According to the World Bank’s Global Findex Database 2017, after China and India, Pakistan has the largest unbanked population with 100 million eligible citizens. The report found that the reasons for this pertain to a number of factors.
The primary reason cited is that people do not earn enough to save anything nor do they earn enough to qualify for a loan. The second most cited reason is that the need for a bank account has never arisen, perhaps due to the infrastructure, cash-based economy, or lack of knowledge. The third most cited reason is that in traditional patriarchal societies, women are barred from financial independence and/or agency over their own income or wealth.
Mobile banking apps in Pakistan have not scaled. We realized that customer interface should not be app based. We believe that voice is the next touch.
This means that the husband, brother, or family patriarch has an account, with all income or wealth pooled into that. So, while the male banked population may be high, the female unbanked population is often greater. Other factors include distrust of financial institutions, distance from a branch, and lack of proper documentation.
The opportunity to bank 100 million people means that there are well over 20 banks in Pakistan working with the State Bank of Pakistan (SBP) to resolve the issue. One of the solutions was to introduce Islamic Banking, billed as an alternative investment model that appeals to members of society that claimed to be unbanked for religious reasons.
To solve the problems around access and customer retention, scores of banks such as Meezan Bank and Bank Alfalah launched branded apps to help customers bank seamlessly or avail points on transactions. These apps serve the dual purpose of easing the customer and collecting metadata that would otherwise be taxed to sift through.
An upcoming app from UBL aims to add a location-based discovery feature, showing users a map that points out proximity from outlets that offer discounts to UBL customers.
In lieu of digital transformation, JS Bank has adopted a $1 million high-risk approach to this problem. Instead of an app, the company is setting up a digital bank through established platforms around bots, both chat and voice that have scaled.
“Mobile banking apps in Pakistan have not scaled,” said Omer Salimullah, Head of Open Banking and Ecosystem Development at JS Bank. “We realized that customer interface should not be app based. We believe that voice is the next touch.”
The high-risk approach undertaken by JS Bank aims to use a branded prompt on Google Assistant (GA) to converse with current and prospective customers about their financial, business, and banking needs. Khurram Sheikh, the Chief Digital Officer of JS Bank, claims to have co-created an AI stack that tracks query sentiments, semantics and aims to predict what the user will need in lieu of financial services.
A Bold but High-Risk Approach
Pakistan is a market where banning a social, video, or digital platform for arbitrary reasons is the norm. Brand marketers in the country have learned this lesson repeatedly when Facebook and YouTube have been banned for months at a time.
In addition, relying on external platforms often results in low control over customer data and the metadata that comes with it. It further allows platforms to monetize that data to their favor, offering it to competitors as well.
According to Sheikh, this has been resolved, while Salimullah said that it’s not a pressing concern at the moment, adding that partnering for scale is much more important than thinking the app-based approach will work. It clearly hasn’t and the data issue is a bridge he’ll cross when the time comes, Salimullah said.
Sheikh says that the AI stack is bridged to GA and is being trained to understand a variety of languages common in Pakistan. The hands-free nature of voice aims to be the ultimate means by which JS Bank enables its customers to passively pay bills and transact, while actively engaging in alternative activities. Salimullah added that voice also means that the perceived barrier of literacy is taken off the table as well.
Relying on external platforms often results in low control over customer data and the metadata that comes with it. It further allows platforms to monetize that data to their favor, offering it to competitors as well.
“If your bot is able to communicate with customers in Saraiki, it just changes the game,” he said. “When convenience and localization converge, we feel that the adoption is going to be huge. We are going to be launching on the Google Assistant because 95% of smartphones in Pakistan are Android based. We are not setting up a bot on our platform.”
As of today, JS Bank is the only BFSI company in Pakistan that has launched an open banking portal with 13 API’s exposed, covering balance inquiry, biometric verification, wallet-opening, balance inquiry, and more.
“So it’s going to be a voice led model,” said Salimullah. “We’ll keep adding platforms, Facebook after Google. With the departure of WhatsApp’s founders, the business is looking to monetize heavily.”
Salimullah believes that the approach of driving traffic to a branded app or website is a zero-sum game that represents an insurmountable waste of time and energy, especially when historically comparing efforts to outcomes.
While the effectiveness of this approach has yet to be actualized, it does represent a desire to shift away from the follower model and approach the problem with a fresh perspective, led by an AI-based IP. And in doing so, JS Bank effectively has a first mover advantage.