Growing financial inclusion in Pakistan and the role of digital banking

Financial inclusion ratios highlight the extent of economic progress and participation of individuals in the financial ecosystem of a country. Pakistan has for long remained a nation where financial inclusion rates among the masses have remained low.

By :Subul Naqvi, Head of Corporate Communications, Easypaisa / Telenor Microfinance Bank

The country has one of the lowest percentages of people holding bank accounts or having access to financial services through regulated channels amongst the developing nations not just in the region but around the world as well.

Over the years, extensive efforts have been made to address this issue. The State Bank of Pakistan (SBP) and the Government have not only drawn plans but also implemented numerous initiatives that have enabled a growing number of citizens to gain access to inclusive financial services. Besides their own goals and policies like the National Financial Inclusion Strategy and the Asaan Mobile Account, the regulatory bodies have encouraged various stakeholders to step up and play their role in improving the state of financial inclusion in the country.

In the last few years and especially with the onset of the COVID-19 pandemic, Pakistan has seen some incredible achievements in registered banking users. According to statistics released by the SBP, the number of mobile banking users grew from 5 million in the third quarter of 2019 to 8.2 million by the third quarter of 2020. According to the Financial Inclusion Insights Survey 2020 by Kantar and Karandaaz, mobile money account ownership has more than doubled since 2017 going from 4% to 9%.

The survey also reveals that the overall financial inclusion ratio in the country has increased from 14% to 21% in 2020. These are welcome signs which indicate that the various steps being taken by SBP and other players including financial institutions are bearing fruit. The most recent report from SBP has highlighted various elements but it has also shed light on the growing role of mobile accounts in driving financial inclusion in the country.

The role of mobile wallets such as Easypaisa, Jazzcash, and others has been extensive not just in the recent past where digital banking has seen a gradual rise but more specifically during the COVID-19 pandemic as well. These platforms provided users with more convenient, simple, and secure solutions for opening mobile accounts which are elaborately functional, enabling users to carry out all sorts of transactions from funds, bill payments, and many more.

Easypaisa being one of the leading service providers reached the highest active device base over 8 million monthly active mobile accounts. The application made it much simpler to perform everyday financial transactions from the comfort of homes or offices. Moreover, QR payments and a variety of other measures introduced by the platform bolstered the acceptance of digital finance amongst users. Then, the cross-integration of IBFT which enabled customers to send funds from their banks directly to their Easypaisa accounts has aided the economic case significantly.

Efforts of mobile wallets and digital banking services have facilitated major strides towards financial inclusion in Pakistan. However, the challenge faced at present is the sustainability of these gains. Our economy is still reliant on currency notes for the majority of financial transactions and there are various reasons for this that would need to be looked into.

Bringing the unbanked segments of society into the fold of financial services is a task that cannot be undertaken by a single entity. It requires industry-wide collaboration and a resolve to make a difference in society. It is high time for major players to collaborate and partner for a cause that can have a lasting impact on our economy through documentation, resulting in increased transparency and in turn greater trust amongst all stakeholders.

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