Despite Pakistan’s promising demographics, financial inclusion remains a significant challenge. Only 13% of the country’s 120 million adults have formal bank accounts, according to Aatizaz Hussain, Manager Implementation Financial Literacy at the National Institute of Banking and Finance (NIBAF).
The lack of financial infrastructure, particularly in rural areas, hampers economic growth and mobility. Women are disproportionately affected, with only 5% having bank accounts. This gender disparity represents a missed economic opportunity, as empowering women could significantly contribute to the GDP.
Micro, small, and medium-sized enterprises (MSMEs) also face challenges in accessing credit. Of the estimated 9 million MSMEs, 53% have access to credit, while 47% do not. This lack of credit hinders innovation and growth in one of Pakistan’s most vital economic sectors.
Digital finance offers a solution to these challenges. By providing personalized financial products, digital finance can bridge the gap in access to credit, especially in rural areas where traditional banking services are limited. This can spur expansion, job creation, and improved operational efficiency for MSMEs.
Zeeshan Riaz, Chief Operating Officer of Urtasker, an e-commerce consulting agency, highlighted the potential of fintech platforms and mobile banking to boost financial inclusion. Financial institutions can provide easily accessible and affordable services using mobile technology, which is quickly becoming established in both urban and rural markets.
Digital finance can reach the unbanked population, make banking convenient, and enable safe saving, borrowing, and transactions. It can also empower women by giving them independent access to financial resources and enabling them to participate more fully in the economy.
Furthermore, digital finance can lead to a more secure credit ecosystem for businesses. Fintech companies can evaluate the creditworthiness of businesses using alternative data, which is especially beneficial for those without official financial records.
To fully realize the benefits of a digital finance revolution, coordinated efforts are required from the government, financial institutions, and technology providers. Policies that support consumer rights, promote digital literacy, and incentivize financial institutions to support marginalized areas are crucial.
