KARACHI: The Governor State Bank of Pakistan (SBP) Jameel Ahmad, offering a blueprint for futuristic transformation of the banking system driven by innovation, inclusion and responsibility, stressed on banks to reorient business models to serve the needs of the private sector, especially SMEs and small depositors.
He was addressing the 10th Pakistan Banking Awards ceremony, organized by the National Institute of Banking and Finance (NIBAF) Pakistan in collaboration with DAWN Media and A.F. Ferguson & Co for promoting excellence, innovation, and integrity in the banking sector, said a statement issued here.
The SBP Governor presented the prestigious Best Bank Award to Meezan Bank, recognizing their outstanding performance and commitment to excellence. Bank of Punjab grabbed three Best Bank awards for Women Inclusion, SMEs and Agriculture Inclusion; Bank Alfalah topped in Digital Excellence and Customer Engagement while HBL, Faysal Bank and Kashf Foundation were declared as best among the banks for ESG, Mid-sized Banks and Microfinance Institution respectively.
The governor SBP, in his address, observed the important role of these awards in helping raise the standard of banking in the country and in this context, offered a blueprint for the needed transformation of the banking system for the next decade, driven by innovation, inclusion and responsibility.
This transformation would not be possible unless banks reorient their business models towards serving the financial needs of the private sector, especially SMEs and small depositors, he observed, adding “Banks that continue to rely on easy returns from lending to the government will eventually be left behind by institutions that are mobilizing deposits and meeting the growing credit needs of the underserved segments.”
Elaborating on the way forward, Governor SBP encouraged banks to focus on four main areas- digitalization, utilization of AI and tailor-made easy financial products, integration of climate risk, and realignment of business models.
He asked the banks to embed digitalization into everyday digital experiences of their customers and their own business operations, including mobile commerce, agriculture supply chains, credit scoring, and risk management. Second, banks should put in place artificial intelligence and machine learning tools to build smarter risk models incorporating alternative information furnished by AI; and design tailor-made financial products for small firms, start-ups, and entrepreneurs who may lack conventional documentation, he added.
Jameel Ahmad also underscored the need to integrate climate risk into banks’ credit decisions, set clear sustainability targets, and develop green bonds and sustainability-linked loans for climate financing. And finally, banks should reassess their priorities and strategically realign their business model to better facilitate and strengthen Pakistan’s exporters, he urged.
