KARACHI: Governor State Bank of Pakistan (SBP) Jameel Ahmed has urged the banking sector to embrace advanced technologies such as analytics and artificial intelligence to improve threat visibility and deter fraud effectively.
Addressing the Institute of Bankers Pakistan’s (IBP) Annual Award Ceremony here on Friday, Governor SBP said that while technological disruptions will unleash new opportunities, they also entail certain new risks that would need to be identified and managed proactively.
He said that in particular, cyber security and consumer frauds have the potential to jeopardize the core asset of banking. “A loss of customers’ funds or data by even one institution tarnishes trust in the entire banking industry”, he added
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Therefore, there is an urgent need to embrace advanced technologies such as analytics and artificial intelligence to improve threat visibility and deter fraud effectively in the banking sector, he said.
Governor in his speech shared thoughts on three important areas including financial inclusion, digital transformation of financial services, and climate change. “These are the areas that we must focus on collectively, as among other factors, they will be vital in shaping the banking system going forward,” he added.
He also asked the banking industry to recognize the risks posed by climate change. Environmental degradation and climate change are evolving issues with real business and economic repercussions for Pakistan, he added.
“There is an urgent need to transition to greener and sustainable business practices, which cannot be delayed any longer. Banking sector can take a lead role and start by conducting a thorough assessment of the key climate-related risks and exposures impacting the sector in particular and the economy in general”, he added.
Governor SBP said that in the future it would be vital for the banking sector to adopt standard industry-wide taxonomy and data definitions that enable macro-level financial stability and stress testing assessments.
He urged the banking industry to review its potentially pivotal role and increasingly channel credit towards climate-smart and sustainability-friendly businesses.
“I would encourage the banking sector players to take a holistic view and incorporate climate considerations into their financial inclusion and digital transformation initiatives going forward,” he added.
Financial inclusion is a vital enabler for poverty reduction, raising the standard of living, and improving financial saving, investment, and economic growth. Raising the public’s access to financial services has been and will remain an important strategic objective of SBP.
He informed that SBP has made great strides towards improving unique and active bank accounts; however, despite this, bank accounts in Pakistan, especially of females, are still quite low compared to our peer countries.
“We must not be content with just raising the number of unique bank accounts, but aim to integrate the use of financial services by individuals, entrepreneurs, SMEs and large businesses in their day-to-day transactions,” he added.
Governor SBP said that technology driven financial innovation is a game changer for Pakistan and digital financial services can help expand outreach and bring un-served communities into the fold of financial services.
Fortunately, there are a number of factors already in place that enable digital financial innovation and proliferation of a tech-based financial ecosystem in Pakistan.
He said that leveraging digital technology is essential not only to promote financial inclusion, but also to ensure that the industry keeps pace with emerging global trends.
Advancements in technology, he said that particularly digitalization of financial services, are altering the banking and payment system landscape by creating profound opportunities in the business models of the financial industry.
“Digitalization is likely to increasingly shift the balance of power from banks to tech-savvy entities such as Fintechs. To keep pace with this fast-evolving landscape, our banks would have to revisit their traditional approach to service delivery and adapt quickly”, he said.
Jameel Ahmed said that the banks investing in capabilities to aggregate customer data, and leveraging Artificial Intelligence and Bigdata for analysis to effectively anticipate customer needs will be more likely to deliver a superior customer journey and ensure customer loyalty.
While the evolving ecosystem, with new entrants such as Fintechs, indicates a more competitive outlook for the financial sector, it also presents opportunities for creating synergies and mutually beneficial partnerships.
“Banks and Fintechs can partner with each other to provide innovative products for customers that are otherwise not viable on a standalone basis,” he suggested.
For banks, Governor SBP said that such partnerships can help with penetration in untapped segments like retail businesses and Micro and Small Medium Enterprises, yielding beneficial outcomes for all stakeholders.
In addition, the partnerships with academia and global peers can help banks to be well-equipped for emerging trends and respond to evolving needs in an informed and effective manner.
He also encourages all the banks to take full advantage of the enabling infrastructure, put in place by SBP, in the shape of customer onboarding and digital bank frameworks and the instant payment system, RAAST, to position them for the future.
Governor SBP acknowledged the efforts of the IBP and suggested that in order to better align collective interests with the forces shaping the industry, IBP may also consider recognizing industry efforts in fields such as women empowerment and sustainable finance through special excellence award categories.
On the occasion, Mansur-Ur-Rehman Khan Chief Executive IBP briefed about the IBP annual banking award.
As per announcement HBL has won the award of the best bank of 2022. Award for Housing Finance was won by Bank Alfalah, Best Innovative Bank Award by Kashaf Foundation, Best Consumer Bank Award by Meezan Bank, Best Digital Bank Award by Bank Alfalah , Best Bank for Agriculture Finance was won by HBL, Best Bank for SME Award goes to Bank of Punjab and Best Microfinance Bank Award to HBL Microfinance Bank.
Copyright Business Recorder, 2022
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