Keynote Address at State Bank of Pakistan Launch of Raast Instant Payment System
Prime Minister Khan, Governor Baqir, Honorable Ministers, Ambassadors, Distinguished Guests, Ladies and Gentlemen,
I am really delighted to be here today for the launch of the pro-poor micropayments gateway. And also to congratulate you on the draft banking on equality policy. These are important milestones on the journey to a more inclusive financial system and to a digital economy that works for everyone.
This is particularly significant for vulnerable segments—such as women and the poor, and especially during this pandemic. These groups have been disproportionately affected by COVID-19, in part because they were already underserved prior to the pandemic. Based on the last Global Findex data from 2018, men in Pakistan were roughly five times more likely than women to have an account and, of the poorest 40% of the population, just 14% had an account.
We know that financial inclusion has a pivotal role to help people deal with the health and economic crisis caused by COVID-19, and of course to assist them in exploring new opportunities. So these figures provides us an indication of the challenges ahead.
Since the beginning of the pandemic, over 200 nations have expanded social protection measures; many by using digital payments providers to make transfers directly into bank accounts or mobile wallets. And digital technologies have supported the shift from in-person to online payments for goods and services.
This has helped provide more access to the digital economy. In Pakistan, the recent experience of setting up the Ehsaas “one woman, one account” digital wallets for 7 million vulnerable Pakistani women has demonstrated the potential for rapid change and impact allowing this emergency program.
The Ehsaas is part of an encouraging effort from the government to improve financial inclusion for Pakistan. It also includes:
- The revised National Financial Inclusion Strategy’s target to create 65 million active digital accounts, with 20 million of these accounts to be held by women by 2023.
- And, the development of the new regulations for electronic money providers, along with the digital onboarding of merchants.
Moreover, efforts to build a regulatory framework for digital banks, to set up a fintech innovation office at the SBP, and to enable online account opening, all promise to spur financial inclusion and introduce potential new providers that could create innovation in the sector.
A critical piece to advance progress will be the finalization and successful implementation of the draft banking on equality policy. The draft emphasizes a gender-lens approach to the financial sector by:
- Diversifying banking workforces and access points;
- Improving women-centric products;
- Enhancing programs for women’s financial awareness;
- Creating digital and in-person engagement points for women;
- And, finally, improving the collection and use of gender-disaggregated data.
Of course, the public sector cannot do this alone. So it is very important that the private sector strongly engages with the State Bank of Pakistan on implementing this policy. This presents an opportunity for financial institutions to be the leaders in driving women’s financial inclusion in Pakistan. Your impact will come from your commitment and action.
For this to happen, it is essential that the private sector goes beyond business as usual, and serves the poor, women and small- and medium-sized enterprises. Existing partnerships between fast moving goods companies and financial service providers, or telcos, are already digitizing supply chains which will create benefits for all. New players are also entering the market, creating competition and developing more customer-centric financial services. And these innovators, from banks to small fintechs, have come together to form the FinTech Association of Pakistan to find solutions to emerging issues and to collaborate on promoting best practices.
All these developments in the private sector will be bolstered by the launch of the micropayments gateway, or Raast, which is accessible for all, regardless of who is the provider. I would like to recognize the hard work of the SBP, Karandaaz, and the Gates Foundation in making this possible. As well as, all the financial service providers that are already part of the platform and, of course, to you—Prime Minister—for your great support.
But we all know, making the effort of setting this up will be in vain if it is not used. If we want the gateway to be really impactful, it will be crucial over the next few months to focus attention on usage. This will only be realized when the platform is adopted by all banks and financial service providers. As Mexico, for example, already experienced, it is key to have a real value proposition for consumers and small businesses if we want to ensure adoption. Identifying the right incentives for consumers and small businesses to keep small balances in their accounts and to make transactions over the platform instead of using cash will really determine the success of the gateway.
The next steps in designing the appropriate governance structure, scheme rules, forthcoming use cases, and pricing will therefore be critical for the platform to have impact. In addition to requiring all banks, microfinance banks, and government entities to join the platform, it will be important to intensify dialogue with industry partners. Getting these design elements right is vital to increase competition between all providers, lower costs, and increase value to customers. There are 17 countries who have functioning faster payments infrastructures, including some of my partners such as Singapore and Mexico, and of course my home country of the Netherlands. Payment specialists from all these countries can assist and share their experiences.
Finally, I look forward to following your continued progress and cheering your accomplishments. My partners are ready to continue to provide support. I wish you much success in all your efforts and fully expect that your work will help build a more inclusive financial and digital economy with expanded opportunities for all.
Thank you very much and I wish you all success.