Most retail payments in Pakistan are now digital, yet many individuals and small businesses still cannot get a formal loan. AdalFi’s five-year impact report suggests part of the answer may already sit in banks’ own transaction data.
Pakistanis increasingly pay digitally by default. According to the State Bank of Pakistan’s Payment Systems Review for FY2024–25, more than 88% of retail payment transactions by volume now go through digital channels, driven by mobile banking, digital wallets and instant payments. Borrowing has not kept pace. Millions of individuals and small businesses remain outside formal lending, including many who bank actively and move money through their accounts every month. That gap is the subject of AdalFi’s Impact Report 2021–2026, which covers five years of technology-enabled lending in Pakistan. The company reports enabling more than $400 million in credit through partner financial institutions, including loans to tens of thousands of first-time borrowers. Its results raise a useful question for the banking sector: could the information banks already hold about their customers open up credit for the people the system has struggled to reach?
Why Digital Payments Have Not Unlocked Credit
The World Bank’s Global Findex Database 2025 draws a line between owning an account and actually using financial services such as savings and credit. In Pakistan, that line matters. A bank account or mobile wallet does not, by itself, get someone a loan. Banks typically assess creditworthiness through documented earnings, collateral, financial statements and repayment history. Those checks manage risk well, but people with irregular incomes or thin borrowing records often struggle to meet them, even when their finances are sound.
Small and medium-sized enterprises feel this most. Pakistan’s economy runs on traders, manufacturers and smaller businesses, many of which keep limited paperwork, so even commercially viable firms can find it hard to prove they qualify. State Bank data for September 2025 put outstanding SME financing at about PKR 686 billion, just 6.55% of domestic private-sector financing, spread across roughly 295,000 borrowers. Businesses left out turn to personal savings, suppliers, family or informal lenders for working capital, which tends to limit how far they can grow.
Some of the gap never shows up in the numbers. Many potential borrowers never apply, assuming they will be turned down for lack of collateral or credit history, and lending statistics only count the people who do. On the lenders’ side, assessing small or unfamiliar borrowers can cost a lot relative to the size of the loan. The bottleneck is less about the supply of money than about whether lenders can assess a wider range of customers quickly and reliably.
Reading Creditworthiness from Transaction Data
Transaction-based credit assessment tackles that bottleneck directly. Instead of relying only on formal credit records, lenders look at how money actually moves through a customer’s account, including deposits, transfers and cash-flow patterns. For someone without payslips or audited accounts, that history can be strong evidence of their financial position. Credit risk does not disappear, but lenders get a much fuller picture of borrowers they would otherwise have to turn away.
AdalFi shows how this works within the existing banking system. The company uses transaction data that partner banks already hold to generate automated credit assessments, so banks can identify eligible customers and offer financing without lengthy manual reviews. AdalFi does not lend itself: partner banks make the loans and keep them on their own balance sheets. According to the impact report, the platform enabled more than $400 million in credit between July 2021 and July 2026, bringing 68,760 individuals into the formal credit system for the first time. More than half (53%) of borrowers in its reported portfolio had never borrowed before.
The repayment numbers stand out. AdalFi reports a default rate of 0.2% on loans more than 90 days overdue, despite its high share of first-time borrowers. The figure is company-reported and not directly comparable with banking-sector non-performing loan ratios, which differ in methodology and portfolio mix, but it is a strong signal that a short credit history does not mean a borrower will not repay. For banks, the appeal is reaching more customers efficiently while keeping risk controls in place. As credit decisions are made faster and at greater scale, data quality, model accuracy and borrower protection need just as much attention as speed.
Reaching Small Businesses and Underserved Borrowers
For a small business, the speed of a loan can decide whether it buys stock, fulfils an order or invests in new equipment, and traditional applications with heavy paperwork can take weeks. AdalFi reports enabling about $150 million in small-business credit, with roughly 6,400 businesses borrowing through its technology, around seven in ten of them for the first time. It has also enabled $84 million in revolving credit lines, a structure well suited to businesses with recurring working-capital needs. The longer-term economic payoff will depend on how firms use the financing and whether that access lasts, but the early numbers are encouraging.
Lending in Pakistan has long clustered around the major commercial centres, where banks have dense branch networks and established customer relationships. In smaller towns and rural areas, having to visit a branch and complete long applications is a barrier in itself. AdalFi’s report says its platform has supported lending across 990 towns, with 69% of lending taking place outside Pakistan’s four largest cities. It also reports $71 million in financing to farming households, 77% of them new to formal credit. Removing the need for in-person assessment will not solve every rural lending challenge, but it opens up areas that commercial banks have historically served less.
Women’s participation shows both progress and room to grow. Women make up 12% of AdalFi’s borrowers, above the 9% national target cited in the report, and about 15,600 women have accessed credit through the platform. The split by product is uneven: women were 23% of credit card borrowers but only 6% of SME borrowers. Women can face extra hurdles around account ownership, access to digital devices, business documentation and collateral. Better credit assessment helps with some of these, while closing the gap fully will take products designed with women borrowers in mind.
Building on Pakistan’s Digital Foundations
Regulation is moving in the same direction. On October 29, 2026, the State Bank announced SMEConnect, a centralised digital portal that routes SME financing applications to banks and development finance institutions from November 1. The portal simplifies the application process and connects businesses with lenders more directly. Digital applications and automated underwriting address different stages of financing, and together they make formal credit noticeably easier to reach. The task for lenders now is to pair that convenience with responsible lending, reliable data and products built around the needs of different borrowers.
AdalFi’s five-year results show what becomes possible when banks put the financial information they already hold to work. They also make the case for measuring financial inclusion by who can borrow, rather than only by how many accounts are opened or payments processed. Access to the right credit helps households manage financial pressures and gives businesses room to operate and grow. Pakistan has already built the digital rails, and the next step is for banks, fintechs and regulators to use them to extend credit widely, responsibly and sustainably.
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