In a significant step towards the digital transformation of Pakistan’s banking sector, the Governor of the State Bank of Pakistan (SBP) awarded the first restricted license for pilot operations to Mashreq Bank Pakistan Limited (MBPL). The special ceremony, held with the Board and senior management of MBPL, also saw the presence of SBP’s Deputy Governor and other senior executives. This marks a crucial milestone in the journey of digital banking in Pakistan, especially after earlier this year when a microfinance bank received the first Digital Retail Bank (DRB) license for commercial operations.
Mashreq Bank Pakistan, a wholly owned subsidiary of Mashreq Bank PSC (UAE), comes with a legacy of innovation and a customer-focused approach in the banking industry. With Mashreq Bank’s extensive presence across the globe—including regions such as Europe, Asia, Africa, and the U.S.—MBPL is poised to replicate this success in Pakistan. The bank’s agile approach and global expertise set the foundation for it to introduce cutting-edge digital banking solutions to the local market.
The SBP’s move to grant licenses for digital banks is a part of the regulatory framework introduced in 2022, which allows both fintech startups and traditional banks to offer fully digital banking services. Under this framework, two types of licenses were made available: the Digital Retail Bank (DRB) and the Digital Full Bank (DFB), both of which operate exclusively through digital channels. The SBP adopted a cohort-based approach and initially decided to issue up to five licenses, a move aimed at fostering healthy competition within the sector. The initiative garnered significant interest, with 20 applications from major financial players. After a comprehensive evaluation process, SBP 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.
The Governor of the SBP expressed his expectations for MBPL to set a high bar for excellence in the banking sector, encouraging the bank to leverage advanced technologies like artificial intelligence (AI) and cloud computing. These technologies will enable MBPL to deliver seamless and highly personalized banking services to customers. Furthermore, the SBP highlighted the importance of fostering competition and innovation within the financial sector, stressing that digital banks such as MBPL play a crucial role in transforming Pakistan’s banking landscape.
The SBP Governor also emphasized the significance of building resilient digital infrastructures capable of withstanding potential cybersecurity challenges. As the global financial world continues to embrace digital solutions, safeguarding both operations and customer data is paramount. Ensuring data integrity and trust in the banking system will be critical as more customers turn to digital banking for their financial needs.
SBP’s commitment to supporting innovation in the financial sector remains strong, and the introduction of the licensing framework for digital banks is a strategic initiative to drive financial inclusion in Pakistan. This framework is designed to allow digital banks to offer more convenient, accessible, and efficient services that meet the evolving demands of customers. With this pilot license now granted to MBPL, the bank has an opportunity to test and refine its digital offerings, which could ultimately shape the future of banking in Pakistan.
Through this initiative, the SBP aims to enhance the digital banking ecosystem, with the vision of offering advanced financial services that can better serve a wider population. With competition and innovation on the rise, Pakistan is on the brink of a new era in banking, where digital transformation will empower consumers and businesses alike.