Nigerian neobank, Kuda, obtained a licence from the State Bank of Pakistan (SBP) to run a digital bank in the country on Friday, January 13, 2023. The neobank, under the name KT Bank, was one of five banks to receive a licence from the SBP. The other banks include Easy Paisa DB, Hugo Bank, Mashreq Bank, and Raqami.
In 2015, the SBP launched a national financial inclusion strategy to increase the number of financially included Pakistanis to 50% of the country’s adult population by 2020. It has not achieved that goal, with only 21% of Pakistanis financially included. Its financial inclusion record is even worse when considering gender, as 36% of male adults in the country are in the financial system compared to 7% of women.
While the country has made slow progress in its financial inclusion journey, smartphone and Internet penetration has risen. In 2022, the Pakistan Telecommunication Authority reported that smartphone users (52%) now outnumber users of 2G-enabled phones (48%) for the first time. Broadband subscribers in the country also reached 102.7 million in 2021, while the number of active mobile wallets has increased from 26.7 million in 2020 to 46 million in 2021.
Perhaps building on this, the SBP introduced a new regulatory and licensing framework for the country in January 2022, receiving 20 applications by March 2022. It has now granted a licence to the five banks, including Kuda, which are expected to incorporate a public limited company with Pakistan’s Securities and Exchange Commission. An in-principle approval is expected to be granted, after which they can commence operations in the country.
In November 2022, Kuda announced that it was beginning operations in the United Kingdom, where large numbers of African immigrants reside, providing them with local transfers and direct debits. At the time, Babs Ogundeyi, the startup’s CEO, explained that Kuda was building a one-stop-shop for Africans, with the UK being the first of its outside-of-Africa destinations. While its Pakistan move does not appear to fall under this plan, Pakistan is ripe for a digital banking disruption, and the startup possibly fancies its chances of competing in the nascent space.
