In a game-changing move for Pakistan’s banking sector, Mashreq Bank has become the first to receive a restricted digital banking licence from the State Bank of Pakistan (SBP). This marks a significant milestone in the country’s financial landscape, positioning Mashreq as the frontrunner in the race for digital banking supremacy. But as the dust settles, the real question remains: can Mashreq maintain its lead against fierce competition?
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The journey began in March 2022, when the SBP unveiled its framework for digital banking and announced that it would soon begin granting licences to digital-only financial institutions. The move sent shockwaves through Pakistan’s banking industry, with traditional banks and fintech players alike eager to seize the opportunity to become pioneers in the digital financial space.
With the growing popularity of digital payments and the emergence of easy installment options for consumers, the writing was on the wall: digital banking was the future. Banks saw the potential of establishing a fully operational digital bank without the hefty costs associated with physical branches, making the race all the more attractive.
By the time the SBP began accepting applications for digital banking licences, over 20 proposals flooded in from a range of players, including major banks like HBL, UBL, Alfalah, and JS, alongside fintech giants such as Easypaisa, local fintech companies, microfinance banks, and even foreign entities.
However, the SBP’s vetting process was anything but easy. After months of scrutiny, only five candidates emerged as finalists in January 2023: Easypaisa, Hugo Bank, KT Bank, Mashreq Bank, and Raqami Bank. Notably absent from the list were several heavyweights who failed to make the cut.
As the process continued, these five contenders received in-principle approval in September 2023, putting them in a position to move forward. But it wasn’t until the recent announcement that Mashreq Bank came out on top, securing the first restricted digital banking licence.
So, how did Mashreq secure its place at the forefront of Pakistan’s digital banking revolution? The answer lies in its deep-pocketed backing and solid reputation. While Mashreq may not have the same name recognition as Easypaisa, its parent company, the Ghurair family, is one of the wealthiest in the Middle East. Mashreq has a long history in the banking industry and has increasingly turned its focus towards digital innovations. In fact, the bank was behind the creation of NeoBiz, the Middle East’s first digital-only bank aimed at retailers.
Mashreq’s ability to leverage its established banking infrastructure and technological expertise has put it in a strong position to capitalize on the burgeoning digital market in Pakistan. However, being first doesn’t guarantee success in the fast-paced world of digital banking. Mashreq faces stiff competition from the likes of Easypaisa, KT Bank, and others still vying for a stake in Pakistan’s rapidly expanding digital financial ecosystem.
The road ahead may be challenging, especially for a bank entering a market as diverse and unpredictable as Pakistan’s. While Mashreq has the advantage of being the first, maintaining that edge in the competitive digital banking space will require constant innovation and adaptability.
As Pakistan’s financial ecosystem continues to evolve, the arrival of Mashreq Bank is only the beginning. It remains to be seen how other contenders will respond and whether Mashreq can hold its ground in the long run. The future of digital banking in Pakistan has just begun, and the race is far from over.
