Pakistan is ideally positioned for the fintech revolution and investors are eying the significant opportunities in the country’s financial technology landscape. Growing smartphone penetration, internet connectivity, and government policies aimed at using digital financial technology has already set the stage for fintech’s growth.
According to Irfan Iqbal Sheikh – chief of Federation of Pakistan Chambers of Commerce and Industry, there are approximately 269 startups specializing in the fintech sector and many of them are highly successful and sustainable.
The country’s fintech sector is experiencing a massive revolution, and the possibilities for collaborating with Pakistani professionals to establish new ventures are infinite. In recent years, regulatory support for fintechs has considerably improved with increased interest from the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP).
SBP in its Digital Financial Services -Innovation Challenge Facility guidelines paper stated that it is estimated that the market potential of Digital Finance services in Pakistan will cross $36 billion by 2025, providing a 7 percent boost to the GDP, creating 4 million new jobs.
During the Covid-19 pandemic, the pace of digitalization in Pakistan accelerated beyond imagination, with the fintech industry claiming much of the credit for the growth. According to a Pakistani consultancy firm – Invest2Innovate – since January 2021, fintechs in Pakistan raised $486m of global capital. It reports that in 2021, 83 Pakistani startups raised $350m.
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Exploiting the true potential of fintech, digital payments provider Easypaisa managed a throughput of PKR 1.7 trillion in the first half of 2022. Money transfer worth PKR 859 billion was done through the platform, which is almost a 100% increase as compared to last year. More than 10% of the total telco industry’s airtime sales are now being paid for through the app. The platform offers a wide range of over 250 payment use cases.
In February, 2022, payments app NayaPay raised $13 million in a seed round led by Zayn Capital, MSA Novo and Silicon Valley early-stage investor Graph Ventures. NayaPay, which initially focused on the student and freelancer market, received a license from SBP in August 2021.
Fintechs are playing a significant role by offering customers seamless access to credit that is simple, competitive and fast to be deployed. By realizing the significance of fintech in supporting the country’s economic advancement, the SBP has become a progressive regulator, creating a financial ecosystem that supports innovation and ultimately seeks to improve the customer experience. Recent initiatives by SBP includes the development of a “Customers’ Digital Onboarding Framework” for banks which outlines the basic parameters for opening of bank accounts through digital channels in Pakistan.
During the first quarter of 2022, digital payments services provider, JazzCash registered 90 million financial transactions witnessing a growth of over 100 percent in terms of mobile account transactions as compared to the corresponding quarter of the last year. During the same time, customer balances in mobile accounts also increased by over 100 percent.
UPaisa has achieved 25.0% year-over-year growth in its revenue during the first quarter of 2022. The balance sheet footing of the platform reached Rs 114 billion.
A significant driving force in the transformation of Pakistan’s digital financial services space is ultimately the customers. Consumers now demand their digital experience be top-class, prompting banks and financial institutions to create intuitive, engaging, and user-centric customer channels.
Fintech is not just about giving people financial tools to better manage their finances. In emerging markets, fintech is symbolic of a wider social and cultural transformation that challenges preconceptions about modern banking, empowers populations and promotes financial inclusion.
Emerging markets like Pakistan are ideally positioned to benefit from fintech innovations — they must constantly ensure everything is being done across the private and public sectors to encourage fintech adoption. Doing so will digitally empower a new generation of consumers, investors and businesses, who in turn, can fulfil their full potential.
