Tajikistan-based fintech startup Alif is ready to tap Pakistan’s fintech space to cater to the country’s large ‘unbanked’ population, said Mahmood Shamsher Ali, Country Representative Alif Capital Holdings.

Following the announcement of the digital banking framework by the State Bank of Pakistan, the company is one of roughly 20 organizations and startups that have sought a license.

“The central bank’s effort has sparked significant interest from participants all over the world,” Ali, the CEO of Alif Digital Bank, stated after the license was approved, adding, “It is rumored that over 20 applications were submitted on March 31, 2022.”

“This bodes well for the future, with legacy banks being pushed to reinvent themselves and fintechs contributing to a new ecosystem that should help the State Bank of Pakistan achieve its various goals.”

Ali has been exploring the market with Alif’s founders to come up with solutions that will provide the most value to Pakistan’s underbanked and ignored SMEs.

Banks have access to only Rs6-7 trillion, according to sources, while Rs17-18 trillion in transactions remained unreported. “Alif is Shariah-compliant as well,” Ali added.

“Alif has enormous potential to service a market like Pakistan because of its stints in Tajikistan and Uzbekistan, which are similar but smaller markets.”

The country’s fintech market has enormous potential, but most transactions are undocumented, said Omer Bin Ahsan, founder, and CEO of another Shariah-compliant fintech Haball. The lack of Sharia-compliant products for consumers, according to Ahsan, is one of the key reasons for Pakistan’s poor banking penetration.

According to Ali, Alif intends to provide BNPL, month-long loans, B2B lending, and remittance services. The company intends to invest Rs1.5 billion in paid-up capital at the outset, increasing to Rs4 billion once fully operational.

Alif’s in-house core banking system was operational by 2017. The products were made and accounted for by Shariah. Alif’s products and services have grown to include alif mobi by 2018. (the largest and most widely used finance mobile application in Tajikistan). By that time, they had joined cross-border money transfer networks and developed, a personal internet banking solution in Tajikistan.

Alif arrived in Uzbekistan in 2019. Alif became Uzbekistan’s largest Buy Now Pay Later (BNPL) service provider in just three years.

Alif received a full banking license from Tajikistan’s central bank in 2020, making it the first Central Asian fintech company to cooperate with Visa on a strategic level.

Alif, which has an e-money and payments license in Uzbekistan, became Tajikistan’s fastest-growing retail bank in 2021.

Alif’s founders visited Pakistan in September 2021 to research the market. The discovery led to a better understanding of BNPL’s credit ecosystem, banking offerings, and an overview of the holes that a fintech, particularly one with a Shariah-compliant and strong customer-centric approach, could fill. Alif spent the fourth quarter of 2021 preparing to join the Pakistani market.

Simultaneously, the SBP released the Digital Retail Banking Framework for Pakistani applicants.

“Alif had previously determined that the circumstances were ideal. Women were enormously neglected, migrants’ families were underserved, and Pakistan’s increasing young population did not have a bank that would cater exclusively to their behaviors,” Ali said.

“However, the young army, whether freelancers or individual contributors, was tech-savvy. They used smartphones frequently to communicate, learn new things, and serve their multinational clients.

A snafu was unavoidable. At the same time, one of the most encouraging invites was from a regulator willing to innovate, engage with local firms, and discover novel solutions to aid Pakistan’s transition from a cash-based to a digitally enabled economy,” he added.

Ali continued, “Alif’s founders saw that the local answer would need to be fast-evolving, technologically powerful, and customer-focused.”

He went on to say that it would have to be made expressly for the Pakistani market.

“With its wholly in-house created solutions, Alif was well-positioned to execute this.” Ali added, “Alif could now boast of having its own Core Banking System, Customer Relationship Management System, and an android and iOS-enabled application.”

“Unlike traditional businesses, Alif’s main emphasis is to deeply understand the customer’s ecosystem and develop methods to connect, offer value, and contribute to helping consumers save and manage their financial demands through a single “application” solution,” he continued.

Alif’s goals in Pakistan, according to a corporate representative, are consumer finance, mobile payments, SME financing, and mobile remittances, where the company is one of the fastest-growing market leaders.

Image Credit: Alif


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