The next step for fintechs

Digital financial services (DFS) have gained momentum in Pakistan since the Covid pandemic. Mobile app and internet banking have grown phenomenally, and branchless banking accounts have surged to 103.1 million. The State Bank (SBP) has launched Pakistan’s first fully interoperable instant payment gateway — RAAST — and recently introduced a merchant payment module. Thus, the country’s digital financial services ecosystem is ready for yet another major disruption: open banking solutions. Open banking is the practice of consumer-initiated, secured and explicitly approved data sharing among financial institutions, investment companies, and third-party financial service providers (which are typically fintechs) to access their customers’ financial information through secure application programming interfaces (APIs). In simpler terms, it enables the sharing of financial data, with the account holder’s consent, between different financial service providers.