The State Bank of Pakistan (SBP) has announced to launch an Innovation Challenge Facility (ICF) to find and support innovative fin tech solutions to promote Digital Financial Services (DFS) in the country. The key objective of facility is to provide an opportunity to financial institutions (FIs) as well as non-financial players to experiment with innovative digital financial products or services in the production environment but with in a well-defined space and duration.
The ICF facility will be available to banks, microfinance institutions, government entities & government departments/subsidiaries/boards, insurance companies, non-banking financial service providers, payment service providers, payment service operators, branchless banking players, fintechs, telcos, software houses, and startups. However, organizations other than banks must have a partnership arrangement with Banks to become eligible for the grant. ICF will be an on-going facility till June 2019.
According to SBP's Guidelines on Digital Financial Services (DFS)-Innovation Challenge Facility issued on Tuesday, the goal of ICF is to allow market players to develop innovative solutions for Pakistani consumers and enterprises for increasing access and usage of financial services within the existing infrastructure of Asaan Mobile Account (AMA). The first batch of proposals will focus on adoption and up-scaling of AMA Scheme.
SBP believed that this will foster the creation of a client centric DFS system which encourages customers to not only open Digital Transaction Accounts (DTA) but use other financial instruments to drive adoption of DFS. Going forward, these solutions can play a major role to digitize payments, foster inclusive economic growth, improve value chains in industries, increase socio-economic wellbeing of masses and bring transparency in the economy.
The facility aims to support financial service providers, financial technology providers and institutions with a digital solution to develop new or expand existing financial products, services and delivery platforms that will increase financial access for people living at the bottom of the pyramid.
The purpose of this challenge facility is to help for launch of innovative ideas having leapfrog growth potential to increase financial inclusion in the underserved areas, for population segments normally excluded from financial sector, i.e. farmers, factory workers, women and other blue-collar workforce.
Develop easy to use, cost effective and innovative digital payment solutions for different stakeholders of society such as general masses, or specific demographics such as women, youth, micro-entrepreneurs, housewives; as well as businesses, and government.
The fund will provide support for pilots and for up-scaling financial services vis-à-vis seed capital and a platform for knowledge sharing, besides novel solutions to create easy digital access to formal financial services including savings products, lending services, pensions, insurance tools, remittances, etc.
SBP has also launched Asaan Mobile Account (AMA) as a DTA scheme under NFIS to create the necessary pillars for the DFS Ecosystem by enabling account opening and usage of financial services through an interoperable platform for the low income demographic.
ICF will be housed at NFIS Secretariat, SBP and a cross functional team having technical level would manage the initial scrutiny of the proposals. After having initial evaluation, the shortlisted proposal will be presented to Evaluation Committee which draws representation from SBP, PTA, DFID and private sector.
The Committee is assisted by the NFIS Secretariat and the technical team in fulfilling its duties such as screening, approval, and oversight of the challenge grants. Grant sizes will be determined according to the financing requirements of the proposal in question; however, the duration of the projects should be ideally not more than ten months. Applicants will be required to contribute at least 10 percent of the total project cost as matching funds.