Page 178 - ITU-T Focus Group Digital Financial Services – Executive Summary

1 Introduction

1.1 Background

Information and communication technologies have penetrated nearly every aspect of urban human life.
Similarly, the global banking systems have also undergone a major metamorphosis given the technological
advancements. In general, foreign banks are credited with introducing “e-banking” in Pakistan between the
late 1980s to the mid-1990s. In the late 1990’s, domestic banks in Pakistan also started following a similar
trajectory to adopt the technologies and e-banking services like automatic teller machines (ATM) cards and
debit cards. Since then, the e-banking system in Pakistan has transitioned from ATM to telebanking,
electronic fund transfer and the revolutionary online banking.

1.2 Challenge and response

Despite the adoption of e-banking in Pakistan, several private banks still rely on traditional banking systems.
Even in banks with the provisions for e-banking, these services are not fully functional. Several banks still
have no website and ATM machines or the facility for online payments. Customers of such banks have to
deposit their bills and cheques in person.
Apart from the limited use of e-banking in Pakistan, there other issues which mar the widespread adoption
of this technology.
These challenges include:

(a) Security issues: The major challenge for banking sector in Pakistan are e-security, cyber-attacks,
unauthorized access to accounts and frauds. This coupled with the limited training on ICTs given to
non-technical staff, exposes the accounts of customers to various privacy and security threats.
(b) Improper management and regulation: Falsifying reports on cash-inflow and other transactions
along with corruption issues increases people’s mistrust in Pakistan’s e-banking system.
(c) Lack of an effective regulatory mechanism to thwart security risks
(d) Limited knowledge among the public on e-banking.

2 The Project

2.1 Vision

Realizing the imminent risks associated with e-banking, the Government of Pakistan has been striving to
make electronic banking a pleasant experience for its citizens by including the Electronic Transaction
Ordinance 2002. This Ordinance provides the legal structure for payments made through electronic
transactions. Furthermore, the Payment System and Electronic Funds Transfer Act, 2007 was also
implemented to provide a regulatory framework for e-banking. The overall responsibility of overseeing the
e-banking scenario in Pakistan has been taken over by State Bank of Pakistan, which supervises and monitors
the payment transactions within the country as well as overseas.
The recently approved Prevention of Electronic Crimes Bill, is also expected to supplement the existing laws
in this domain to protect and improve the security associated with online transactions.

3 Conclusions

Throughout Pakistan’s stint with e-banking techniques, the Government has consistently tried to render
support its expanding banking sector. As such the cyber-crimes associated with banking fraud still remain
relatively high in Pakistan. Assessing this situation, the Government of Pakistan has regularly introduced
appropriate laws and regulations which are bound to facilitate the growth of the banking sector and improve
its security in the coming decades.

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