KARACHI: HugoBank, Pakistan’s digital retail lender, has begun a limited-scope pilot and plans to launch commercial operations after completing the trial and securing regulatory approval, its chief executive said, as the bank targets underserved consumers and small businesses amid growing demand for digital financial services.
“The pilot phase is like a controlled activity with minimal users,” HugoBank CEO Asim Hasan told The News in an interview.
Under State Bank of Pakistan requirements, digital banks must complete a test period of at least three months and no more than nine months before receiving approval for full commercial operations, Hasan said.
The trial will begin with employees and gradually expand to consortium members, allowing the bank to identify potential weaknesses before opening its platform to the wider market. HugoBank will submit the pilot results to the SBP for assessment before seeking approval for a commercial launch, he added.
HugoBank is backed by sponsor shareholders through Starlight Holdings (Private) Limited. Its sponsors include Getz Group, Muller & Phipps Pakistan and Atlas Consolidated, bringing together investment and operating experience from Pakistan and Singapore.
Pakistan’s digital banking sector has expanded gradually in recent years, with the SBP approving five digital retail banks in 2023 by issuing no-objection certificates. Three of those digital banks have since commenced commercial operations.
Digital payment channels are becoming increasingly embedded in Pakistan’s financial system, with digital transactions accounting for 92 per cent of total retail payment volumes in January-March FY26, according to the SBP’s quarterly payment systems review. The banking system processed 3.7 billion retail payments during the quarter, up 9 percent from the previous three months, while the value of transactions rose to Rs168.8 trillion. Digital channels processed 3.4 billion transactions during the period, underscoring their growing role in how individuals and businesses make and receive payments.
Bets on underserved SMEs, open to partnering with fintechs
HugoBank plans to focus on retail and small and medium-sized enterprise customers, particularly people who remain outside the formal banking system because of requirements such as proof of income and other documentation, the CEO said. Additionally, the bank is seeking to win business from existing banking customers with more efficient financial products and services.
The bank sees the SME sector as a major contributor to Pakistan’s economy but one that remains largely underserved by the financial system, Hasan said.
He noted that many SMEs struggle to secure bank financing because their businesses rely on a continuous cycle of selling inventory, generating cash and using those proceeds to replenish stock, leaving them with limited conventional collateral or financial records to support borrowing.
HugoBank is open to partnering with fintech companies that develop targeted solutions to specific financial problems, as the digital lender seeks to integrate outside technology into its banking platform, the CEO said. The bank, which began as a fintech before obtaining a digital banking licence, sees partnerships as a way to expand its capabilities while creating opportunities for both sides, he said.
Overseas Pakistanis will be a key focus for HugoBank as it seeks to tap the country’s growing remittance flows, the CEO said. Pakistan received a record $41.6 billion in remittances in fiscal year 2026, providing a vital source of foreign exchange for the economy while supporting millions of families, he said. HugoBank plans to leverage that pool of liquidity by developing services to facilitate money transfers into Pakistan, making remittances a potential growth area for the digital lender.
Regarding green financing and virtual assets, Hasan said these are on the long-term roadmap but not an immediate priority. “We’re not going to be looking to launch as many products as we can from the start... But definitely on the roadmap.”
HugoBank is also preparing for the expansion of Islamic banking in Pakistan, with the CEO saying the platform has been built to be Sharia-compliant from the outset. With the country’s banking system mandated to move towards full Islamic banking by 2028, the digital lender will be able to introduce Sharia-compliant products without having to overhaul its underlying technology, he said.
HugoBank’s CEO said the lender sees a role for artificial intelligence in analysing data and generating insights but cautioned against adopting the technology simply because it is becoming widespread in the banking industry. Automation and AI should be viewed as separate tools, with automation reducing manual intervention while AI can analyse data and help generate solutions, he said. For a digital bank, however, AI must be introduced carefully given the broader risks around reputation, cybersecurity and technology. The bank will focus on practical applications where AI can add value rather than deploying it for its own sake, he said.
Pakistan’s traditional brick-and-mortar banks are likely to coexist with digital lenders as the country’s banking sector evolves, Hasan said. Digital banks will focus on customer segments where they can offer more efficient services, while conventional lenders will continue to rely on their established branch networks and longstanding relationships, he said. The two models can therefore complement rather than displace each other as customer preferences shift towards digital banking.
“I think they would still have more to play. But I hope that, obviously, they continue to innovate and bring new products and ideas as well,” he said.
