Nigerian neobank Kuda has been granted a license by the State Bank of Pakistan (SBP) to operate a digital bank in the country. Kuda, which will operate under the name KT Bank, was one of five banks to receive a license from the SBP. The other banks include Easy Paisa DB, Hugo Bank, Mashreq Bank, and Raqami. This move comes as the SBP has been pushing for financial inclusion in Pakistan, with a goal of 50% of the country’s adult population being financially included by 2020, however, it has not yet reached that goal, with only 21% of Pakistanis financially included, and even lower figures for women. With the rise of smartphone and internet penetration in Pakistan, the SBP introduced a new regulatory and licensing framework in 2022 and received 20 applications by March 2022. Now, these five banks including Kuda are expected to incorporate a public limited company with Pakistan’s Securities and Exchange Commission and will be granted an in-principle approval to begin operations in the country. It’s worth noting that in November 2022, Kuda announced that it was beginning operations in the United Kingdom, targeting African immigrants and providing them with local transfers and direct debits. While the move to Pakistan may not be part of this plan, it presents a ripe opportunity for digital banking disruption and Kuda may see potential to compete in the market.
Kuda, being a neobank, can provide a range of services such as online account opening, mobile banking, and digital payments which are becoming increasingly popular in the digital age. In addition, the use of technology and automation can also increase the efficiency and security of financial transactions.
In the United Kingdom, Kuda’s target market is the African immigrants and the company wants to create a one-stop-shop for them, providing local transfers and direct debits. Pakistan, on the other hand, presents a different market, but it seems that the company sees potential for success there as well. It will be interesting to see how Kuda adapts to the Pakistani market and how it will compete with other digital and traditional banks.
The State Bank of Pakistan’s move to grant licenses to digital banks like Kuda is a positive step towards financial inclusion and accessibility in the country. The use of technology and automation can improve the efficiency and security of financial transactions, and the introduction of digital banks can increase competition in the banking industry, driving innovation and better customer service. Kuda’s entry into the Pakistani market presents an opportunity for digital banking disruption and could potentially benefit the country’s population.
