SBP Governor Calls for Human Oversight in AI Banking Decisions

State Bank of Pakistan (SBP) Governor Jameel Ahmad has underscored the indispensable role of human oversight in artificial intelligence-driven decision-making processes within the banking sector, particularly in high-stakes areas such as credit approvals and customer due diligence.

Addressing the sixth AlBaraka Forum Regional Conference, the Governor emphasised that while AI offers substantial operational efficiencies, it must not supplant human judgment in functions requiring alignment with regulatory compliance, ethical considerations, and risk management imperatives. “Human oversight remains essential to monitor AI-driven decisions, especially in areas such as credit approval and customer due diligence,” he stated, highlighting the need to preserve accountability and fairness in sensitive banking operations.

The Governor also highlighted the transformative impact of digitalisation on Pakistan’s financial ecosystem, crediting SBP’s proactive policy interventions for the rapid expansion of mobile banking applications, branchless banking channels, digital wallets, and Electronic Money Institutions (EMIs). These platforms now account for approximately 78% of total digital retail transactions, reflecting a profound shift in consumer behaviour and expectations, with over 70% of global populations utilising at least one digital financial service and more than 80% expressing willingness to transition further toward digital banking.

Linking these advancements to Islamic finance principles, Governor Ahmad stressed that Shariah-compliant banking must remain intrinsically anchored to the real economy, prioritising equity, transparency, risk-sharing, and inclusive prosperity rather than serving narrow interests. He advocated for digital innovation as a vehicle to enhance financial inclusion, particularly for underserved segments including small and medium enterprises, agricultural producers, and women entrepreneurs historically marginalised from formal financial systems.

In this context, the SBP’s 2022 grant of principal approvals to five digital banks— with one already operational in Islamic banking and another in the pilot phase—signals a significant evolution in Shariah-compliant digital finance in Pakistan.

However, the Governor cautioned against the risk of merely replicating conventional financial models in digital formats without rigorous adherence to Shariah principles. He called for robust data protection mechanisms, strong governance frameworks, and unwavering commitment to the highest regulatory and ethical standards to safeguard the integrity of digital Islamic finance.

Yousef Hassan Khalawi, Secretary General of the AlBaraka Forum for Islamic Economy, reinforced that the primary challenge lies not in digitisation itself but in effectively managing the transformation, necessitating collaborative engagement among scholars, regulators, and industry stakeholders to ensure alignment with Shariah objectives and sustainable economic stability.

Muhammad Atif Hanif, CEO of AlBaraka Bank Pakistan, concluded by noting that the strategic integration of digital solutions with core Islamic economic principles continues to propel Pakistan’s banking sector toward a more inclusive, accessible, and equitable financial system.