By Ume Kalsoom Abid
At the World Economic Forum Annual Meeting 2016 in Davos earlier in the year, two facets of the global Financial Services industry were examined and deliberated over in great detail. First, that globally speaking, 2 billion people and 200 Million Small to Mid-sized enterprises (SME’s) are financially underserved. And second, that innovation in Financial Services, especially the emergence of blockchain technology, poses a threat to the very idea of ‘Big Banking’. These two states in the industry, one a pervasive shortcoming and the other an existential threat, are together giving shape the future of Financial Services in the world.
To illustrate the magnitude of these developments and the speed at which they are bringing change, we must consider that 35% of global banking revenues are now estimated to be at risk by 2020 due to disruption from new entrepreneurial business models in Financial Services (also known as ‘FinTechs’).
Furthermore, the value of investment in FinTechs is projected to grow to around eight billion U.S. dollars by 2018. And to help cement of all this momentum, the ubiquity of Mobile Phones is changing the way consumers access financial services and make payments. Mobile phones have increasingly become tools that consumers use for banking, payments and shopping and as a result 255 mobile money services are now live across 89 countries.
This disruption has brought forth a wave of change and opportunity for financial sectors in Pakistan. New technologies, like mobile devices and the cloud, have given businesses the ability to rapidly adopt new business models.
With 59% increase in G2P Payments and overall 51% increase in transaction values of branchless banking in Pakistan, we are emerging as a poster child of innovation in the global industry. However, there are still vast spaces of un-tapped potential to be explored and developed. The National Financial Inclusion Strategy points out that only 8.7% of Pakistani adults have an account at a formal financial institution against the South Asian average of 45.5%.
As a result, it is the banks who understand the challenges and this fast changing landscape and are preparing themselves to compete in a new world of digital banking that will be the winners in tomorrow’s industry.
Banks are well-placed to tap into this potential but they must fast develop their digital strategy. And to execute their plans, they must acquire reliable partners to build technology platforms that are to be the engines for provisioning innovative products and services.
To put more focus on digital banking, AbacusConsulting sponsored for the 6th consecutive year for the annual Mobile Commerce Conference, held earliest this week in Karachi. The conference emphasized on the advancement of digital revolution in the financial segment of Pakistan.
AbacusConsulting is one of the major players in Pakistan to meet the innovative needs of financial institutions and telecom companies. We are the technology partner of several Mobile Banking deployments in Pakistan. We help our clients by offering digital financial services and provide opportunity to discuss possibilities to be a part of future innovative disruption.
It is hoped that the 9th international Mobile Commerce 2016 will go a long way in the development of Mobile Financial Services in the region. We see this conference as a step ahead in narrowing the gap between the industry and customers through digitization of financial services in our country.