The Deputy Governor of the State Bank of Pakistan (SBP), Saleemullah, has made it clear that digital transformation is no longer optional but an absolute necessity for financial institutions. In a speech at the 16th SaarcFinance seminar held in Islamabad, he called on financial institutions to invest in advanced analytics, artificial intelligence (AI), and automation, all while developing regulatory frameworks that strike a balance between fostering innovation and ensuring stability.
The event, organized by the SBP at the National Institute of Banking and Finance (Nibaf), brought together experts, policymakers, and delegates from the South Asian Association for Regional Cooperation (Saarc) member countries to discuss key issues affecting central banking and the financial industry. The seminar, titled “Challenges and Opportunities in the Capacity Building of Central Banks and the Financial Industry: Lessons for Saarc Countries,” provided a platform for in-depth discussions on the future of financial systems and central banking.
In his address, Saleemullah highlighted the profound impact of technological advancements, geo-economic shifts, and climate change on central banking. He pointed out the growing importance of AI, machine learning, and blockchain in enhancing the efficiency, inclusivity, and affordability of financial services. These technologies are rapidly reshaping the financial landscape, offering immense potential for innovation but also presenting new challenges for both regulators and financial institutions.
Saleemullah emphasized three key challenges that central banks and financial institutions must address in the face of these technological shifts. The first challenge revolves around the accelerating adoption of AI, Big Data analytics, and blockchain. These technologies are changing the way financial institutions operate, and their adoption requires central banks to urgently reskill their workforce to keep up with the innovations.
The second challenge is the global digital divide, which poses significant risks to the adoption of digital technologies, particularly in developing regions like South Asia. While digital transformation holds tremendous potential, the uneven access to technology and infrastructure in certain regions threatens to exacerbate economic disparities and limit the benefits of these advancements.
The third challenge is the rise of fintech and financial interconnectedness, which has increased the risks associated with cybersecurity, data privacy, and financial fraud. The growing complexity of the financial system demands greater regional and global collaboration to address these risks and ensure a secure and trustworthy digital financial ecosystem.
Saleemullah also took the opportunity to underscore the unique role of SaarcFinance as a platform for cross-border collaboration among South Asian nations. He advocated for the establishment of joint training programs, knowledge exchange initiatives, and regional centers of excellence to foster collective growth and address the challenges facing the region’s financial systems.
In conclusion, Riaz Nazarali Chunara, CEO of Nibaf, called for collective action from Saarc countries to embrace innovation, invest in human capital, and strengthen regional cooperation. By doing so, he stated, the region could build a more resilient and inclusive financial ecosystem that is better equipped to navigate the digital transformation underway in the global financial industry.
This event underscored the pressing need for South Asian nations to adapt to the rapid changes in technology and finance. With the support of regulators, financial institutions, and industry stakeholders, the region has the potential to harness the power of digital transformation and pave the way for a more secure and inclusive financial future.