Ant Financial is about to upend the entire Pakistani retail banking sector

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Photo: Reuters/Bobby Yip

Banking in Pakistan has not, to put it diplomatically, reached its full potential. It is so inefficient, according to one industry insider, that more than 35 banks provide services to only about 12% of the population. But Omer Salimullah, a fintech specialist with Karachi-based JS Bank, wrote in a post last week that the days are numbered for this sorry state of affairs, and China’s Ant Financial will be the catalyst.

The Alibaba subsidiary took the plunge into the Pakistani financial services market with an acquisition earlier this month, looking to tap into the potential of around 100 million un-banked individuals. Ant Financial’s acquisition of Telenor Microfinance Bank for the sum of US$185 million is “a VERY big deal,” Salimulla emphasized. “As a comparison, 100% of RBS Pakistan was sold to Faysal Bank for US$ 50 million. Please note that Ant has not valued a Pakistani micro finance bank at US$ 410 million. What they have valued is the almost complete takeover of the retail financial services market from incumbent banks,” he said.

Ant’s partnership with Telenor’s mobile banking brand, Easypaisa, is going to transform banking services in the country, and synergy with a possible acquisition of Pakistan’s largest e-commerce player Daraz, will expand the ecosystem even further. The Chinese fintech giant stands to swallow up a huge chunk of the youth an un-banked market, according to Salimulla, and many small to mid-sized banks will not survive the next several years.

“There is too much old-world thinking in corridors of powers in banks. There is ZERO realization of what is coming and how big this sea change will be,” he warned.

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