Pakistan-based fintech startup Sadapay raised $10.7 million ahead of its mass rollout — making it the country’s most-funded fintech in the past five years.
With the neobanking system sprouting up across the globe, Pakistan too has recently steered towards this emerging form of banking. As opposed to traditional banking, neobanking is solely grounded in an online presence — it has no physical branches — and partially mimics existing digital banks’ operations.
Its potential to parallel traditional banking is primarily inspired by the former’s scope for significant digital innovation enabling seamless digital customer banking experiences.
However, one of the reasons why neobanks are still in a nascent phase as opposed to the traditional brick-and-mortar banking structures is their limited capacity in terms of the product and service range they can provide as per regulations.
While the caution shown by Pakistani regulators is understandable, the sector should not be completely strangled in the name of consumer protection
While neobanks are restricted to savings accounts, payments services and money transfer facilities, physical and digital banks extend a multitude of services including the former but also not limited to investment services, credit services and financial advice.
Nevertheless, neobanks are still gaining momentum, as their lower costs and greater transparency against that of traditional banks compensates for their limited service range. By leveraging technology...
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