest of World that they were taken aback by the interest from fellow Y Combinator alumni Stripe. “We were not expecting it and were really intrigued, as they have been a huge inspiration for us,” said Naqvi.“They (Stripe’s founders) understand that partnering up with people who are ambitious and want to tackle a problem is a much better way to enter a market than kind of going in there without any context,” he added. “At a founder-to-founder level, we spoke, and they understood what our vision was.”  

The State Bank of Pakistan recently launched Raast, a digital payment infrastructure that represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

Pakistan's Potential:

Pakistan is the world's 5th largest population with young demographics offering tremendous growth opportunity. Broadband subscriptions in the country have soared from 2 million in 2012 to 100 million now, according to the nation's telecommunications regulator. Ookla, recognized globally for its broadband speed testing, reports that Pakistan's average broadband download speed is 11.35 Mbps, while its upload speed stands at 10.7 Mbps. Thousands of kilometers of new fiber optic cable is being installed and mobile data usage in Pakistan has recently surged to 8,000 petabytes. Smartphone sales are also swelling. All signs are pointing to Digital Pakistan becoming reality in the near future. 

Pakistan's economy is overwhelmingly cash-based. More than half the population is unbanked. It offers a great untapped market for financial technology firms. Pakistan is also promoting digital payments to enhance financial inclusion and document the economy. Eliminating  interbank digital transaction fees during the covid pandemic has resulted in 100%-200% jump in such transactions.  

Summary:

Speaking with CNN"s Julia Chatterly, the State Bank of Pakistan Governor Reza Baqar said the Pakistani government is currently studying the idea of issuing central bank digital currency (CBDC). China is showing Pakistan the way with its CBDC. There will be an announcement on the country's CBDC in the next several months. Because CBDC is issued by the central bank, it can help the country fight crime and corruption. Pakistan is also promoting digital payments to enhance financial inclusion and document the economy. Eliminating digital payment fees during the covid pandemic has resulted in 100%-200% jump in such transactions. He said fintech companies and digital payment processors like Stripe are welcome to operate in Pakistan. It has the world's 5th largest population with young demographics offering tremendous growth opportunity.


Here's a brief video of Dr. Reza Baqir's CNN interview with Julia Chatterly:

https://youtu.be/BZ8MAi-_Qb4

28 comments:

Mayraj F. said...

The Chinese government has begun to issue blockchain-powered digital currency to its citizens. The Wall Street Journal reports that 750,000 recipients have been determined by a lottery system and can already spend their digital Yuan in stores and online using a special app.

App-based payments are already very common in Chinese brick-and-mortar businesses, so merchants were quick to adapt to the government’s new offer. Starbucks and McDonald’s are reportedly among those already accepting the digital Yuan, as is the Chinese Communist Party.

Ubiquitous digital payments and tight government surveillance have led to a plethora of payment data already available to Chinese administrators. This knowledge on how people spend money will only grow with the implementation of the digital Yuan, even though the country’s Central Bank has said it will limit traceability and create what it calls “controllable anonymity.” With the launch of the digital currency, every Yuan in circulation will either exist as physical or as digital currency. Analysts expect the Chinese government to raise the amount of digital currency in the future, thereby lowering the amount of physical currency available in the market. Some even think China plans to make all Yuan digital at one point.

China is only the second country and the first major economy to officially launch a blockchain version of its own currency. According to Bloomberg, the sand dollar of the Bahamas Central Bank launched last year and was already being accepted in stores in the capital Nassau. Bloomberg identifies four more countries – South Africa, India, Pakistan and Thailand, with concrete plans to launch their own official cryptocurrencies soon. Like some other phone payments, official blockchain currencies have the ability to reach the unbanked, making them interesting for the developing world.


https://thewire.in/world/china-becomes-first-major-economy-to-issue-digital-currency

Riaz Haq said...

Pakistan’s central bank exploring its own digital coin: Reza Baqir

https://nation.com.pk/09-Apr-2021/pakistan-s-central-bank-exploring-its-own-digital-coin-reza-baqir

Pakistan’s central bank is exploring its own digital coin, the Governor, State Bank of Pakistan Reza Baqir revealed in an interview on Thursday after China became the first major economy in the world to create its own digital currency.

Expressing his views on a central bank-issued digital currency, Baqir said, "we are at a stage where we are studying it. We hope to be able to make some announcement on that in the coming months.”

The SBP governor told that they have allowed a framework for digital banks to begin their operations in Pakistan. These are the banks, which don’t have a brick and mortar presence and are purely digital like challenger banks or neo banks.

The SBP governor said they are studying it (SBP’s own digital currency) as some countries such as China are already showing the way it benefits central banks.


It will not only boost the central bank efforts for financial inclusion but also allow it to make progress in its fight towards anti-money laundering and countering terrorism financing, he added.

Baqir didn’t share any details about the SBP’s own digital currency, but he said Pakistan is open to digital innovation.

“Stripe and other big payment providers are very welcome in Pakistan. It’s a market that’s waiting to burst as far as digitization is concerned,” the governor said while responding to a question on Fintechs.

Explaining he said when the SBP eliminated the IBFT fee in response to the Covid-19 pandemic, its impact was phenomenal. “For the quarter that ended in December, we had a growth of about 150% to 200% compared to a year ago on mobile banking transactions. For internet banking transactions that number is around a 100% to 150% growth.”

Pakistan is a market that is home to the fifth-largest concentration of people. They are young and tech-savvy that are very fertile for such digital innovation, he added.


Earlier this week, China created its own digital currency, a cyber yuan, which is controlled by its central bank that will issue this virtual money.

Riaz Haq said...

Pakistan: Central Depository Company (CDC) and National Institutional Facilitation Technologies (NIFT) signed an agreement to enable digital payments through NIFT ePay.

https://nation.com.pk/08-Apr-2021/cdc-signs-agreement-with-nift-to-enable-digital-payments

CDC is recognised as the infrastructure backbone of Pakistan’s capital market and it is the sole securities depository in the country, while NIFT is one of the largest payment processors in Pakistan.

This collaboration will enable the investors to use NIFT ePay services for investing into Mutual Funds using CDC’s digital platform” “Emlaak Financials.” Furthermore, the solution will also be facilitating CDC’s IAS account holders to make IAS payments through CDC Access portal.

The agreement was signed by NIFT’s CEO Haider Wahab, and CDC’s CEO Badiuddin Akber at the CDC’s head office.

NIFT’s CEO stated, “We are delighted to be a part of CDC’s newly launched initiative for the Mutual Fund Industry. We understand that the “Emlaak Financials” platform has an aspiring roadmap, and we look forward to playing our role in enabling the platform and in making this service a success. NIFT will always focus to partner for unique and innovative ideas which will uplift the digital transformation in Pakistan.”

At the signing ceremony, CDC’s CEO Badiuddin Akber said, “As we embark on this collaboration with NIFT, it gives us immense pride that we are engaging NIFT’s payment gateway for the first of its kind mutual fund aggregator platform , being launched in the financial landscape of Pakistan. The launch of this platform and its integration with NIFT’s services to enable secure and swift payments for mutual fund investors is in-line with CDC’s vision of enhancing efficiency and ease of doing business.”

Riaz Haq said...

Pakistan ready to adopt digital financial solutions on large scale, says Easypaisa CEO


https://nation.com.pk/06-Apr-2021/pakistan-ready-to-adopt-digital-financial-solutions-on-large-scale-says-easypaisa-ceo


“Pakistan is rapidly progressing when it comes to mobile broadband. Our country has enormous potential with respect to widening financial inclusion through digital solutions. Currently, 95 million people across the country use mobile broadband, a number which has grown by 50 million in the past 5 years. A majority of adults have broadband connections in Pakistan serving as a backbone to developing a digital payments ecosystem in the country.” said M. Mudassar Aqil, CEO Easypaisa/Telenor Microfinance Bank, while talking about Pakistan’s financial services landscape.

“96% individuals have a biometrically verifiable ID issued by the government, indicating that a robust regulatory framework is in place which is supported by credit bureaus. Despite these fundamental factors, 70% of Pakistanis don’t have access to financial services when the rails to address these challenges are in place,” he added. During COVID-19, digital payments witnessed a boom. According to the SBP’s quarterly report, 296.7 million e-banking transactions, valuing at PKR21.4 trillion, were carried out during Oct – Dec 2020, growing by 24% in volume and 22% in value compared to the same quarter last year.

“During COVID-19 industry numbers of digital transactions grew at an exponential rate. At Easypaisa, our annual throughput increased by 64% as compared to the previous year reaching PKR 1.5 trillion in 2020. Similarly, the number of active Easypaisa App users reached 3.44 million, registering a 54% increase in comparison to previous year.” he commented. Pakistan is predominantly a cash-based economy. However, things are changing as the use of digital payments is taking center-stage.

Mudassar opined: “The Pakistani economy is ready to adopt digital financial solutions on a large scale as opening a mobile wallet account on a smartphone or feature phone takes less than a minute. Roughly PKR 6 trillion or about one-third of the country’s deposits are in circulation. This is one of the highest percentages anywhere in the world and the only way to reduce this is for every adult in the country to have a mobile wallet. Furthermore, all retail outlets in Pakistan should be mandated by law to accept digital payments from mobile wallets. Tax incentives should also be introduced making digital payments cheaper than cash.”

Riaz Haq said...

China is now applying calculated doses of pain to shock Westerners into realizing the old, #American-led order is ending. #Chinese foreign policy chief lectured American diplomats in #Alaska. Then #China sanctioned #British, #Canadian & #EU politicians https://www.economist.com/china/2021/04/03/china-is-betting-that-the-west-is-in-irreversible-decline

Its gaze fixed on the prize of becoming rich and strong, China has spent the past 40 years as a risk-averse bully. Quick to inflict pain on smaller powers, it has been more cautious around any country capable of punching back. Recently, however, China’s risk calculations have seemed to change. First Yang Jiechi, the Communist Party’s foreign-policy chief, lectured American diplomats at a bilateral meeting in Alaska, pointing out the failings of American democracy. That earned him hero status back home. Then China imposed sanctions on British, Canadian and European Union politicians, diplomats, academics, lawyers and democracy campaigners. Those sweeping curbs were in retaliation for narrower Western sanctions targeting officials accused of repressing Muslims in the north-western region of Xinjiang.

China’s foreign ministry declares that horrors such as the Atlantic slave trade, colonialism and the Holocaust, as well as the deaths of so many Americans and Europeans from covid-19, should make Western governments ashamed to question China’s record on human rights. Most recently Chinese diplomats and propagandists have denounced as “lies and disinformation” reports that coerced labour is used to pick or process cotton in Xinjiang. They have praised fellow citizens for boycotting foreign brands that decline to use cotton from that region. Still others have sought to prove their zeal by hurling Maoist-era abuse. A Chinese consul-general tweeted that Canada’s prime minister was “a running dog of the us”.

Such performance-nationalism is watched by Western diplomats in Beijing with dismay. Envoys have been summoned for late-night scoldings by Chinese officials, to be informed that this is not the China of 120 years ago when foreign armies and gunboats forced the country’s last, tottering imperial dynasty to open the country wider to outsiders. Some diplomats talk of living through a turning-point in Chinese foreign policy. History buffs debate whether the moment more closely resembles the rise of an angry, revisionist Japan in the 1930s, or that of Germany when steely ambition led it to war in 1914. A veteran diplomat bleakly suggests that China’s rulers view the West as ill-disciplined, weak and venal, and are seeking to bring it to heel, like a dog.

In Washington and other capitals it is not hard to hear voices suggesting that China is making rash, clumsy mistakes. Surely China sees that it is souring public opinion across the West, they murmur. There is puzzlement about how China now views its recent draft accord with the European Union, the Comprehensive Investment Agreement, which it had appeared so eager to conclude. That pact’s ratification by the European Parliament is now on ice, and possibly entombed in permafrost, as a result of China’s sanctions on several Euro-legislators.

Riaz Haq said...

Globally, the value of all outstanding cryptocurrency has jumped to about $2.4 trillion — or more than the approximately $1.2 trillion of United States currency in circulation worldwide — from about $200 billion two years ago.

https://www.nytimes.com/2021/05/09/us/politics/cryptocurrency-regulation-sec-ripple-labs.html


As Scrutiny of Cryptocurrency Grows, the Industry Turns to K Street
Companies behind digital currencies are rushing to hire well-connected lobbyists, lawyers and consultants as the battle over how to regulate them intensifies.

When federal regulators late last year accused one of the world’s most popular cryptocurrency platforms of illegally selling $1.38 billion worth of digital money to investors, it was a pivotal moment in efforts to crack down on a fast-growing market — and in the still-nascent industry’s willingness to dive deeply into the Washington influence game.

The company, Ripple Labs, has enlisted lobbyists, lawyers and other well-connected advocates to make its case to the Securities and Exchange Commission and beyond in one of the first big legal battles over what limits and requirements the government should set for trading and using digital currency.

Ripple has hired two lobbying firms in the past three months. It has retained a consulting firm staffed with former aides to both Hillary Clinton and former President Donald J. Trump to help it develop strategy in Washington. And to defend itself against the S.E.C., it hired Mary Jo White, a former chairwoman of the commission during the Obama administration.

Ripple is just one of a long list of cryptocurrency companies scrambling for influence in Washington as the Biden administration begins setting policy that could shape the course of a potentially revolutionary industry that is rapidly moving into the mainstream and drawing intensifying attention from financial regulators, law enforcement officials and lawmakers.

“There is a tectonic shift underway,” Perianne Boring, the president of the Chamber of Digital Commerce, a cryptocurrency lobbying group, told other industry lobbyists, executives and two House lawmakers who serve as industry champions, during a virtual gathering last month. “If we don’t start planning and taking action soon, we have everything to risk.”

So far, cryptocurrency has been a highly volatile investment, but it is already starting to alter the way individuals, companies and even some central banks do business. Firms like Ripple, which is based in San Francisco, run cryptocurrency platforms that allow customers to make nearly instant global payments through a system that operates largely outside government monetary networks.

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The House this month passed a bill backed by industry lobbyists to create a working group of federal regulators, industry executives, investor protection groups and others to examine possible frameworks for a regulatory system.

“We need to get the big prize done,” Representative Darren Soto, Democrat of Florida and a member of the Congressional Blockchain Caucus, a group of lawmakers working with the industry to help promote cryptocurrencies, told the industry conference last month. “Which is the statutes and jurisdiction and definitions to create that certainty, to really let blockchain and cryptocurrency flow and improve in the United States.”

Riaz Haq said...

Pakistan to bring #cryptocurrency out of the dark. Pak has had a boom in trading & mining it. Pak govt has set up a committee to study cryptocurrency #regulation, which includes observers from #FATF, federal ministers & country's #intelligence agencies. https://www.reuters.com/technology/pakistan-moves-bring-cryptocurrency-boom-out-dark-2021-07-16/

Once a week Ghulam Ahmed, 38, takes time out from his cryptocurrency consulting business to log into a WhatsApp group with hundreds of members eager to learn how to mine and trade cryptocurrency in Pakistan.

From housewives looking to earn a side income to wealthy investors wanting to buy cryptomining hardware, many barely understand traditional stock markets but all are eager to cash in.

"When I open the session for questions, there's a flood of messages, and I spend hours answering them, teaching them basic things about cryptocurrency," said Ahmed, 38, who quit his job in 2014, believing it was more profitable to mine Bitcoin.

------------

"Half the members had no clue what it was and didn't even want to understand it," said committee member Ali Farid Khwaja, a partner at Oxford Frontier Capital and chairman of KASB Securities, a stock brokerage in Karachi. "But the good thing is someone set up this committee. The relevant bodies in the government who need to get things done are supporting it, and the promising thing is nobody wants to stand in the way of technical innovation."

The head of the country's central bank, Reza Baqir, said in April the authority was studying cryptocurrencies and their potential for bringing transactions happening off the books into a regulatory framework. "We hope to be able to make some announcement on that in the coming months," he told CNN. Baqir declined to comment to Reuters on the topic.

Even the education sector has caught on.

In February, one of the country's leading universities, the Lahore University of Management Sciences, received a grant worth $4.1 million to study the technology from Stacks, a blockchain network that connects Bitcoin to apps and smart contracts.

LEGALISATION AND INVESTMENT

These moves can't come soon enough for cryptocurrency advocates.

Institutions have at times treated those involved in the trade of cryptocurrency with suspicion, worried about possible associations with money laundering.

Ahmed said he has been arrested by the Federal Investigation Agency (FIA) and charged with money laundering and electronic fraud twice, though the charges have not held up in court.

On one occasion, he said, the FIA seized a cryptocurrency mining farm he had set up in Shangla, in Pakistan's northern Khyber-Pakhtunkhwa province, which ran on its own hydroelectric power. The FIA did not respond to Reuters' request for comment.

Waqar Zaka, a former TV host with more than a million followers on Youtube, has been lobbying officials for years to not only legalise the industry, but have the government invest in it. Zaka, like Ahmed, had set up a cryptocurrency mining farm running on hydroelectric power.

Now, Khyber-Pakhtunkhwa's provincial government has tapped Zaka and Ahmed to be on a committee studying how it can profit from such ventures. In March, the group announced it was looking into setting up new mining farms using Zaka's facility as a template.


Riaz Haq said...

Riaz Haq has left a new comment on your post "Pakistani-American VC At Top Silicon Valley Firm L...":

Digital technologies are set to transform the way people live and work in Pakistan. As we saw in the GSMA 2020 Digital Societies Report, which tracks the progress of 11 focus countries in Asia Pacific, Pakistan is advancing its societal, economic and digital ambition, as outlined in Digital Pakistan Vision. Indeed, our report’s digital society index tracked Pakistan in achieving one of the highest increases in its overall score.

https://dailytimes.com.pk/798868/pakistans-digital-transformation-2/


By 2023, the economic contribution of the mobile industry in Pakistan is expected to reach $24 billion, accounting for 6.6% of GDP .In an effort to stimulate this growth, Pakistan has recently moved forward with significant mobile services tax reforms.

Digital platforms, such as mobile services, have become the primary channel for a growing number of citizens to access public and private services, especially during the pandemic. Behind this development are the vital roles played by National and provincial policymakers, the Pakistan Telecommunication Authority (PTA) and Ministry of Information Technology and Telecommunication (MoITT), who have helped increase access for citizens high-quality connectivity and digital services. This has cultivated digital inclusion, e-commerce and a general entrepreneurial spirit for the people of Pakistan.

With a population of approximately 220 million, and more than 100 million people under the age of 25, Pakistan is well positioned to play a growing role in the global economy over the next decade.Pakistan’s mobile market has experienced rapid development over the last decade, playing a significant role in Pakistan’s growth. In 2018, the total economic contribution of the mobile ecosystem was worth $16.7 billion, equivalent to 5.4% of GDP.

In a post pandemic world, Industry 4.0 – otherwise known as the fourth industrial revolution – will help economies recover and become more resilient to future shocks. And technology, supported by mobile networks, will be at the core of Pakistan’s industrial development as it works to launch the fourth industrial revolution.

Pakistan’s recent policy actions offers a glimpse of this potential. But authorities must act together, creating the business environment necessary to realise these goals. A whole-of-government (WGA) approach will ensure better coordination of digital transformation initiatives across the public sector, complemented by private sector investment and innovation. We believe this holistic approach is a way for emerging and transition digital societies to leapfrog bureaucratic pain points.

Riaz Haq said...

Digital technologies are set to transform the way people live and work in Pakistan. As we saw in the GSMA 2020 Digital Societies Report, which tracks the progress of 11 focus countries in Asia Pacific, Pakistan is advancing its societal, economic and digital ambition, as outlined in Digital Pakistan Vision. Indeed, our report’s digital society index tracked Pakistan in achieving one of the highest increases in its overall score.

https://dailytimes.com.pk/798868/pakistans-digital-transformation-2/


A whole of government approach in Pakistan creates the start of a predictable investment and flexible regulatory environment. These measures, needed to achieve the goals of Digital Pakistan, include tax reforms as well as efforts to implement Right-of-Way (RoW) infrastructure policies. The success of these efforts will be measured by their implementation, along with the growth they support in the future.

Implementing tax reforms for industry growth and infrastructure policy Pakistan recently approved tax reforms that will stimulate mobile industry growth. These include gradually reducing Advance Income Tax from 12.5% to 10% in the next financial bill (FY2021-22); further reducing to 8% in the 2022-23 Finance Bill; approval of harmonization /uniform rate of taxes on telecom service; withdrawal of SIM issue tax; simplification of and exemptions for withholding tax to ease doing business; reduction of minimum tax for telecom services from 8 to 3%.

In order to fully realise the benefits of these tax recommendations, the Financial Bill (FY 2021-22) must be enacted into law. Similarly, we recommend policy makers implement Right of Way (RoW)and other policies that impact the infrastructure supporting digital and mobile access. Recently, a significant milestone was reached when policy makers in Pakistan approved, for the first time, RoW infrastructure policy. We commend this move and urge that these policies are implemented quickly. As technology evolves, unforeseen challenges can arise that may not have occurred to policy makers during their inception.

Spectrum roadmap and digital inclusion

Along with these crucial policies and regulatory modernisation initiatives, there are additional steps needed as Pakistan continues to build itself into a digital society. In particular, the development and implementation of a five-to-seven-year spectrum roadmap. Spectrum is the foundation for mobile services. Sufficient spectrum allows mobile networks to reach even more citizens in Pakistan and offer a better quality of service.

Digital Pakistan also includes digital inclusion as one of its policy objectives. Currently, it has a 54% mobile broadband usage gap , as defined by people who live within the footprint of a mobile broadband network but do not use mobile internet. A spectrum roadmap provides stability and certainty as it helps to create a more investment-friendly environment for mobile operators looking to build 5G and 4G mobile networks.



Industry and government stakeholders

A holistic, whole-of-Government approach speeds digitization and the adoption of new technologies in a more efficient manner. By removing barriers caused by siloed efforts from different ministries, Pakistan could more efficiently harness the capabilities of its existing 4G networks, while preparing for 5G. Another key piece in the digitization effort will be the solicitation of input from industry stakeholders. A transparent consultation process that offers parties the ability to submit thoughtful input has the potential to lead to an enabling regulatory framework primed for new technologies.

Riaz Haq said...

Meet the Investor Who Spots Opportunities for Jeffrey Katzenberg
Anthony Saleh oversees a growing venture-capital fund at the former Hollywood chief’s WndrCo, after its Quibi video app collapsed. He also works with the rapper Nas.


https://www.wsj.com/articles/meet-the-investor-who-spots-opportunities-for-jeffrey-katzenberg-11642341603


While working with Nas several years ago, Mr. Saleh cold-emailed Ben Horowitz, the co-founder of the venture-capital firm Andreessen Horowitz to discuss ideas, Mr. Horowitz said. The two men got to know one another, and in 2013, Mr. Saleh called Mr. Horowitz to say he and Nas were interested in bitcoin after seeing how many “unbanked” people in the world had no checking account but did have a cellphone—a dynamic he said could decentralize finance. When Mr. Horowitz later heard about Coinbase, the cryptocurrency exchange platform, he brought the duo into the investment.

Last year, Coinbase Global Inc. was one of six investments in Mr. Saleh’s personal portfolio that ended in a public offering.

Riaz Haq said...

E-banking transactions exceed GDP

https://tribune.com.pk/story/2343698/e-banking-transactions-exceed-gdp


Speaking at the launch of Raast Person-to-Person (P2P) Instant Payments System on Tuesday, the central bank governor said that e-banking transactions were considerably more than the country’s total gross domestic product (GDP), which currently stood at $370 billion.

“If the figure is $500 billion now, you can imagine the pace at which we are digitising,” he remarked, adding that those transactions showed a year-on-year growth of 30.6% in volume and 31.1% in value.

Baqir said that there were around 190 million mobile phone subscribers in the country whereas only 80 million people had bank accounts, meaning that there were over 100 million people who had mobile phones but they did not own a bank account.

“Therefore, there is a huge potential for enhancing financial inclusion,” he said and expressed hope that the Raast initiative would help bridge the gap.

The SBP governor pointed out that Raast was different from other programmes as it facilitated free-of-charge transactions within seconds. He was hopeful that people would take benefit of the revolutionary system.

The State Bank has taken many initiatives for ramping up the pace of digitisation. In this regard, the installation of Point of Sales (POS) machines has shown a growth of 50% and it is expected to rise further at a rapid pace.

In collaboration with the National Database and Registration Authority (NADRA), the SBP will also facilitate people in undergoing biometric verification remotely for opening bank accounts.

The new banking system will be established in line with the Roshan Digital Account that has been introduced for overseas Pakistanis.

“Individuals can use Raast platform in their daily transactions similar to cash and they will not have to pay any fees or charges for using this payment system,” Baqir said. “It is secure, convenient and free of risks compared to cash.”

Riaz Haq said...

The Indian economy is being rewired. The opportunity is immense
And so are the stakes

https://www.economist.com/leaders/2022/05/13/the-indian-economy-is-being-rewired-the-opportunity-is-immense

As the country emerges from the pandemic, however, a new pattern of growth is visible. It is unlike anything you have seen before. An indigenous tech effort is key. As the cost of technology has dropped, India has rolled out a national “tech stack”: a set of state-sponsored digital services that link ordinary Indians with an electronic identity, payments and tax systems, and bank accounts. The rapid adoption of these platforms is forcing a vast, inefficient, informal cash economy into the 21st century. It has turbocharged the world’s third-largest startup scene after America’s and China’s.

Alongside that, global trends are creating bigger business clusters. The it-services industry has doubled in size in a decade, helped by the cloud and a worldwide shortage of software workers. Where else can Western firms find half a million new engineers a year? There is a renewable-energy investment spree: India ranks third for solar installations and is pioneering green hydrogen. As firms everywhere reconfigure supply chains to lessen their reliance on China, India’s attractions as a manufacturing location have risen, helped by a $26bn subsidy scheme. Western governments are keen to forge defence and technology links. India has also found a workaround to redistribute more to ordinary folk who vote but rarely see immediate gains from economic reforms: a direct, real-time, digital welfare system that in 36 months has paid $200bn to about 950m people.

Riaz Haq said...

Pakistan to launch digital ID wallet this year
By Daniel Tost - March 8, 2022, 6:19 pm

https://www.globalgovernmentfintech.com/pakistan-to-launch-digital-id-wallet-this-year/


Pakistan’s National Database and Registration Authority (NADRA) is planning to roll out a digital identity wallet later this year in a move that will end the need for physical ID.

NADRA is tasked with digitising all citizen data in the country, which – with more than 220 million citizens – is the fifth biggest in the world in terms of population.

As part of a digital push aimed at generating benefits including greater financial inclusion, the authority is working on a significant evolution of the existing ‘Pak-ID’ smartphone app – which was itself only introduced seven months ago, the authority’s chairman Tariq Malik told Pakistani media Dawn.

Launched last September, Pak-ID allows citizens to apply for a physical ID card remotely by using their Android or iOS device to scan documents and biometric data including their fingerprints and take a picture to verify their identity. When it was introduced, NADRA proclaimed that Pakistan had become ‘the first country in the world to introduce ID technology’. Two weeks later, the authority launched a similar biometric verification service for the banking and payments industry. With five banks initially participating, the service enables customers to open bank accounts and undertake biometric authenticated financial transactions using a mobile-phone camera.

Hailing Pak-ID’s debut, prime minister Imran Khan called the app “a revolutionary step in providing convenience, especially to overseas Pakistanis”. It seems these expats have at least partly driven the decision to launch the digital identity wallet by updating the Pak-ID app. “In a short span, 75,000 overseas Pakistanis have processed their national identity cards from the comfort of their homes by using the app,” Malik told Dawn. “With successful testing on 75,000 overseas Pakistanis, NADRA will go for a digital wallet.”

The wallet would be “a leap forward putting an end to the conventional physical ID” and is to be made available “later this year”, Malik said. “The digital dividends of such technology innovation will yield positive results in contactless banking, financial inclusion, ease of doing business and e-governance initiatives by offering remote identification and e-KYC [know-your-customer procedures].”

Riaz Haq said...

Pakistan to launch digital ID wallet this year
By Daniel Tost - March 8, 2022, 6:19 pm

https://www.globalgovernmentfintech.com/pakistan-to-launch-digital-id-wallet-this-year/

Focus on unregistered citizens
As of January, 96 per cent of Pakistan’s adult (above 18) population, have a Computerised National Identity Card (CNIC), according to Islamabad-headquartered NADRA. Pakistan started rolling out its Smart National Identity Card (SNIC) in 2012 in a programme overseen by NADRA and aimed at replacing CNICs. Currently, both types of cards remain valid.

Recently, NADRA has focused on unregistered individuals (citizens without an identity card) by creating an ‘Inclusive Registration Department’. Its aim is to enhance registration, especially for women, minorities, transgender and unregistered persons. The agency targeted 80 districts with a gender gap of more than 10 per cent in registration figures. Eighteen female-only NADRA centres were opened to overcome socio-cultural barriers of women cautious about dealing with male staff. Additionally, 262 mobile registration vans and 80 ‘ManPack’ mobile units have been deployed countrywide for people living in remote areas or senior citizens who may struggle to travel. In total there are more than 700 registration centres operating countrywide and in all 154 districts of Pakistan. According to a NADRA press notice issued last month, the gender gap has been reduced by 40 per cent in targeted districts.

NADRA says it holds the largest biometric database of citizens in the world. The security of such a stock of citizen data is clearly important but the authority states that its SNIC is equipped with 36 security features, using a layering system to safeguard sensitive information.

Principles for interoperable ID
Pakistan’s move comes against the international backdrop of high-level principles to support the development of mutually recognised and interoperable digital ID systems and infrastructure having been drafted by a working group on digital identity comprising representatives from eight countries.

The 11 principles call for digital ID infrastructure to be open; transparent; reusable; user-centric; inclusive and accessible; multilingual; secure and private; technologically neutral and compatible with data portability; administratively simple; able to preserve information; and effective and efficient.

In its report, the Digital Identity Working Group (DIWG) said its goal is to enhance trade agreements and to ‘facilitate economic recovery from Covid-19, for example to support the opening of domestic and international borders’.

Established in 2020, DIWG comprises Australia, Canada, Finland, Israel, New Zealand, Singapore, the Netherlands and the UK. It is chaired by Australia’s Digital Transformation Agency.

Riaz Haq said...

SBP
@StateBank_Pak
Another milestone achieved by #SBP in the journey of digitization, as number of #Raast IDs registration crosses 10 million mark since its launch in Feb22. Aggregated value of Person to Person (P2P) Transactions using #Raast system by customers crosses Rs36bn.

https://twitter.com/StateBank_Pak/status/1526174517910986755?s=20&t=aqY9b05RSGuFWfapw2ib7w

Riaz Haq said...

U.S. Lawmakers Look to Digital Dollar to Compete With China
The Federal Reserve is considering the idea, but in no rush to join a digital-assets space race

https://www.wsj.com/articles/u-s-lawmakers-look-to-digital-dollar-to-compete-with-china-11659925037?mod=Searchresults_pos4&page=1

Lawmakers are pushing the Federal Reserve to move swiftly toward issuing a digital dollar, to combat steps from China and others they say could one day threaten the U.S. status as the global reserve currency.

The bipartisan group of lawmakers, including Reps. Maxine Waters (D., Calif.) and French Hill (R., Ark.), has sought for the U.S. to counter global competitors launching digital versions of their currencies. The House Financial Services Committee, which both serve on, might vote on related legislation as soon as next month.

Ms. Waters has framed competition over new forms of central-bank money as “a new digital assets space race.” The Biden administration and the Fed don’t share a sense of urgency.

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Fed Chairman Jerome Powell has indicated the central bank isn’t in a rush, as it confronts inflation and a slowing economy. Mr. Powell has said it is more important to get the digital dollar right than to be first to market, in part because of the dollar’s critical global role. He has also said the Fed won’t issue a digital dollar without support from elected officials. The White House has largely remained neutral on a digital dollar, with President Biden ordering a study to determine its implications for issues such as economic growth and stability.

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Some in Congress say the U.S. is already behind the curve. Among the Group of 20 major economies, 16 are in the development or pilot phase of a digital currency, according to the Atlantic Council, a Washington think tank. The European Central Bank, on behalf of countries including Germany and France, is exploring designs for a digital euro and preparing to launch a test pilot.

Mr. Hill, the Arkansas Republican, said his concerns were animated in part by China, which began real-world testing of its own central-bank–issued digital currency in 2020. In an interview, he said China’s lending practices in the developing world could make it easier for the country to promote international uses of its digital currency—a potential threat to the dollar-based global economy.

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“We should be concerned about China’s predatory practices,” he said.

Chinese authorities haven’t ruled out international use of the e-CNY, the official name for the country’s digital currency, but say it is designed for small-scale domestic use by consumers.

Analysts are looking for signs that the People’s Bank of China will take concrete steps to join with central banks elsewhere to make it possible to use digital currencies between countries. The bottom line is that Beijing is uncomfortable with the outsize role the U.S. dollar plays in global commerce and in particular fears being frozen out of the dollar-based financial system, such as in response to a conflict over Taiwan.

International transactions in a digitized currency created by China, the thinking goes, could be a defensive weapon in such circumstances because they would happen beyond the reach of the U.S.

Riaz Haq said...

Non-bank finance firms disbursed over Rs6.14bn loans digitally

https://www.dawn.com/news/1673391/non-bank-finance-firms-disbursed-over-rs614bn-loans-digitally


Licensed digital lending Non-Bank Finance Companies (NBFCs) have made rapid progress and started to show disruption in Pakistan’s lending landscape and are proving to be significant in furthering the journey of financial inclusion, data shared by the Securities and Exchange Commission of Pakistan (SECP) showed on Friday.

The SECP has licensed six fintech-enabled NBFCs, which have collectively reached out to 365,239 borrowers with disbursement of over Rs6,139 million through 858,998 loans, which signifies that many borrowers have obtained more than one loan from these lenders.

The data released by the SECP shows that the average loans size of these digitally-enabled NBFCs ran­ges from Rs1,000 to Rs80,000 depen­ding upon the nature of business and target market of these entities.

“These are small loans available easily for the borrowers, but since these are digital-based, the borrowers cannot default and ignore the repayment,” said a senior official of the SECP adding that the data of defaulters is shared with the State Bank of Pakistan as a result the defaulter cannot avail any other financial service.


The official added under this lending mode, the small amount request by the borrower is credited into the digital wallet of the borrower within few hours as digital processing of the loan is fast and does not require any guarantee.

Newly licensed digital lending NBFCs include Finja Lending Ser­vices Limited, SeedCred Financial Services Limited, Qisstpay BNPL Limited, Tez Financial Services Limited, Cashew Financial Ser­vices Limited and CreditFix Fina­ncial Services Limited. These NBFCs are providing financial solutions to otherwise unserved and underserved through digital means and include Nano lending, Peer-to-Peer (P2P) Lending and Buy-Now-Pay-Later models etc.

All of these licences have been issued during the last three years to NBFCs that are engaged in digital lending using innovative fintech solutions.

The first fintech-enabled NBFC licence was issued in 2019 and only 55,528 requests were honoured, disbursing Rs495 million, while by the end of 2021, the six licence holders disbursed a total of Rs6.13 billion to 365,239 borrowers.

“This is a solution to the traditional complaint that the banks were not interested in small loans, and the majority of borrowers were those who either did not possessed credit cards or wanted to spend the amount in any sector which does not deal in credit cards,” the official added.

The SECP has said that fresh applications have been received for NBFC licence from investors who intend to engage in fintech based lending.

Riaz Haq said...

VEON Subsidiary Pushes Digital Inclusion in Pakistan

Tommy Clift | Reporter

https://www.sdxcentral.com/articles/news/veon-subsidiary-pushes-digital-inclusion-in-pakistan/2022/09/

Mobilink Microfinance Bank (MMBL) launched a trio of initiatives to accelerate financial inclusion for farmers and female entrepreneurs in Pakistan. The move echoes another by its parent company VEON to promote digital access through its subsidiary Kyvistar.

The MMBL plans include an agriculture advisory service for Pakistani farmers, e-commerce services for female entrepreneurs, and 4G handsets. VEON CEO Kaan Terzioglu believes the initiatives will play a pivotal role in digitalizing the microfinance industry in Pakistan.


VEON noted in a statement that agriculture represents nearly 23% of Pakistan’s gross domestic product and employs approximately 37% of its workforce. Recent floods in the country destroyed 3.6 million acres of crops and killed 700,000 livestock, it added.

MMBL is partnering with Pakistan-based agricultural technology company BaKhabar Kissan to provide information and guidance on livestock management, weather monitoring, crop planting – including which are profitable, and boosting agricultural yields.

“We are aiming to build a digital infrastructure that will help further economic prosperity and financial empowerment among women business owners and small and medium-sized farmers in the country, two segments that have the potential to transform Pakistan’s economic future,” MMBL President and CEO Ghazanfar Azzam stated.

Their push to incentivize and advance female entrepreneurs comes with their collaboration with Pakistan e-commerce platforms Daraz and its flagship Women Inspirational Network (WIN) program. This is intend to promote a female-focused, “digital financial ecosystem” using their subscriber base – currently accounting for 53% of the 195 million cellular subscribers in Pakistan, according to VEON.

Women make up nearly half of the country’s population, but VEON notes “their financial inclusion figure stands at 7%.”

The new program will use the Digit 4G handsets to “drive participation in the digital economy among marginalized groups within the population.” The handsets will be discounted and targeted at female entrepreneurs, coming “pre-loaded with the digital banking application, MMBL DOST, which will enable customers to obtain quick financial assistance, pay bills, make money transfers, and use a vast array of digital banking services,” VEON explained.

Riaz Haq said...

Investors, including HBL, participate in Finja’s Series A2 Funding Round
Finja, Pakistan’s largest dual-licensed SME digital lending platform, announced fresh capital injection as part of its $10 Million Series A2 financing round, with participation from notable investors including Sturgeon Capital and HBL.


https://www.globalvillagespace.com/investors-including-hbl-participate-in-finjas-series-a2-funding-round/

Finja, Pakistan’s largest dual-licensed SME digital lending platform, announced fresh capital injection as part of its $10 Million Series A2 financing round, with participation from notable investors including Sturgeon Capital and HBL. This investment round is multi-dimensional and includes equity, debt, and off-balance sheet capital. This is HBL’s second investment in Finja after its initial participation in the company’s Series A1 round.

With this injection, Finja has the capacity to finance more than $50 million over the next 12 months to catalyze the potential of Pakistan’s SME sector. This has set the stage to further scale Finja’s existing digital co-lending program to support its overall vision of empowering Micro, Small and Medium Enterprises (MSMEs) and their supply chains with digital credit.

This financing is a significant step towards more fully utilizing Finja’s credit engine, which continues to prove its scalability and accuracy, cementing Finja as the sustainable choice for SMEs throughout Pakistan.


Qasif Shahid, Co-Founder Finja remarked, “The future of the financial services industry lies in collaboration between fintechs and banks. Moving away from vertical silos to open banking systems and embedded finance. This puts Finja in a winning position as it ramps up our capability to offer small and micro businesses digital products.” He further added, “With this new injection and our laser focus on optimizing our organization, we will now be turbo charging digital lending to SMEs through our association with HBL”

Finja today has emerged as one of the leading digital lending platforms in the country clocking a total lending throughput of PKR 7 Billion at the back of extending approximately 150,000 loans to 35,000 Karyana stores in 30+ cities. Finja also works closely with FMCG distributors and helps them to buy supplies upstream on credit and also provides purpose built working capital lending lines to SMEs scored through Finja’s proprietary AI/ML algorithms.

Kamran Zuberi, CEO Finja Lending Services, remarked that Finja is the first financial services entity to package capital in small amounts of PKR 50,000 and for periods of 7, 14 and 30 days to Karyana stores for availing credit to buy supplies and improve their sales. “We score these retailers from data that we get from our partnerships with multiple FMCG principles, hundreds of distributors and new-age market aggregators that operate mobile apps for small retailers to order supplies from.”

Riaz Haq said...

Waada Buys Rival to Become Pakistan’s Top Insurance-Tech Startup
Pakistan’s insurance penetration is 0.7%, trailing neighbors
Nation to see further consolidation as funding slows: investor
---------------

Waada becomes largest technology led insurance start-up in Pakistan - 24/7 News

https://www.insurancejournal.com/news/international/2022/11/07/693869.htm

Pakistani online insurance startup Waada acquired a local rival to create the South Asian nation’s largest player in the field, seeking to benefit from growth in the burgeoning market.

The Karachi-based company took over MicroEnsure Pakistan, a unit of MIC Global operating in South Asia and Africa, in an all-stock deal, according to a statement Friday. The brands combined have 1.5 million active customers, Waada said, without disclosing the deal value. Waada also said it’s closed a seed round of $1.3 million from local angel investors and foreign venture capital firms.


Pakistani online insurance startup Waada acquired a local rival to create the South Asian nation’s largest player in the field, seeking to benefit from growth in the burgeoning market.

The Karachi-based company took over MicroEnsure Pakistan, a unit of MIC Global operating in South Asia and Africa, in an all-stock deal, according to a statement Friday. The brands combined have 1.5 million active customers, Waada said, without disclosing the deal value. Waada also said it’s closed a seed round of $1.3 million from local angel investors and foreign venture capital firms.

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https://247news.com.pk/waada-becomes-largest-technology-led-insurance-start-up-in-pakistan/

Waada, The Insurance start-up has announce that the company has become the largest player among all technology-led start-ups in the country’s insurance segment after acquiring its rival company MicroEnsure Pakistan.

The Announcement was made on the startup’s Social media handle LinkedIn, In the announcement, it has been confirmed that deal has been locked however, company has not disclosed the details of the deal yet.

Separately, the company also announced a $1.3 million seed funding round. According to international news agency, the all-stock deal will bring the number of active customers of Wada to 1.5 million. “Waada aims to add customers using online sign-ups and has a goal to distribute 10m policies in three to five years,” it said.

Riaz Haq said...

Pakistan:Insurance market grows by nearly 22% in 2021
https://www.asiainsurancereview.com/News/View-NewsLetter-Article?id=82438&Type=eDaily

The insurance industry posted gross annual premium of PKR432bn ($1.9bn) in 2021, 21.7% higher than the PKR355bn chalked up in 2020, according to data compiled by the Securities and Exchange Commission of Pakistan (SECP).

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Other News
Pakistan:Insurance market sees GWP jump by 24% in 2021
Pakistan:Adamjee's improved underwriting results lead to more balanced split of earnings
Thailand:Insurance industry growth predicted to be flat in 2023
Hong Kong Insurance Awards 2022 winners feted
Taiwan:Cathay Financial Holdings to raise at least US$1.4bn




Riaz Haq said...

Pakistan launches new laws to expedite CBDC launch by 2025
The State Bank of Pakistan signed in new laws for Electronic Money Institutions — non-bank entities offering digital payment instruments — to ensure the timely issuance of a CBDC in the next three years.

https://cointelegraph.com/news/pakistan-launches-new-laws-to-expedite-cbdc-launch-by-2025

Regulators worldwide see central bank digital currencies (CBDCs) as a way to enhance fiat capabilities by inheriting the financial prowess of technologies that power cryptocurrencies. Pakistan joined this list by announcing new regulations to ensure the launch of an in-house CBDC by 2025.

The State Bank of Pakistan (SBP) signed in new laws for Electronic Money Institutions (EMIs) — non-bank entities offering digital payment instruments — to ensure the timely issuance of a CBDC in the next three years. The World Bank helped Pakistan design the new regulations, according to local media Arab News.

In addition to timeline adherence for the CBDC launch, the regulations warrant preventive measures against money laundering and terror financing while considering consumer protection and reporting requirements.

The state bank, SBP, will issue licenses to EMIs for CBDC issuance. During the announcement, Finance Minister Asad Umar stated that using EMIs in promoting the digital economy will safeguard financial institutions from cybersecurity threats. Deputy Governor of SBP Jameel Ahmad envisions curbing fiat-induced corruption and inefficiency through CBDCs. He said:

The commencement of a speedy regulatory environment places Pakistan among the nearly 100 countries that are actively involved in researching and launching CBDC initiatives.

Neighboring country India also recently joined the race to launch a home-grown CBDC. On Nov. 22, The Reserve Bank of India (RBI) announced an ambitious plan to launch a retail CBDC pilot by the end of 2022.

Indian central bank, RBI, is reportedly in the final stage of preparing the retail digital rupee pilot rollout, which will be initially tested among 10,000 to 50,000 users of participating banks.

Riaz Haq said...

5G technology to be launched next year

https://www.nation.com.pk/06-Dec-2022/5g-technology-to-be-launched-next-year

The Ministry of Information Technology and Telecommunication is likely to launch 5G technology next year in the country to cope with the challenges of the digital world. The official of ministry of IT and telecommunication said that the provision of broadband services across the country was the topmost priority of the ministry of IT. He said that the ministry of IT through the Universal Service Fund (USF) had launched some 70 projects of optical fiber cable (OFC) and broadband infrastructure development in four provinces at a cost of Rs 65 billion. “All projects are underway in far-flung areas would be completed by June next year,” he added. “In the province of Sindh alone, 20 projects of NGBSD and OFC worth Rs16.3 billion have been started so far in 20 districts, including Tharparkar, Nawabshah, Khairpur, Larkana, Badin, Jacobabad, Shikarpur, Mirpurkhas, and Dadu,” the official said. He said that projects of connectivity of the un-served and underserved communities of Balochistan, Punjab, and Khyber Pakhtunkhwa (KP) provinces had also been launched. He said, through USF aimed to connect all the citizens of the country as digitalisation had become a priority for businesses and communities. Under its Next Generation Optic Fiber (NG-OF) Network and Services programme, USF had contracted over 16,000km of Optic Fiber Cable (OFC) to benefit 31.5 million populations across the country.

Riaz Haq said...

Mobile banking doubles, internet banking grows by 51.7% in FY2021-22
As internet banking, POS, and eCommerce transactions post strong growth, the digital payments ecosystem is picking up steam

https://profit.pakistantoday.com.pk/2022/12/23/mobile-banking-doubles-internet-banking-grows-by-51-7-in-fy2021-22/

https://www.sbp.org.pk/PS/PDF/FiscalYear-2021-22.pdf

The overall number of payment cards, however, decreased during the year, from 45.9 million in 2020-21 to 42.4 million in 2021-22.

Bring in the fintech

According to the State Bank’s annual report, the four fully licensed EMIs (electronic money institution); Sadapay, Nayapay, Finja and CMPECC, combined had 262,558 total active accounts and 514,961 payment cards issued to their customers. Last year’s numbers on EMIs were not available for a comparison on how these numbers have grown.

The SBP has in the past has often emphasised on the potential fintech can play to boost digital payments and financial inclusion.

During his speech at the Institute of Banking Pakistan Annual Award Ceremony, Jameel Ahmad, Governor SBP stressed on the need for banks to revisit their traditional approach to service delivery and adapt quickly as digitalization shifts the balance of power from banks to tech savvy entities, hinting at the growing trend in fintech.

“Leveraging digital technology is essential not only to promote financial inclusion, but also to ensure that the industry keeps pace with emerging global trends,” opined Ahmed.

Speaking on the importance of technology, Ahmad quotes M-Pesa, a Kenyan fintech. “An often-cited success story is that of M-Pesa in Kenya, where it single-handedly drove mobile financial services availability and successfully raised financial services access in Kenya. “

Ahmad pointed out that a number of factors already exist in Pakistan that can help drive digital financial innovation and proliferation of a tech-based financial ecosystem. He pointed out that the nation has a fully functional digital ID system, ubiquity of mobile devices, penetration of mobile and broadband services, availability of faster payment rails, remote account opening process, and facilitative regulatory environment for enabling the entry of non-bank entities into the financial arena.

The Central Banker also points out that while fintech has brought competition, it also presents the sector with an opportunity to create synergies and mutually beneficial partnerships.

“Banks and Fintechs can partner with each other to provide innovative products for customers that are otherwise not viable on a standalone basis. For banks, such partnerships can help with penetration in untapped segments like retail businesses and Micro and Small Medium Enterprises, yielding beneficial outcomes for all stakeholders,” he said.

Encouraging the banks that are yet to make consistent and sustained moves toward technological transformation, Ahmad told them to make use of the digital bank frameworks and the instant payment system, RAAST, to position themselves for the future.

Riaz Haq said...

Pakistan cracks down on sketchy digital lending

https://techcrunch.com/2022/12/28/pakistan-cracks-down-on-sketchy-digital-lending/


Pakistan’s markets regulator issued new guidelines for digital lending in the country, cracking down on several sketchy practices that it said have become prevalent in the South Asian market.

The Securities and Exchange Commission of Pakistan said Wednesday evening that non-banking finance companies that disburse loans through digital channels, including mobile apps, will be required to disclose key fact statements such as the credit amount they are granting to consumers, annual percentage rates, duration of the loan and “all fee and charges.”

The non-banking finance firms will be required to share these key facts with consumers through audio or video and emails and text messages in both English and Urdu languages. “Any fee not included in key fact statement will not be charged to the borrower,” the regulator said (PDF) in a press release.

These firms will also not be able to access borrower’s phone book or contacts lists or pictures on the device “even if the borrower has given consent in this regard,” the regulator said. (You can read the full guidelines here {PDF}.)

“The lender shall also not be allowed to contact the persons in the borrower’s contact list, other than those who have been specifically authorized by the borrower as guarantors and who have also provided their consent to the digital lender at the time of loan approval,” it added.

The move follows the regulator noticing a rise in mis-selling, breach of data privacy and “coercive” recovery practices of licensed digital lending companies” and to safeguard public interest, it said.

Neighboring nation India also introduced strict rules surrounding digital lending in a move that has toppled the local fintech industry.

https://www.secp.gov.pk/document/circular-no-15-of-2022-requirements-for-nbfcs-engaged-in-digital-lending/?ind=1672222021650&filename=Circular-No.15-of-2022..pdf&wpdmdl=46436&refresh=63ac43d13db561672233937

Riaz Haq said...

Pakistan’s Agriculture-focused Fintech Digit++ Obtains Approval from State Bank

https://www.crowdfundinsider.com/2022/12/200398-pakistans-agriculture-focused-fintech-digit-obtains-approval-from-state-bank/


The State Bank of Pakistan (SBP), the nation’s central bank, has reportedly granted approval to the test launch of the country’s very first agriculture-focused Fintech platform, Digitt+ (providing an Electronic Money Institution or EMI permit).

Digitt+ is supported by Akhtar Fuiou Technologies (AFT), the firm revealed this past Friday.

According to the firm, the aim of this agri-Fintech app is to fully digitize the agricultural ecosystem, enable greater financial inclusion for local farmers and unbanked consumers via its tech, partnership, relationship with agri-businesses and FMCGs operating in Pakistan.

As reported by local sources, Digitt+ has teamed up with FuiouPay, an international payment solutions provider, in order to offer a market-based alternative to the traditional banking system.

As explained in the announcement, FuiouPay provides holistic enabling solutions via their 75 intellectual property licenses and proprietary software solutions.

Qasim Akhtar Khan, Founder and Chief Strategy Officer at Digitt+, noted that the firm will offer financial technology solutions to farmers residing in the country, who will have the option to open bank accounts and also gain access to credit and digital financial services – including easy bill payments, digital commerce, investments as well as fund transfers.

As noted in the update, the approval from the State Bank of Pakistan is a key milestone.

This ongoing initiative has the potential to address persistent food security issues, significantly improve yields and enhance human welfare in Pakistan, directly affecting local farmers and merchants, he stated.

Notably, Pakistan has been a significant agriculture powerhouse for many years. Agriculture employs around 50% of the nation’s workforce and also contributes approximately 25% to the GDP.

While this is considerable, the industry doesn’t have adequate access to financial services from the banking sector.

Ahmed Saleemi, CEO of Digitt+ explained that using tech to create digital financial products focusing on micro services to build a platform that should support the delivery of these solutions for the retail Agri market and corporate sector can be achieved via the provision of business tools.

Riaz Haq said...

Unlocking Pakistan’s digital potential: The economic opportunities of digital transformation and Google’s contribution

https://alphabeta.com/our-research/unlocking-pakistans-pkr97-trillion-digital-potential-by-2030/


Pakistan’s vibrant technology sector has grown significantly in recent years and is well-positioned for further growth. The country produces over 20,000 Information Technology (IT) graduates each year, has nurtured over 700 tech start-ups since 2010, and has the fourth highest earning IT workforce in the world. Pakistan’s technology sector also has a large export element, with annual revenue from exports of IT and IT-enabled Services (ITeS) accounting for USD1.4 billion in 2020 – having grown at 10.8 percent per year since 2010. Furthermore, the government has identified the creation of a holistic digital ecosystem – most prominently in its “Digital Pakistan Policy” – as one of the key levers of economic growth.

Despite these significant achievements, the country can go further in its digital transformation journey. Pakistan’s online population has grown rapidly at 68 percent per annum from 2016 to 2019, and the Internet penetration rate reached 35 percent in January 2020. However, the country faces several hurdles to full digital transformation. For example, the World Economic Forum’s “Global Competitiveness Index 2019” ranked Pakistan as 73rd out of 141 countries on the ability of the active working population to possess and use digital skills. Digital transformation will also be important to boost its economic recovery efforts and enhance the long-term resilience of businesses in adapting to future “black swan” events in the post-pandemic era.

There is a significant economic prize attached to accelerating Pakistan’s digital transformation. AlphaBeta’s study (commissioned by Google) finds that digital technologies can unlock PKR9.7 trillion (USD59.7 billion) worth of annual economic value in Pakistan by 2030.

Key messages from the research include:

There is a significant economic prize attached to accelerating Pakistan’s digital transformation. If fully leveraged by 2030, digital technologies could create up to PKR9.7 trillion (USD59.7 billion) in economic value. This is equivalent to about 19 percent of the country’s GDP in 2020. The sectors projected to be the largest beneficiaries are agriculture and food; consumer, retail and hospitality; and education and training. For example, machine learning algorithms have shown to be beneficial for the agricultural and food sector, where AI-powered technologies can monitor ecological conditions to determine whether crops need irrigation or not, reducing water use.
There are three areas of action required for Pakistan to fully capture its digital opportunity: i) develop infrastructure to support the local tech ecosystem; ii) create a conducive environment for IT exports, and iii) promote innovation and digital skills. A range of policies by the Pakistani government has already been introduced to accelerate digital transformation such as “Right of Way” policy, which expedites the expansion of telecom infrastructure, and the “Brand Pakistan” campaign, which promotes the country’s exports via digital platforms. However, there is further scope of actions for Pakistan to consider such as increasing Internet availability through infrastructure investments, especially in rural areas (e.g., Thailand’s “Net Pracharat” programme to expand the national broadband network), creating an accommodative tax framework and ease restrictive data policies, and forging close public-private partnerships to improve the relevance of skills trainings (e.g., “Philippines Talent Mapping Initiative” which involved Philippines’ Department of Labour and Employment consulting with employers to create a framework to analyse the competencies of Filipinos).

Riaz Haq said...

State Bank of Pakistan issues NOCs to five applicants for establishing digital bank

https://www.brecorder.com/news/40220082

Central bank expects after commencement of operations, digital banks will promote financial inclusion by providing affordable/cost effective digital financial services to unserved and underserved segments

The State Bank of Pakistan (SBP) on Friday said that it has issued no-objection certificates (NOC) to five applicants for establishing digital banks in the country.

The following are the ones issued the NOC:

I) Easy Paisa DB (Telenor Pakistan B.V & Ali Pay Holding Ltd.),

II) Hugo Bank (Getz Bros & Co., Atlas Consolidated Pte. Ltd. and M & P Pakistan Pvt. Ltd.);

III) KT Bank (Kuda Technologies Ltd., Fatima Fertilizer Ltd. and City School Pvt. Ltd.);

IV) Mashreq Bank (Mashreq Bank UAE); and

V) Raqami (Kuwait Investment Authority through – PKIC and Enertech Holding Co.)

In January 2022, the SBP introduced a licensing and regulatory framework for digital banks.

“The Framework was the first step towards introducing full-fledged digital banks in Pakistan. The digital banks are expected to provide all the banking services through digital means without any need for their customers to visit the bank branches physically,” said the SBP.

Race to digital banking – final round

In response to SBP’s Licensing and Regulatory Framework for digital banks, the central bank received twenty (20) applications from a diverse range of interested players such as commercial banks, microfinance banks, electronic money institutions and Fintech firms by March 31, 2022.

“Further, a number of foreign players including venture capital firms already operating in the digital banking space also expressed their interest to venture into Pakistani market directly or in collaboration with local partners. The five (05) applicants were selected after a thorough and rigorous assessment process as per the requirements of the Framework.

Bank Alfalah launches QR payment solution with SnapRetail

“Applicants were assessed on various parameters that included fitness and propriety, experience and financial strength; business plan; implementation plan; funding and capital plan; IT and cybersecurity strategy and outsourcing arrangements, etc. Further, all the applicants were given the opportunity to present their business case to SBP.

“Going forward, each of these five applicants will incorporate a public limited company with the Securities and Exchange Commission of Pakistan. Afterwards, they will approach SBP for In-Principle Approval for demonstrating operational readiness and for commencement of operations under the pilot phase. Subsequently, they will commercially launch their operations after obtaining SBP’s approval.”

The SBP said it expects that after commencement of their operations, these digital banks will promote financial inclusion by providing affordable/cost effective digital financial services including credit access to unserved and underserved segments of the society.