Rise of the star and the crescent moon, why you should watch FinTech in Pakistan 2019

FinTech in Pakistan

When we think about fintech development in the East, our attention will likely go towards China, India, and southeast Asia (ASEAN) regions. But what about the rest of the Asian countries, such as Pakistan? Where do the opportunities lie in these emerging markets?

Take Pakistan for instance – a country with around 210 million people and the world’ 5^thlargest young population (two-thirds of the country are less than 30 years old). It has some of the necessary enabling elements, including digital safety net support and a growing microfinance sector. Yet according to the 2017 Findex published by the World Bank, only 21 percent of the total population has bank accounts in the formal financial system, along with a gender gap of more than 27 percent. With less than 1 percent of the population having credit cards, cash is still king in the society and there is little incentive for banks to innovate.

Ample opportunities exist, however, to improve financial inclusion with the current infrastructure, especially given the projected growth in mobile penetration. Taking a page out of the playbook in various micro ecosystems in Asia, financial institutions and fintech startups in Pakistan need to focus on developing solutions that reflect the needs of the local communities. Perhaps Ant Financial’s foray into Pakistan through its $184.5 million investment in Telenor Bank will serve to help the country transition into a new era of cashless payments, lower the cost of financial services, and stimulate the digital ecosystem.

Earlier this year, Telenor bank, in partnership with Valyou of Malaysia, introduces Pakistan’s first blockchain-based cross-border remittance service, powered by Alipay. With Pakistan receiving about US$ 1 billion in home remittances from Malaysia, this is vital for the overall macroeconomic stability in the country, and serves as an example of how emerging technology can empower societies through innovation and financial inclusion.

The Pakistani government recently presented its National Financial Inclusion Strategy through a five-year plan that focuses on the enhancing the use of digital payments, deposit base, promotion of SMEs and agricultural finance, and Islamic banking. Access to financial services is critical to achieve sustainable and inclusive economic growth; it is anticipated that three million jobs and additional exports of US $5.5 billion will be created as a result of the initiative.

The next few years may prove to be pivotal for the country.

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Listen in to our conversation with Rabeel Warraich, on our new episode of The Red Envelope on iTunesand Spotify, as we talk about the future of banking.

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