John Papaevgeniou is the founder and CEO of Relational SA, a company he has led for the past 28 years. He founded Relational in 1995 in Athens, Greece, and has been an active leader of the company ever since, continuously investing in the company’s growth in the EMEA region. He has successfully expanded the company into new geographies through strategic planning, firm execution, and select acquisitions.

Following are the edited excerpts of a recent conversation that he had with BR Research:

BR Research: Can you tell us about your company, Relational SA?

John Papaevgeniou: We are a leading European IT firm. Through the years, Relational has become a leading business software provider with vast industry experience, an international footprint, and a long track record of serving 150+ major industry players in 35 countries, providing invaluable support and driving tangible business impact.

The company has offices in 4 strategic locations that include Athens – Greece; Amsterdam – The Netherlands; Bucharest – Romania; and Nairobi – Kenya. They deliver Loan Origination, Loan Management, and Debt Management solutions through their i-Apply, CiTRON and AroTRON products. Their long-lasting partnership with several international software vendors such as SAP, Informatica, BMC, and Atlassian allows them to offer Business Service Management, Analytics, and Data Governance solutions.

BRR: How do you see Pakistan as the potential market in which to explore your business?

JP: Pakistan represents a promising regional business expansion market with several key opportunities. An enormous opportunity is the large prospect base - with a population of over 240 million, Pakistan is the 5th largest country globally, offering a substantial target audience to address with our products and services. Despite recent economic challenges, Pakistan’s economy is resilient, and key sectors, such as power generation, renewable energy, telecoms, etc., are identified as high-potential areas. Additionally, Pakistan’s strategic location in South Asia makes it a gateway to other regional markets, enhancing its attractiveness for businesses looking to expand their reach. Finally, the government has been improving the business environment, including infrastructure development and regulatory reforms, to attract foreign investment.

BRR: With 45 commercial and microfinance banks and over 40 fintech operators in Pakistan, how do you see the market competition, considering Pakistan has the third largest unbanked population?

JP: This competition drives innovation and better services and challenges new entrants to significantly differentiate themselves to gain market share. The fact that a large part of the population doesn’t have a bank account can be seen as a massive opportunity for banks to tap into a vast, underserved market. Additionally, the potential of digital banking, becoming a key trend, is backed up by the State Bank of Pakistan, which has approved several digital banks that will transform the banking landscape by offering convenient, 24/7 services.

BRR: What in your view is the role of technology (innovative solutions) for the banking sector and a financial strategy that could enhance Pakistan’s low saving-to-GDP and lending-to-GDP ratio?

JP: Technology plays a transformative role in the banking sector, driving innovation, efficiency, and customer satisfaction. In the case of digital banking, online and mobile banking platforms provide customers with 24/7 access to their accounts, enabling transactions, bill payments, and fund transfers from anywhere.

Artificial Intelligence (AI)enhances customer service through chatbots, personalized financial advice, and fraud detection. It also improves efficiency via process automation.

Blockchain technology ensures secure and transparent transactions, reducing fraud and operational costs.

Cloud Computing services offer scalable and cost-effective data storage and processing solutions, enhancing operational efficiency.

Advanced data analytics help banks understand customer behavior, manage risks, and tailor products to meet customer needs.

Robust cybersecurity measures protect sensitive financial data from breaches and cyber-attacks.

By leveraging technology and implementing strategic financial reforms, Pakistan can improve its saving-to-GDP and lending-to-GDP ratios, fostering economic growth and stability. Such a financial strategy could include principles like promoting financial inclusion as expanding access to banking services for the unbanked population can increase savings and lending. This includes leveraging mobile banking and fintech solutions to reach remote areas.

Then incentivizing savings is crucial as higher interest rates on savings accounts, tax incentives, and financial literacy programs can encourage more people to save.

It could also include developing capital markets as strengthening them can provide alternative investment opportunities, encourage savings, and improve the lending environment.

Another area is enhancing credit access by simplifying loan application processes and offering microloans, which can boost lending, especially to small and medium-sized enterprises (SMEs).

It must also include regulatory reforms to ensure a stable macroeconomic environment can foster confidence in the financial system, encouraging savings and lending.

And then Public-Private Partnerships (PPP) can help collaborate with private sector entities to develop infrastructure and financial products that can enhance the economic ecosystem.

BRR: Authorities have been working aggressively on digitizing the economy by increasing formal banking channels for transactions rather than cash. What are your suggestions to the government and stakeholders?

JP: This is an excellent initiative towards digitizing the economy, and by focusing on some key areas, the government could create a beneficial environment for the growth of digital financial services, ultimately leading to a more inclusive and efficient economy.

First is enhancing the digital infrastructure. Invest in robust digital infrastructure to ensure reliable and secure online banking services; expand internet access, especially in rural and underserved areas, to facilitate digital transactions.

Then promoting financial literacy is equally crucial. Launch nationwide financial literacy programs to educate the public about the benefits of digital banking and how to use digital financial services safely; collaborate with educational institutions to integrate financial literacy into the curriculum.

Mya another suggestion would be to incentivize digital transactions. Offer incentives such as tax benefits, discounts, or cash back for using digital lpayment methods; implement policies that encourage businesses to adopt digital payment systems.

Also, developing and enforcing stringent cybersecurity measures to protect against fraud and cyber-attacks; and providing training and resources to financial institutions to enhance their cybersecurity capabilities should also be on their radar.

The government should also encourage Innovation in fintech. Support the growth of fintech startups through grants, subsidies, and regulatory support; foster a competitive environment that encourages innovation in digital financial services.

The government should also streamline the regulatory framework. Simplify and harmonize regulations to make it easier for financial institutions to offer digital services; ensure that rules are flexible enough to adapt to new technologies and business models.

Again, Public-Private Partnerships are important. Encourage collaboration between the government, financial institutions, and technology companies to develop and implement digital financial solutions; leverage the expertise and resources of the private sector to drive digital transformation.

Authorities should monitor and evaluate progress. Establish mechanisms to monitor the adoption and impact of digital financial services; regularly evaluate the effectiveness of policies and initiatives, adjusting as needed to ensure continued progress.

BRR: How do you compare Pakistan’s market with a peer country where you have worked and helped your clients succeed?

JP: Malaysia is a good example.A country of 33 million people, with a diverse and multicultural population – far less than Pakistan’s but with higher per capita income. The banking sector is well-developed, with advanced digital infrastructure and high internet and smartphone penetration. It also has quite a supportive regulatory environment, facilitating rapid growth in digital financial services and other technology-driven sectors. The knowledge gained from collaborating in a market with those characteristics can easily be leveraged to meet the needs of the Pakistani market. As mentioned, the untapped opportunity of customers without bank accounts can open the door to significant improvement of financial inclusion through digital banking and fintech solutions. This will drive growth in key sectors such as consumer goods, power generation, renewable energy, and telecoms.

BRR: How do you see the emerging role of fintech and digital banks worldwide and in Pakistan? Are these threats to the conventional banking system?

JP: The rise of fintech and digital banks is reshaping the global financial landscape, including Pakistan’s market. The first and most significant impact is that financial services are becoming accessible to underserved populations, particularly in developing countries. Banks can offer convenient, low-cost financial products and services, helping bridge the gap between the unbanked and the formal financial system. Another positive outcome is leveraging advanced technologies like AI, blockchain, and machine learning to enhance customer experience, streamline operations, and reduce costs. This innovation drives efficiency and creates new financial products tailored to customer needs, which leads to more Customer-Centric Services. Digital banks, now more than ever, can focus on providing seamless, user-friendly experiences sand offer services such as instant payments, personalized financial advice, and automated customer support, which are often more appealing than traditional banking services.

While some could argue that fintech and digital banks pose a competitive threat to traditional banks, this also presents collaboration and financial inclusion opportunities. It forces conventional banks to innovate and improve their services, leading to better products, better services, and ultimately better customer experience and satisfaction – beneficial for the entire financial ecosystem.

BRR: Pakistan plans to convert its banking system from conventional to Islamic. How do you see the transformation phase?

JP: This would be a significant and complex undertaking, and it can present opportunities but also some challenges. Islamic banking can enhance financial inclusion by providing Shariah-compliant financial services to a more substantial segment of the population, particularly those who avoid conventional banking for religious reasons. We also know that the demand for Islamic banking products is growing domestically and internationally. This transition can position Pakistan as a global Islamic finance market leader. The shift to Islamic banking can drive innovation in financial products and services, leading to a more diverse and resilient banking sector.

On the other hand, converting to Islamic banking requires significant changes in the operational framework of banks. This includes developing Shariah-compliant products, training staff, and updating IT systems. Educating customers about the benefits and principles of Islamic banking is crucial. This involves marketing efforts and financial literacy programs. Finally, ensuring compliance with Shariah principles while maintaining economic stability and regulatory requirements is a delicate balance.

BRR: What are the modern challenges to banking companies and financial institutions?

JP: One of the biggest challenges is the regulatory landscape, which is becoming increasingly complex. Financial institutions must navigate many regulations, such as the Dodd-Frank Act and Basel III, which can strain resources and require significant investment in compliance systems2.

Next on the list are the Cybersecurity Thr-eats. Cybersecurity threats have become more prevalent with the increasing digitization of banking services. Financial institutions are urged to invest heavily in cybersecurity measures to protect sensitive customer data and maintain trust. Rapid technological advancements are beneficial for everyone; however, they are disrupting traditional banking operations.

Banks must adopt new technologies such as AI, blockchain, and cloud computing to stay competitive and meet evolving customer expectations. And they need to do it fast. Customers have never been more demanding, expecting personalized, seamless, 24/7 banking services. Meeting these expectations requires significant investment in digital transformation and customer experience enhancements. If we look at the macro-environment, economic instability, such as high inflation and fluctuating interest rates, can impact the profitability and stability of financial institutions. Banks must develop robust risk management strategies to navigate these uncertainties.

Those are only a few of the long list of modern challenges. Talent acquisition, financial crime, outdated legacy systems, and the ESG agenda are also critical areas that should be addressed.

BRR: How do you see banks’ importance in increasing investments in cybersecurity?

JP: Crucial. Banks handle vast amounts of sensitive data, including personal information, financial records, and transaction details.A breach could lead to severe consequences, including identity theft, economic loss, and damage to the bank’s reputation. Maintaining customer trust should be the cornerstone of the banking industry. Customers need to feel confident that their money and personal information are secure. Robust cybersecurity measures help maintain this trust and prevent customer attrition. Investing in cybersecurity ensures compliance with data protection regulations, avoiding hefty fines and legal repercussions. It also prevents financial loss from cyberattacks while enhancing operational resilience. Finally, investing in cybersecurity can give the banks strong differentiation and a competitive edge, as customers will be more likely to choose a bank that demonstrates a strong commitment to protecting their data and financial assets.

BRR: How can you help Pakistan attract remittances from expatriate Pakistanis through technology?

JP: Great question! This could be a game-changer for Pakistan’s economy. Specific strategies should be followed to educate and make this an attractive option for expatriates.

Digital payment platforms such as encouraging using mobile wallets like Easypaisa and JazzCash and promoting online remittance services such as ACE MoneyTransfer offer secure, cost-effective, and efficient ways to send money home.

Implementing blockchain technology to ensure secure and transparent transactions and enable instant money transfers.

Increasing access to banking services in rural and underserved areas through mobile banking and digital financial services. It could also help to launch financial literacy programs to educate people about the benefits of using formal remittance channels and how to use digital financial services safely.

Incentivizing formal channels by reducing transaction fees for remittances sent through formal channels makes them more attractive than informal methods. This could be topped up by offering tax incentives.