Pakistan stands at a defining economic crossroads. With a population of over 240 million, a youthful demographic, rising smartphone penetration, and rapidly evolving digital infrastructure, the country should by now have emerged as one of the world’s most vibrant digitally banked economies. Yet financial exclusion remains deeply entrenched.
According to the State Bank of Pakistan (SBP), nearly 53 per cent of Pakistan’s adult population remains financially excluded, while only around 2.4pc has access to formal credit facilities. These figures represent millions of Pakistanis who continue to rely on undocumented cash transactions, informal borrowing, and economically inefficient systems that constrain productivity and limit upward mobility.
Over the past decade, Pakistan has made meaningful progress in digital financial services. The SBP deserves considerable credit for introducing progressive regulatory frameworks around branchless banking, Payment System Operators (PSOs), Payment Service Providers (PSPs), Electronic Money Institutions (EMIs), and, more recently, digital retail banking initiatives. The launch of Raast has transformed real-time payments and accelerated digital adoption across the country.
Today, digital channels account for nearly 88pc of retail transaction volumes, while Raast has processed transactions worth more than Rs44 trillion since its launch. Yet despite these impressive numbers, one critical question remains unanswered: has digitalisation materially improved the economic wellbeing of the average Pakistani?
Thus far, Pakistan’s digital banking discourse has largely been viewed through a payments lens. Success has been measured through wallet growth, transaction volumes, and payment throughput. While important, these developments alone do not necessarily translate into meaningful financial inclusion.
A person sending money digitally rather than physically is undoubtedly progress. However, if that same individual still lacks access to productive credit, savings, insurance, or opportunities for income enhancement, then the broader economic impact remains limited.
Pakistan’s challenge is not simply the digitisation of payments. The real challenge is the digitisation of economic opportunity.
This is why the next phase of digital banking must be approached through a productivity lens, with a particular focus on expanding access to credit for ordinary Pakistanis and micro, small and medium-sized enterprises (MSMEs).
It is no coincidence that formal credit penetration remains exceptionally low. In the absence of accessible finance, millions continue to depend on informal lenders and exploitative borrowing arrangements.
Interestingly, despite its relatively modest scale, the microfinance sector has consistently been at the forefront of serving underserved communities and MSMEs. Yet limited capital bases, fragmented operating models, and insufficient technology integration have constrained its ability to scale effectively.
Nevertheless, one reality stands out clearly: Pakistan’s two most successful branchless banking platforms — Easypaisa and JazzCash — were both built on the foundations of microfinance and branchless banking licences through Tameer Microfinance Bank and Mobilink Microfinance Bank respectively.
This serves as clear empirical evidence that such models are capable of delivering scale and adoption.
The opportunity now lies in evolving this model further by combining digital banking infrastructure with mass-market deposit mobilisation, scalable credit underwriting, and robust treasury capabilities to create a truly sustainable digital banking proposition for Pakistan.
There also remains a common misconception that a digital bank in Pakistan can operate solely through mobile applications without meaningful physical infrastructure. In developed economies, this may be feasible. In Pakistan, it is not.
Pakistan remains a heavily cash-based economy. According to SBP data, there are more than 666,000 branchless banking agents operating across the country because physical cash conversion points remain essential. The first challenge is bringing trillions of rupees from the informal cash economy onto digital rails. That transition simply cannot occur without omni-channel infrastructure, whether through proprietary branches, retail partnerships, or super-agent networks.
A successful digital bank in Pakistan must therefore be digital not only in capability, but also physical in reach.
This understanding has increasingly shaped the strategic direction of emerging players seeking to build digital banks on the foundation of microfinance and branchless banking licences — similar in regulatory structure to operators that have already demonstrated scale, but with a stronger focus on productivity, credit, and financial empowerment.
The objective extends beyond merely facilitating payments. The broader goal is enabling economic participation through meaningful access to finance.
Through Banking-as-a-Service (BaaS) models, financial institutions are pursuing differentiated B2B2C approaches in which partner organisations contribute to customer acquisition, sector expertise, and risk sharing. This enables financing to flow towards productive and income-generating activities while simultaneously strengthening portfolio quality and scalability.
Such models have the potential to contribute meaningfully across multiple sectors by providing much-needed funding to underserved individuals, businesses, and communities that traditional banking structures have historically failed to serve.
Pakistan’s financial inclusion journey will not ultimately be defined by which institution processes the highest volume of payments. It will be defined by which institutions succeed in improving the productivity, resilience, and economic mobility of ordinary Pakistanis.
Technology alone cannot solve Pakistan’s financial challenges. However, technology combined with responsible credit, scalable infrastructure, and a deep understanding of Pakistan’s socioeconomic realities can play a transformative role in addressing them.
The writer, Kabeer Naqvi, is an industry veteran currently serving as Entrepreneur in Residence with the Abhi Group, responsible for building its digital bank in Pakistan. He is also the former chairman of the Pakistan Microfinance Network.
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