In a significant development, Telenor Microfinance Bank Limited (TMBL) is poised to transition into a digital retail bank pending regulatory clearance and final approval from the central bank, according to the acting chief executive. The State Bank of Pakistan granted in-principle approval to five entities, including TMBL, in September 2023, allowing them to prepare for the launch of digital financial services in a country that heavily relies on cash.
The other four banks that received such approvals are HugoBank, KT Bank Pakistan, Mashreq Bank Pakistan, and Raqami Islamic Digital Bank. These banks, including TMBL, were granted no objection certificates in January 2023, enabling them to register as public limited companies with the Securities and Exchange Commission of Pakistan.
TMBL, known for owning easypaisa, a prominent digital payments platform, emphasizes the significance of converting its license from microfinance to a digital bank. The bank aims to leverage its expertise in microfinance and branchless banking services in Pakistan to address the broader financial needs of the underbanked populations.
Kashif Ahmed, the acting CEO of TMBL/easypaisa, highlighted the acknowledgment of their digital-first strategy by the State Bank of Pakistan, emphasizing their commitment to becoming a fully-fledged digital bank to enhance financial inclusion in Pakistan. He mentioned significant progress in operational readiness, including digital lending services, optimized branch banking network, and seamless integration with offline business.
While regulatory approvals for digital banking operations are still in process, Ahmed assured that they are working closely with the central bank to meet all criteria and ensure readiness across various areas. Once formal approval is granted, TMBL plans to launch commercial operations as a digital retail bank, catering to the financial needs of millions of Pakistanis.
Despite the country’s high dependence on cash, TMBL sees a ripe opportunity for mass adoption of digital financial services due to the high smartphone penetration rate and a significant population aged between 15-40 years. Ahmed believes that TMBL, operating on a digital-first principle, is well-positioned to drive financial inclusion and digitize cash in Pakistan.
Post-approval, TMBL intends to offer a comprehensive suite of digital financial services, including payments, lending, savings, insurance, and platform services in a completely digital manner. The focus will be on frictionless onboarding, real-time digital fulfillment, and a superior customer experience.
TMBL, a joint venture between Ant Financial and Telenor, aims to broaden access to digital financial services through innovative distribution models, including digital salesforces, platform partnerships, and embedded finance solutions. The bank’s mission is to cater to various customer segments, including micro, small, and medium enterprises, youth, women, and freelancers, with customized and innovative digital financial products.
It’s worth noting that last month, Telenor Group agreed to sell its Pakistan unit to the state group Pakistan Telecommunications as part of its strategy to build scale and market-leading players in Asia.
