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ABR 2025 26(Entrepreneurial)printed 41 · PDF 51
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The explosion of mobile wallets and
instant
payment
options
have
transformed
Pakistan’s
financial
landscape, marking greater growth in
the last few years than ever before.
However, there is a lot to unpack
beneath the appealing aesthetics of
app-based
banking
systems
and
promises of financial “inclusion”. One
would inevitably question whether or
not the explosion of fintech in Pakistan
is really fostering democratization of
finance or if it is simply an illusion to
conceal the fact that it can only be
availed by a select few. Fintech, short
for financial technology, refers to a
branch of technology that is used to
automate
and
digitize
traditional
banking
practices.
A
country
like
Pakistan, with almost a hundred million
unbanked
adults,
and
without
a
presence of many traditional banks in
rural and underserved areas, could
benefit greatly from this technology.
Pakistan has seen mobile banking and
fintech startups grow significantly in the
last five years. On the earlier end,
JazzCash and Easypaisa perform basic
financial transactions through mobile
phones. Fintech companies are trying to
catch
up
with
more
sophisticated
platforms like SadaPay, Nayapay or
Finja. The gap left by financial legacy
institutions is being filled at a rapid pace.
Strides made in regulations with the
launch of EMIs or Electronic Money
Institutions sponsored by the State Bank
are now allowing for construction free,
digital only financial institutions to
operate without the need for physical
branches. Looking deeper, however
promising this might seem from a
distance,
there
lies
discomforting
questions. The question remains, is this
inclusion
when
poor
economic
demography
continues
lacking
fundamental
resources?
There's
no
denying
of
progress that has been made towards
installing mobile applications or virtual
wallets, genuine financial inclusion is
still a distant dream. According to a
report published by Karandaaz in 2023,
while digitally linked accounts have
increased, more than 70% of mobile
wallet
users
are
male.
In
rural
conservative regions, women are still
heavily marginalized. Furthermore, a
majority of participants in the fintech
ecosystem do not go beyond basic
transactions. The ability to access vital
elements of financial mobility such as
savings,
insurance,
credit,
and
investments is almost non-existent. The
digital
divide
makes
things
worse.
Fintech operates in the context of
smartphones, however, almost 46% of
the population in Pakistan does not own
a smartphone and does not have access
to stable internet zoom. Adding to this
problem is the lack of trust online
systems suffer. For informal laborers,
farmers and even slum dwellers, what
appears to be a seamless fintech
interface is actually incomprehensible
code.
Fintech – “fear of missing out” on
financial services?
Pakistan's fintech story seems to have
been
written
based
on
sheer
speculation and excitement, with little
thought given to the numbers. Between
2020 and 2022, local fintech startups
were flooded with over $100 million
from venture capitalistists, which also
ignited a surge of fintech startups
brought
about
a
sharp
rise
in
entrepreneurs with a vision to create the
“Stripe of South Asia.”
41
Enterprise Edition