Pakistan has come to light as a potentially strong market for digital finance. Fintech has shown rapid growth in the country but given a challenging landscape, a lasting change has become a point of concern.
“Pakistan is rapidly progressing when it comes to mobile broadband. Our country has enormous potential with respect to widening financial inclusion through digital solutions. Currently, 95 million people across the country use mobile broadband, a number which has grown by 50 million in the past 5 years. A majority of adults have broadband connections in Pakistan serving as a backbone to developing a digital payments ecosystem in the country.” said M. Mudassar Aqil, CEO Easypaisa/Telenor Microfinance Bank, while talking about Pakistan’s financial services landscape.
“96% individuals have a biometrically verifiable ID issued by the government, indicating that a robust regulatory framework is in place which is supported by credit bureaus. Despite these fundamental factors, 70% of Pakistanis don’t have access to financial services when the rails to address these challenges are in place,” he added. During COVID-19, digital payments witnessed a boom. According to the SBP’s quarterly report, 296.7 million e-banking transactions, valuing at PKR21.4 trillion, were carried out during Oct – Dec 2020, growing by 24% in volume and 22% in value compared to the same quarter last year.
“During COVID-19 industry numbers of digital transactions grew at an exponential rate. At Easypaisa, our annual throughput increased by 64% as compared to the previous year reaching PKR 1.5 trillion in 2020. Similarly, the number of active Easypaisa App users reached 3.44 million, registering a 54% increase in comparison to previous year.” he commented. Pakistan is predominantly a cash-based economy. However, things are changing as the use of digital payments is taking center-stage.
Mudassar opined: “The Pakistani economy is ready to adopt digital financial solutions on a large scale as opening a mobile wallet account on a smartphone or feature phone takes less than a minute. Roughly PKR 6 trillion or about one-third of the country’s deposits are in circulation. This is one of the highest percentages anywhere in the world and the only way to reduce this is for every adult in the country to have a mobile wallet. Furthermore, all retail outlets in Pakistan should be mandated by law to accept digital payments from mobile wallets. Tax incentives should also be introduced making digital payments cheaper than cash.”
However, efforts for wide scale adoption of digital financial services are hindered by fraudsters who entice users into giving out their account credentials.
When asked about the impact that these activities have on users, Mudassar highlighted; “There is a learning curve associated with using digital financial services. From a cyber-security standpoint, service providers have implemented the most sophisticated and robust IT systems to plug loopholes within the system however, majority users are being duped through social engineering where scammers trick them into giving out their credentials. The easiest way to prevent such scams is for people to never share their personal/ financial information to anyone over the phone or over text/voice messages.”
Digital financial services are a boon for users, benefitting both men and female adopters. In his concluding remarks, Mudassar said: “Embracing digital payments will create a documented economy with simplified access towards basic finance and credit services, resulting in increased transparency which will allow institutions to have greater trust of customers. Moreover, there is also a dire need for providing women access to financial services, which we will be focusing heavily on.”