Time to Innovate the Banking Sector



By Sohail Malik

After spending more than a decade (2001 – 2012) in Telecom Industry for various national/multinational companies in Pakistan I was able to build a successful career for myself. Yes, telecoms in Pakistan is a cut throat business but it provides fuel to those who are ambitious and want to grow fast.

After reaching the position of Chief Commercial Officer for a leading Telecommunication Company (highest possible position one can hold before becoming Chief Executive), I decided to change my career path from telecommunications to banking. At the peak of price wars, saturation and very thin margins, telecom industry was naturally destined to decline, exactly like we had predicted in early 2010.

At the same time, Pakistan’s financial sector was and is still growing rapidly, opening up a world of opportunities through Digital Banking, and Branchless Banking regimes.

How is it possible for an institute to think about Digital Banking and doesn’t require Digital People? After evaluating the scope, growth chances and the right time, I jumped into it and joined one of the Largest Banks of Pakistan.

With lot of hopes, innovative ideas, faster pace and out of the box thinking I was sure to be on top in a shorter span of time based on my expertise and exposure. But, surprisingly banking sector was altogether a different world. Soon I realized that there is a stark contrast between the both industries. The pace at which new projects, existing projects and BAU is conducted in banking sector is extremely slow and time consuming. A project that would hold a TAT at one quarter at there (in telcos), takes approximately two years to complete here (in banking).

Individuals are not encouraged to think out of the box and new initiatives are not something to be appreciated here and this leads to lack of innovation. People believe to follow rather than dare to lead. Everything is gauged on ‘Market Practice’ and ‘Precedents’ and someone with newer ideas is usually termed as ‘Non Industry Inhabit’ or a ’Lost Child’ and he / she is met with laughter, harsh remarks, and sympathies in return.


I wondered why there hasn’t been much innovation in the banking sector in Pakistan? Upon digging, it was obvious that majority of the issues were related to regulator. Today I can safely say that State Bank of Pakistan is one of the most strictly regulated central banks of the world.

In my opinion, the rooting problem is the that State Bank of Pakistan’s line of communication is directed at the TOP tier only; they speak with the heads of banking institutions i.e. the President, CEO or the Chairmen.

Such a line of communication is inconceivable in the telecommunication sector. I remember the incidents when Final Warning Letters were received and answered by manager level POC (Point of Contact) at Telcos and sending a letter directly to CEO of telco (unless its from Chairman PTA himself) is considered something very rigid and unethical.

Banks in Pakistan are good at replicating things, instead of innovating ideas and brining in new products. Any proven business plan that has a proven record will be appreciated greatly, however, if you come up with a new thing – which obviously will involve risk – may not receive similar feedback from the peers.

It is often observed that banks in Pakistan are usually busy in saving their running business lines instead of creating new ones. But, this has to change. Since telcos are running their Financial Services very aggressively and trying to snatch retail businesses from the giants, the time has come for the banks to think differently.

As a matter of fact, banks initially just ignored the telcos, then they started showing the telcos the teeth and now the time has come when banks are in fighting mode with telcos. I am fearing the day when telcos will come ahead to offer credit cards or type of loans to consumers.


What banks should essentially do at this point in time is to delegate the operational responsibilities to business partners. Despite the fact that banks themselves have vast operations, considering the cost involved and magnitude of returns, passing on the responsibility to partners will only reap them the benefits. This is exactly what happened with the telecommunications sector. We saw the emergence of what I call, “White Label Offerings (WLO)”.

These WLO’s came up with the idea offering different type of White Label Telecom Services like, Calling Cards and outsourced services to consumers to reduce costs, and save time. Through these calling cards, ease of access was created and customers were allowed to make calls from their mobile phones by simply purchasing a calling card and dialling the number.

Essentially, banks need to align their vision in the same way telco’s did. Banks have an edge today because in Pakistan, banks have yet to reach a stage of full maturity in digital and branchless banking platforms. This is particularly crucial at this time because startup culture is about to kick in here in Pakistan.

With emergence of 3G technologies, there would be countless startups who would be willing to partner with banks to offer these WLO to act as a front end of a financial solution while back end can be conveniently managed by the banks themselves.

So, the bank aligned with the WLO will have complete control over security, risk, KYC, card production and any information that is stored on your card. It is important to understand here that we are talking specifically about Branchless Banking products to begin with. Some great examples could be the outsourcing of WLOs for front end management.

Once and if these ventures prove to be successful, then banks can start offering more of their services to WLOs such as branch franchises and credit cards. Banks will benefit in terms of less workload, better returns, more business and new outsourcing initiatives while white label companies will get benefited in terms of making a brand name for themselves and earnings through product pricing and commission income.


Once banks in Pakistan get comfortable working with WLOs it will automatically create a ripple effect. This will lead to innovation and out of the box thinking not only inside banks but with their external partners in terms of product enhancement.

Young entrepreneurs with fresh start ups will want a piece of the cake and will bring in investment in such companies. To sum up this behavioural change from the banks perspective, they need to explore the option of white label offerings to avoid disappearing from the economic map the way in which Paktel, Instaphone and Kodak did.

This paper is aimed at audience from all walks of life. I understand that people who do not have a banking or financial services background, may take a look at this and find the whole union between banks and white label offerings as an interesting venture but they will be highly sceptical about its success.

Let’s come to the banking cohort of the population now; old and conventional bankers will also be wary of this idea at the risk of thinking out of the box but they might pitch it to their Digital teams to explore it further.

From the point of central banks of countries, our regulator, SBP will see this as a pretext for bringing modifications in banking policies/frame work and will route the idea to their relevant departments to look into this possibility further.

Last but definitely not least, new start-ups that are run by young entrepreneurs will be ecstatic about WLOs and will want to invest their funds in such operations, by thinking which bank to contact immediately for discussions and evaluation of.


Author is working at a senior position in one of the Largest of banks of Pakistan. He manages Digital Payments and has approximately 15 years of experience in Sales, Product Development & Management in Telecom, FMCG and Digital/Retail Banking.


  • Admin! What did happen Pakistan’s PAYPAL meeting? Which you mentioned on the 23th April.

      • aap se t0 asay e jawaab ki umeed ti janab, kbi kch acha mat 0nay dena pakistan k liye,

        Aap k liye “Tikkay” laga0n ya Firdos ki Lawn lengay ??

        • yar proof to nae hai wese ider hota yehi hai to muje lagta cancel he ho gae hoge

  • If banks need innovation, They have to give the chance to the fresh blood and start encouraging the R&D. Engage the University students for their thesis, If industry want the new ideas. Too many people want to work on that either they don’t have resource or guidance or space to work. Last but not the least change the old mindset in the banks. Literally, I know the people who still want the Banker’s Check instead of PO/DD. :)

  • Good piece of writing. Hopefully someone from SBP will read this and make some changes they way the do business

    • SBP is not going to do anything. Banks have to take the initiative to go with some solid proposal and I know they will entertain.

    • SBP is not going to do anything. Banks have to take the initiative to go with some solid proposal and I know they will entertain.

  • what an islamic republic of pakistan

    and what a soodi nizaam in it..

    ___________ ho aise andhe goonge or behre hukumrano pr jo 67 saal baad b apne nizaam ko sood se nahi bcha sake..
    or baten karte hain aasmaan se taare torne ki.
    kya aik momin musalman ki taleem me sood ki sharah ki caculations honi chahiain ??
    kya humare zehno ko soodi nizaam k liay tayyar krna durust hai
    kya ap sab unhi logon ki safon me aanaa chahte ho jin se ALLAH OR US K RASOOL S.A.W.W ne khuli jang ka ailaan kia hai???
    main officially _________ bhaijta hoon in sab logon pr jo gunah ko gunah hi nahi samajhte

    ye hai is islamic country ka state bank
    jahan rozana sood ki sharah sare aam muqarar ki jati hai,,,

    _______ho tum jese khabeeson pr jo apne bachon or nasloon ko soodi nizam se nahi bachana chahte or iblees mrdood ki pervi me khush hain khabees kaheen k….

    [Edited by admin]

    • seems like kamran should move to the sharia islamic caliphate of north waziristan.

      • It is not a matter of north Wazirastan but there is a clear instruction in Quran that interest is a War against Allah.. it seems odd for me being a business student… but why not we do some research on True Islamic economic system in which Real investment is made for business and Profit/ Loss is shared among investors (Mazarbah).. Read Mr. Orya Maqbool Jan who is a part of International movement against Ribah/ interest and has presented a complete alternative economic system based on islamic rules… this is not a joke but most of the problems in our world are caused by this interest system which is suitable for Capitalists only and poor people/ countries are facing worst conditions…

        • I prefer to live without interest. But you know what? under Islamic society of the past, there were always poor. Under socialism or communism there were always poor. Under capitalism there are always poor. Poverty has nothing to do with the system.

          • poverty is a different thing my dear.. any one who can not perform.. stay poor… I am talking about much bigger economic problems…let’s hope for good in future.. :)

      • O wait wait wait mr shahid saleem! Wt u said u mean people like me who really wants to defend the verses of QURAN not stupid jews or chiristianic thoughts should be at north wasiristan…

        For your kind information and I bet it would be mind blowing informative line for you that
        From the past two years Britains started an islamic banking system and check out there official banking sector reports that the turn over of islamic banking system is 200 times better than there old banking system and more intrustingly they observed that thats equally beneficial for customers and bankers..

        Wese ap jese loagon k bare me hi kaha tha shayed maine ________ cuz jo b sood ki himayat kare ga us pr ALLAH OR US K PYARE HABEEB S.A.W.W or un k man’ne walon ki lanat….

        • Isi liay kehte hain mr shahid saleem k hr khud me ungle nahi deni chahidi kidre sanp v honda ay…

          • Or a0 jese stubbend or jahil logon ko to wese b aadat hoti hai hr jagah pr tang arane ki..

      • سود:
        حصہ اول
        رسول اللہ صلی علیہ وسلم نے فرمایا:
        سود کے 73 درجے ہیں سب سے کم تر درجہ اس گناہ کی مثل ہے کہ کوئی آدمی اپنی ماں کے ساتھ نکاح کرے.
        1845-صحیح ابن ماجہ
        حصہ دوئم
        سود کا ایک درہم جسے جانتے ہوۓ آدمی کھا لے 36 مرتبہ بدکاری کرنے سے بھی برا ہے.
        جس قوم میں زنا اور سود پھیل جاتا ہے وہ اپنے نفسوں پر اللہ کا عذاب حلال قرار دے دیتے ہیں.
        1860-صحیح الترغیب
        4981-مسند ابی یعلی

        حصہ سوئم
        رسول اللہ صلی علیہ وسلم نے سود لینے والے، اس کے تحریر کرنے والے اور اس کے گواہوں پر لعنت کی ہے نیز فرمایا (گناہ کے ارتکاب میں) سب مساوی وبرابر ہیں.
        333-ابو داؤد
        2277-ابن ماجہ
        8/54-شرح السنۃ

        • what is your point? 8 days ago i said “I prefer to live without interest.” was that not clear?

    • You just read the word “banking” and began your tirade. I am certain this is the only English word you understand. The writer talked about an entirely different thing, unfortunately in English, and you started cursing him.
      Banks are selling products that people buy. agar mulamat hi karni hai tu sab sy pehly apny maan baap aur relatives ki karo. THEY are equally responsible. bachay! lanat unn par bhej pehly.
      btw, is this how you preach Islamic values? Musalmaan WO hai jisky haath aur ZUBAAN sy dosray musalmaan mehfooz rahein.

      • Dear mudassar! Are u really muslim.. no I mean I am not asking it to you but itld be much better if u ask it yourself and try to revise the defination of sood.. or jahan tak rahi bat k musalman woh ji k haath or zuban se doosra MUSALMAAN mehfooz rahe! Bhai kya musalman sood khata ya deta ?? Kya woh musalman ho sakta hai jo QURAN OR HADEES ki nafi kare pr khud ko musalmano ki fehrist me shamil samjhe..
        Beshak woh munafqeen me se hi ho sakta hai.. bhai mere mujh se soodi nizam ko defend krne ki bjary apne iman ko defend kr lo aisa na ho k imaan k lalay pr jain mujhe to ap ne sab k samne jhutla dia lekin kya khuda k samne is ka azala kr pao ge?? Maine lanat aik makhsoos mindset pr bheji hai jo is nizam ko prefer krte hain jo ALLAH OR US K RASOOL k munafi ho. Maine kisi b musalman ko is me nahi ragra. Ap k liay main woh report yahan b post kr deta hon jo shayad ap k liay b mind blowing ho or mr xim k liay b

        For your kind information and I bet it would be mind blowing informative line for you that
        From the past two years Britains started an islamic banking system and check out there official banking sector reports that the turn over of islamic banking system is 200 times better than there old banking system and more intrustingly they observed that thats equally beneficial for customers and bankers..

        Aj woh Christians or jews hamare QURAAN ki taleemat pr chal kr kamyaab tr hote jaa rahe hain or ap kehte hain k todays modren economic system is far better than the teachings of islam..

        I know k hamare yahan behes krne se kisi ko koi farq nahi parne wala but main apne ALLAH OR PYARE NABI MUHAMMAD S.A.W.W ki teachings ko challange krne walon me se hrgiz hargiz nahi ho sakta.. ap khush apne deen pr main khush apne iman pr.

    • I love “sood”. It works for the most part and has allowed people to grow out of poverty. You would rather see them stuck to monthly handouts.

      • سود:
        حصہ اول
        رسول اللہ صلی علیہ وسلم نے فرمایا:
        سود کے 73 درجے ہیں سب سے کم تر درجہ اس گناہ کی مثل ہے کہ کوئی آدمی اپنی ماں کے ساتھ نکاح کرے.
        1845-صحیح ابن ماجہ

    • Take it easy man. At one time, guys like you declared Loud Speaker as “Shaitan ka Baja” and Train as “Shaitan ki Sawari”. Today’s Interest System is entirely different from Islamic concept of Riba. Lekin aap jaisay logon ko 50 saal baad samajh aayegi.

      • Hahahaha u must b kidding man…

        We are talking about the clear wordicts and verses of QURAN and HADEES.

        Not my own sentiments..

        MAY ALLAH protect our iman..

        Let me mention a golden hadees for the current time.

        Abbu Hurerah r.a se riwayat hai k NABI KAREEM S.A.W.W ne irshad farmaya
        Jab qayamat qareeb ho gi to aik waqt aisa ai ga k insan subha musalman ho ga or sham tak kafir ho jaey ga
        Or shaam ko musalm soey ga to subha tak kafir ho chuka ho ga..


        Bhai mere behes baraey behes karna meri aadat nahi pr kalma e haq kehne se main rukta nahi.. na ap mujhe jante ho or na hi main ap ko pr hamara RABB hamari kawishon or soochon se khoob waqif hai or jald woh ham sab se hisab lene wala hai

    • Don’t worry about the above comments bro, they are just wanna be Gorras….they are bunch confused cool dudes who think Angel dropped them in Pakistan by mistake otherwise they were destined to born in the Hollywood Hills. Mentally they are not part of Islamic society thats why one loves Sooad and another one thinks Quran is a book of past and present interest system has superseded its knowledge…

      • Saying that Riba and Interest are two different things doesn’t mean Quran is a book of past. Our mullahs and people like you are living in past and not willing to understand modern financial system just as people like you refused to accept simple tools such as Loud Speaker and Train.

        • You must be a banker thats why defending modern interest systems just to prove that your job is Halal…may Allah give you long life but people like you will understand after 50 years when you’ll be in your grave and at that moment you’ll realize…oopsssss hun tay lag gai meri
          May Allah guide us all.

          • A reall punch…. and opps whats that
            Its knock out… yeah mr stupid 420 knocked out by only one goldwn punch by sam…


          • My comment did not get post. Repeating again.

            Fortunately I am not a banker and therefore do not have to defend my job as Halal. That sends your argument to grave instead. Sorry about it :)

            Just tell me one thing. How come use of Loudspeaker and Train was Haram earlier but is Halal now. People who said Loudspeaker is not Haram faced same hate response which people arguing for Interest face today.

            How come the use of technology is not acceptable for Moon Sighting but making announcement of Moon Sighting using technology is allowed, especially the technology that was Haram. I hope you know that I am talking about TV.

            Please respond with concrete arguments instead of cursing people who ask rational questions. Let’s see whether you know your stuff or just try to settle every disagreement with Punches.

      • I appreciate ur comment.
        Or shukr ada krta hun k ap jese loag b mojood hain yahan pr jo kalma e haq ko mante or kehne ka hosla b rakhte hain. InsahALLAH one day ull b proud on it inshaALLAH. May ALLAH TABARAK WATALAAH protect our iman and forgive our sins and guide all of us.. AAMEEN

  • Full article to read nae kiya because start mein jo impression mila wo ye ha
    Apne moun miyan mithoo
    wese @aamir7:disqus mein bhi na aik article likh kay apni tareef or sath kuch ider uder ki baten ker k sub ko bore ker dun. Mein bhi boht bari position per hun. ( I am serious)
    maybe its paid or maybe the writer is your friend or you share this on a reference.

    • You are right. He has tendency of being an attention ________. For instance, he says “Preston really doing fabulous job.” But I hope im wrong. After all, corporate sector turns you into a different breed.
      He has given an impression that he regrets his decision to switch from telecom to banking sector. Is he right to claim that next promotion of chief commercial officer is ceo? I thought board of governors appoints CEO. There is no such thing as getting promoted to this position.
      But he must be an ambitious guy. lets wish him best of luck

      • Look at this:

        “After reaching the position of Chief Commercial Officer for a leading Telecommunication Company…..”

        As if he was Chief Commercial Officer in Mobilink, Telenor and the likes. Come on man, DV-Com was a baby. Only a kid could have been made CCO there :D

  • Debit Card loss – Why Customer to suffer ????

    If a Debit Card is lost, when you dial a Bank to report its loss, there will be SING and DANCE music for half and hour to do this and do that. I have read that a person’s account was wiped out till the banking officer picked up and took the complaint. But it was too late as the thief had a nice day with shopping the Debit Card at customer’s account.

    It is prevailing universal practice in most of the countries, especially in most Middle East Countries to use 4 digit pin code for ALL goods and service purchased through Debit Cards. I happened to be in South Africa and used a Debit Card issued in
    Qatar by a Bank. I could use the subject Debit Card very easily anywhere
    by punching my 4 digit pin code for safety and security reasons.

    For customer’s convenience, nowadays cordless machines for Credit / Debit Cards are widely used in Hotels and Restaurants so that a customer may not get up from his seat to go to counter and instead may punch his pin code simply by sitting and remaining on his / her dinning chair.

    This Security is the dire need of the day and State Bank of Pakistan should implement this security measure in letter and spirit and instruct Banks to adopt 4 Pin Security code immediately. They don’t need to invent a wheel for this as this 4 pin security pin code is already built up in the Card which we use for ATM withdrawals.
    They [State Bank of Pakistan] must give Commercial Banks a firm deadline to make use of this secret pin code compulsory for each and every purchase failure to comply Banks should be made responsible for all such impending losses incurred by Card owners in case of Card theft / losses.
    Dr. Saleem Siddiqi

  • This article doesn’t quite fit the picture and title, my first impression was that writer is talking about some new specific technology to be implemented in banking but it turned out to be mostly the managerial talk and personal experience.

  • Good article. You missed one structural issue, in past years banks were essentially taking the deposits and loaning it to Pak Government, netting the huge spread. They did not have to do consumer banking at all; not even commercial banking, as net loans were negative. Now with competition, hopefully, they would need to focus on consumer banking. And to do that, they need innovation.

    SBP is truly very rigid, a friend at local bank can not operate mobile app for its sales force due to SBP: as according to them, consumer data is venerable (have they not heard of encryption?).

    Innovation in payment can save money even Govt. money (back of the envelope calculations: BISP payout Rs. 70 billion; paid to visa or mastercard @2.5%= Rs.175 million. With its own online payment system, it would be fraction of this payout alone. Something like Dwolla.

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