ISLAMABAD: Approximately 60 percent of e-commerce transactions in Pakistan were carried out in cash and the remaining 40 percent through digital channels in the Fiscal Year 2021-22, reports WealthPK quoting the Pakistan Telecommunication Authority (PTA).
An expert told WealthPK that the State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan (SECP) and other stakeholders should join hands to promote financial technology (fintech) in the country.
The mobile banking network has expanded to more than 534,460 agents and 74.6 million m-wallet accounts but cash still dominates economic activities.
Some authorities, not necessarily from developed markets, have regulatory frameworks for various fintech businesses, which can be adopted by Pakistan after analysis and amendments through mutual collaboration. They are necessary for the local market and in line with the existing legal framework. The regulatory helpdesks can play a more proactive role in aiding prospective participants by addressing their queries.
Sumbul Naveed Qureshi, a senior compliance consultant and owner of a Dubai-based firm, said banks could encourage fintech. She called for banks to stay abreast of the changing banking mechanisms and to capture a larger market share. She said new or smaller fintech firms had already provided an opportunity to the banks.
“Fintech can provide technical expertise through customized affiliations and collaborations. For banks, it is the most efficient way to achieve the goal of digitization in collaboration with other stakeholders,” she said.
She added that the formation of a new regulatory framework was not the only challenge and reviewing and amending the existing laws are also needed to make them conducive to the fintech businesses.
The biggest challenge in the country is obtaining a license to operate in the absence of any specific regulatory framework. In Pakistan, regulatory sandbox space has been introduced where fintech can test the business ideas in a controlled environment. However, entering this sandbox scheme is not easy, as only a limited number of people have access to it.
“Regulators have introduced helpdesks to support the prospective participants; however, it is still a daunting task to obtain relevant information or clarifications either directly from the regulator or through consultants,” said Sumbul.
She said a strong and well-thought-out regulatory framework would lay a strong foundation for developing fintech in Pakistan. However, the expertise in business and technology lies with the fintech firms and young entrepreneurs.
The regulators have a bigger role and responsibility, as they have to take into consideration operational aspects, financial stability, market integrity and protection of investors while developing new regulatory frameworks.
“The most efficient way of achieving a workable and successful regulatory framework is through regulators and fintech collaboration forums,” said Sumbul.
She told WealthPK that access to such forums should not be limited to a few selected entities and input from the industry should be heeded. Collaboration with international regulators would also be a big step in this direction, she added.
