The role of banking in the digitalisation of Pakistan’s economy

Pakistan is in an exciting stage of development. Once synonymous with an informal, cash-heavy economy, the nation is now embracing technology and its power to unlock prosperity and drive development, and the banking sector must step up and play a crucial role in catalyzing this transformationto ensure its benefits reach every corner of the country.

64 per cent of Pakistan’s population is under the age of 30 and tech-savvy. The digital landscape is burgeoning with high-bandwidth (3G/4G) internet penetration which has surged past 43 per cent, while mobile penetration has exceeded a staggering 77 per cent with over 80 million users, fueled by affordable data packages and fiber-optic infrastructure. Yet, many of Pakistan’s citizens and residents remain unbanked or underbanked, with limited access to essential financial services. While this could potentially stifle economic growth, it also represents a tremendous opportunity to leverage digitalization of financial services as a game changer for the country. Developing nations including Brazil and Indonesia have successfully capitalized on such opportunities through their breakthroughs in digital banking which have disrupted the traditional banking sector. Brazil’s NuBank, a digital bank only founded in 2013 in Brazil, is today Brazil’s fourth largest bank. Examples such as these serve as testaments to the digital transformation potential that digital banks in Pakistan hold.

Looking at the current digital financial services sector trends in Pakistan – we see an upward trajectory, as reflected in the data from the State Bank Payment Systems Report. Overall financial transactions have more than doubled over the past six years, skyrocketing from 1.1 billion in 2017 to an impressive 2.7 billion in 2023, and from 60 per cent of all transactions in 2017, digital transactions now represent a full 82 per cent today. Only 18 per cent remain paper-based, underscoring a massive cultural and technological shift. Mobile and internet banking transactions now surpass traditional ATM transactions in digital payment volume and value, with mobile and internet banking transactions witnessing a cumulative growth of 70 per cent, compared to a mere 15 per cent for ATMs.

Digital banking offers many benefits to customers. Payments are accessible to anyone with a digital device, and occur much faster and more affordably than via the traditional method, empowering customers through an enhanced experience and setting higher standards for convenience, speed and reliability. The shift to instant banking has led to simplification of the customer’s journey, offering consumers fast, convenient and secure banking, thus transforming the banking ecosystem. International banking leaders such as Mashreq, a leading financial institution in the MENA region, can also help bridge borders, ensuring that funds sent by expatriates reach their families promptly, thus boosting the financial stability and inclusion of recipients. These factors are bound to boost job creation and entrepreneurship and diversify the economy, shaping a more resilient and dynamic landscape.

The government has also made its ambition for innovation and financial inclusion clear. This is evident in the State Bank of Pakistan (SBP) granting the In-Principle approval (IPA) for establishing five digital retail banks, includingMashreq. The SBP has also issued draft guidelines on a regulatory sandbox, providing a controlled environment for startups and fintech companies to test their products and technologies, making it easier for regulators to understand their financial stability and consumer protection implications. This initiative should encourage further innovation in digital financial services, facilitate the development of a robust digital payment’s ecosystem in Pakistan, and enhance financial and digital inclusion in the country.

At Mashreq, we believe the success of this digital transformation - and indeed the growth of digital banking - hinges on a partnership approach. We believe collaboration with governments and other entities will help strengthen the digital infrastructure. Banks must work hand-in-hand with the government, telecom operators, and technology companies to create a holistic ecosystem that fosters trust, innovation, and accessibility. Mashreq comes with a proven track record of driving transformation across the markets it operates in through its deep local understanding and proven partnerships, allowing us to offer tailored solutions that truly meet the needs of our customers, in turn strengthening the digital ecosystem.

McKinsey Global Institute’s 2016 report, ‘Digital Finance for All: Powering Inclusive Growth in Emerging Economies’, suggested that digital financial inclusion of individuals alone can increase Pakistan’s GDP by $36 billion by 2025. Despite the promising tailwinds highlighted above, if one reflects on this projection made in 2016, it is clear that the adoption of “digital financial services” in Pakistan is taking longer than anticipated. What Pakistan needs today is a ‘catalyst for change’ with proven track record, and Mashreq is aptly placed to drive mass adoption of digital financial services by capitalizing on its global award-winning digital banking innovations and experience-led banking services.

With a proactive government, a vibrant tech ecosystem, and a committed banking sector, Pakistan is poised to leapfrog into the digital age, opening doors to a future of limitless possibilities. A digitalized Pakistan is not just an economic aspiration; it’s a social imperative. It’s about empowering people, boosting entrepreneurship, and building a fairer, more inclusive society. We have a road ahead full of opportunity; with dedication, collaboration, and a shared vision for a bright future, we can transform the traditional banking experience into one that is seamless, convenient and accessible to everyone, ensuringthe digitalization of Pakistan’s economy becomes reality.



The writer is CEO of Mashreq Pakistan.


The writer is CEO of Mashreq Pakistan.

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