• According to research, 41% of Pakistanis rely on unregulated banking and financial services.
• Oraan’s management claims that the majority of its customers are women with restricted financial options.

RAWALPINDI: Pakistan’s informal financial sector, which was developed by ordinary people to handle their money and savings through mutual help, is now being tapped by digital corporations claiming to be promoting more economic inclusion, particularly among the country’s female population.

Rotating credit and savings associations, or “committees” in local vernacular, allow people to join together each month and pay a set amount to create a pool of money that is then paid given to a member on a rotating basis until everyone involved has accepted the lottery.

According to a 2018 study by a fintech business, Oraan, 41 percent of Pakistan’s population, largely women, use the method to handle their finances.

Since its inception in 2018, Oraan, a digital programme that puts committee parties in the hands of its users, has been downloaded by thousands of people, 84 percent of them are women.

“Women’s financial options in Pakistan are restricted,” the company’s chief executive officer, Halima Iqbal, told Arab News over the phone on Friday. “So we started looking at things from that angle and asking ourselves, ‘How were women banking if they couldn’t easily access financial services?'”

Alternative banking options were shown to be the most preferred method of obtaining funds, particularly among women, according to research.

“We looked at how people interacted with money in these settings and what inefficiencies there were,” she stated. “And that’s how Oraan was born.”

Oraan, unlike previous methods, matches people with communities based on their finances and requirements, removing the necessity for an established social group to join a committee.

This not only assists it in providing a critical financial service, but it also helps to establish communities and expand financial inclusion opportunities for its users.

“It’s fascinating to observe that a product like a committee can help people become more financially included because it provides an accessible entrance point into the world of finance,” said Farwah Tapal, the organization’s chief operating officer.

Sana Tawfik, a senior research analyst at Arif Habib Limited, spoke with Arab News about how banks could go toward digital informal banking alternatives.

“Our data shows that just 9% of Pakistanis save for retirement,” Tawfik told Arab News over the phone, “and people who participate in committees receive lump payments rather than returns on investments.”

“Overall, banks should look at the digitization of informal banking, such as committee parties, as something the country should be going toward because the figures show people are familiar with it and it is a consumer behaviour they can expand on,” says the author.