ISLAMABAD: Pakistan’s fintech industry has been growing rapidly over the last two decades, particularly after the Covid-19 pandemic, as fintech startups received $53.15 million investment in the first five months of calendar year 2022.
Banks continue to play a crucial role in the financial industry, but rapid technological developments in the financial sector are gradually shifting the world economy to digital channels, which are ensuring easy and speedy transactions.
Multiple factors have helped in the quick growth of fintech, but internet penetration is one of the most critical factors. Internet has undeniably become the driving force behind advancement of fintech. Pakistan has one of the fastest internet penetration rates, with 36.5% of the total population availing the facility.
About 64% of Pakistan’s population is under 30 years of age, and inclination of the young population towards the use of modern technology makes Pakistani fintech companies critical players within the financial technology landscape.
Although the fintech ecosystem is nascent, it consistently attracts investment from world-renowned firms and market leaders. Abhi and NayaPay, two new electronic wallets, received $17 million and $13 million in investment, respectively, in 2022. While another fintech startup, SadaPay, received $10 million investment.
According to Khalid Umar, Chief, Strategic Planning at Central Asia Regional Economic Cooperation (CAREC) Institute, Pakistan is the second-lowest in terms of bank accounts after Afghanistan in the CAREC region. Only 21% of people in Pakistan have a bank account, which is a very low ratio.
Mobile money accounts are gaining attention worldwide. In the areas where this traditional banking sector is unable to provide services to the marginalized people, these mobile money accounts are making a lot of difference. There are many examples in the world, like Kenya, where mobile money accounts have revolutionized financial inclusions.
Ultimately, the most important factor in the transformation of Pakistan’s banking and financial services is the customer. Banks and financial institutions must create channels that are intuitive, engaging, and user-centric to satisfy customers.
The key to accelerating fintech adoption in Pakistan may be harnessing innovative, indigenous technologies while collaborating with technology partners who have proven track records in creating fintech ecosystems that set precedents.
Codebase Technologies, a global provider of open API (application programming interface) banking solutions, has been the partner of choice when building Pakistan’s financial technology landscape from the ground up. As part of their DigibancTM suite of products, Codebase Technologies provide banking institutions and financial services companies the ability to build and deploy modular, and scalable products and services.
Keeping in view all these new inventions and innovations, Pakistan must also focus on developing an inclusive society that is ready and well-educated to adopt these transitions of the financial system from traditional to new and advanced methods.
