Financial technology has irrevocably revolutionised the financial services industry in less than a decade. Fintech firms are challenging the banks’ monopoly and have the potential to become household names. Alif Bank’s country representative in Pakistan, Mahmood Shamsher Ali, explains why Pakistan is ripe for a fintech revolution.
Investors poured more than $200 billion into financial technology start-ups and scale-ups last year, nearly $90 billion more than the year before.
While this is a wonderful development for the industry, we must not underestimate fintech’s role in digitally enabling communities that have not yet had access to new financial technologies. In this aspect, Pakistan has fascinating potential.
Pakistan is a developing economy at a key juncture in its development. Annual GDP growth is currently above 4%, while concerns about inflation have prompted calls for additional reforms and programmes that prioritise economic growth. It’s one of the reasons the State Bank of Pakistan (SBP) is considering digital challenger banks as part of its long-term economic plan.
To fully comprehend why Pakistan is well-positioned for a fintech revolution, we must first comprehend the country’s financial landscape. There are three distinct tendencies to be aware of.
The first is the number of customers who use a retail bank on a regular basis. Only 21% of Pakistan’s adult population has a bank card at the present.
Despite this, there are 181 million mobile customers in a country with over 220 million people, making teledensity 85 percent. This exemplifies fintech’s potential. Because of Pakistan’s high mobile phone penetration, fintech can address accessibility difficulties by allowing Pakistanis to use their phones to access banking services.