With the first Digital Retil Bank licence granted to Mashreq Bank, the State Bank has begun to see light at the end of the fintech tunnel, which it had opened when it granted No-Objection Certificates to five institutions in 2023, out of the 20 which had applied. As can be seen from only one licence being granted, progress has been slower than could have been wished. Digital banking has the potential to render the need for physical bank branches obsolete, and for customers to perform all functions with their smartphones. There are two or three technical requirements, however. First, that all transactions be secure. Second, that all functions are available at all times, or at least at definite times, as with physical branches. One major target was to reach out to such underserved segments as women and small businesses
In effect, it means that cloud computing will have to grow, something which is a little uncertain, even though the various telephone companies are also offering various services. There is a need for the setting up of new data centres so that the banks can accommodate the vast amounts of customer data that will be generated. The banks are thus finding themselves getting more and more involved in blockchain technology, as they prepare to offer security. The days may soon be over where masked men with guns hold up a bank, but instead there will be the rise of the cyber-criminal. Indeed, he has already arrived, and must be preparing for the time when the digital banks go online. It my be remembered that banks were at the cutting edge of computerization decades ago, when they set up huge banks of machines running on magnetic tape. Is it unlikely that they will now be obliged to sey up their own data centres?
Meanwhile, the role of the government has expanded. While the State Bank continues to supervise and regulate, it will keep doing so, though the regulations may involve more failsafes than safes. The Pakistan Telecommunication Authority becomes even more important because it won’t represent the avility of social media users to access the latest piece of disinformation, but their ability to access their money. Throw Artificial Intelligence into the mix, and it seems that banks would do better to have computer engineers on their staffs rather than the more traditional business administration or economics graduates. The entire way that people live their lives is about to change because of technology, including their relationship to money. And when that happens, can banking void being transformed beyond belief?
