Why Pakistan’s Banks Need to Rethink Digital Transformation
Pakistan’s banks are digitizing faster than many expected. SBP Governor Jameel Ahmad said at the Pakistan Banking Summit 2026 that more than 92 percent of retail financial transactions are now processed digitally, up from about 50 percent a few years ago.
But his message to banks was not to celebrate. He urged them to treat digital transformation as a long-term strategic investment, not a technology project.
What Digital Transformation Means?
An application is what customers see and use. Transformation is about the technology infrastructure that powers it, enabling the processes that run the bank. It is responsible for creating, updating and protecting the data about customers that the bank holds, and the people that power that infrastructure.
A bank may have a great application but take days to open an account, or have a product stuck in development for months. Going digital can make a service accessible to everyone. Digitizing the very core can make a bank more adaptable to change.
Legacy systems are slowing everyone down
At the heart of every bank is its core banking system, which manages accounts, deposits and loans. But these systems were originally designed for traditional branch banking. As a result, every new digital banking service has to work around this old technology.
Modernizing core banking systems is a priority for many Pakistani banks, including HBL, which completed the first phase of its Temenos Core Banking go-live in May 2026, covering 200 of its branches. DIB Pakistan has also signed an agreement to migrate from Oracle Flexcube to Temenos’ cloud-native core banking platform.
Should banks go cloud?
Cloud computing could be a viable option for banks looking to expand their capabilities and roll out products faster. But they must operate within existing State Bank rules.
In 2020, the State Bank of Pakistan permitted financial institutions to use both local and international cloud service providers to host their core applications, primarily for non-core functions and business support systems. Data must be encrypted, and contracts must not lock banks in to one provider. An updated framework also regulates all outsourcing activities, putting cloud computing under the direct supervision of the State Bank, and any major offshore outsourcing requires State Bank approval.
Modernizing without stopping the operations
A bank cannot shut down for a long-period of time to restructure itself. Its millions of customers expect it to be available and operational at all times.
HBL again offers an example, as it went live with the first phase of its core banking system in May 2026, covering just 200 of its branches. At the same time, the second phase covers the entire branch network, as well as over 40 million accounts. The phased approach reduces the risk of large-scale failures while allowing the bank to adapt to the changes as it goes along.
Security is a priority
With every new avenue comes new security concerns. The Governor warned that without trust, digital banking initiatives will only see limited adoption, and made specific recommendations to improve cyber resilience and consumer data protection.
Money is what makes the system go
Digital banking initiatives are only as good as the ease with which people can access them. Governor Jameel Ahmad announced that the system supports “268 million financial accounts and over 49 million Raast ID registrations” at the summit.
He also announced that all federal, provincial, and local government payments must be made through secure digital wallets.
This is an important step, and the next big question is whether the development can support the traffic of consumers, businesses, and even freelancers.
The future ahead
Pakistan’s banks have come a long way, and the next step is to build on the momentum and make the shift from faster payments to stronger, more secure and capable systems. It is a long-term strategic change, and as such requires a sustained effort rather than one-off projects.
If you are a bank or financial institution that wants to start its digital transformation journey, reach out to Ibrahim Amin about digital transformation.
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