ISLAMABAD: Approximately 60 percent of the e-commerce transactions in the country were carried out through cash and the remaining 40 percent through digital channels in the previous fiscal year, according to 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 for the promotion of financial technology (fintech) in the country.
The mobile banking network has expanded to more than 534,460 mobile banking agents and 74.6 million m-wallet accounts but cash is still dominating economic activities in the country. Electronic payment is not common in Pakistan.
Some authorities, not necessarily from developed markets, have regulatory frameworks for various fintech businesses, which can be adopted by Pakistan with mutual collaboration, after analysis and amendments, 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 and being more approachable.
Sumbul Naved Qureshi, a senior compliance consultant and owner of a Dubai-based firm, said that banks could encourage fintech. She called for banks to stay abreast with changing banking mechanisms and to capture the larger market share.
She said that new or smaller fintech firms have already provided the opportunity to banks. “Fintech can provide technical expertise through customised affiliations and collaborations. For banks, it is the most efficient way to achieve the goal of digitisation in collaboration with other stakeholders,” she said.
She added that the formation of a new regulatory framework was not the only challenge but it was also needed to review and amend the existing laws for making them conducive for fintech businesses.
The biggest challenge in the country is obtaining licence 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 facilitate 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 Qureshi.
She said that 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 regulator, fintech collaborating forums,” said Sumbual Qureshi.
She told WealthKP 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.
