In the first quarter of current year, the Annual Payment Systems Review issued by the State Bank of Pakistan (SBP) reveals that Pakistan witnessed 3.7 billion retail transactions, out of which 92 percent were made via digital channels, such as mobile apps and QR codes. Nationally, it was reported that 9.1 billion retail transactions worth of PKR 612 trillion took place, with 88 percent conducted via digital channels.
Notably, digital payment systems like Raast has grown by around 162 times since 2022, crossing 1.28 billion transactions in 2025, thus making it a success story in the field of fintech. However, there is still a difference as only a quarter of Pakistan’s adult population is having accounts as compared to 56 percent in Indonesia and 89 percent in India. According to a detailed analysis by the Karandaaz Financial Inclusion Survey, presently only 35 percent of adults have some kind of digital financial account, with a significant gender disparity that is, 14 percent for women, and 56 percent for men. In addition, according to Global Findex 2025 Report, Pakistan is one of the 8 countries where the adult population without a bank account is more than 50 percent.
The paradox is that payments are experiencing a rapid growth, while financial inclusion has been relatively less accelerated. Transaction volume has grown by four times in 10 years, but financial inclusion has grown by a quarter of that. There is an insignificant decline in the gender gap disparity in account ownership since 2014. This article aims to address this paradox and recommends some viable solutions to improve fintech-based financial inclusion in Pakistan.
Pakistan’s fintech landscape reveals two-tier system. The first one is urban, banked, smartphone-owning Pakistan, which is now being catered by a growing list of payment gateways and digital banks, including several that have recently acquired full digital banking licenses from the State Bank with the help of JazzCash, Easypaisa, NayaPay, SadaPay, etc. This tier is financially included through mobile applications. The second tier is rural; a smartphone is a family unit instead of a personal possession, and a registered SIM card is something that is available to only 47 percent of women compared to 78 percent of men. Furthermore, these are mandatory requirements to open a digital account.
The financial sector in Pakistan faces two critical structural gaps: digital literacy and financial literacy. Less than 40 percent of those with financial access are financially literate, leading to underutilization of accounts. Consumer trust in financial institutions is low, with only 10 percent of unbanked adults trusting these institutions, while 85 percent depend on family and friends for financial support. As mentioned in the Pakistan Business Council (PBC) report, the financial network is still limited to personal transactions rather than commercial or credit trading. Additionally, a lack of representative information on borrower behaviour and informal income hinders credit market innovation, limits fintech integration to payment solutions instead of expanding into credit or insurance.
A central question is whether underserved communities, SMEs and agriculture sector are facilitated in fintech revolution?
The answer, however, is ambiguous. The creation of economic value requires more than the shifting of transactions from cash to mobile wallets. A large number of people from business community still deal in cash to avoid documentation. However, digitizing the payment mode provides data on servers that leads to improvement in governance if utilized rationally. The regulators use it as a parameter to measure the financial inclusion. Furthermore, SBP may use it for financial modelling and guide the policy makers by identifying the underserved communities. Digitization of payments through fintech enlightens the policymakers to intervene for specific sectors. Therefore, the data sets available on servers should be used to address the underlying issue related to financial inclusion of underserved communities.
The banking sector has experienced the new mode of licensed digital banking. This shows the potential to attract foreign investment. Nonetheless, because of scarce financial inclusion from underserved communities the profitability is still challenging. Currently, there is an increasing trend of digital lending, and 10.5 million low-income borrowers are being served through microfinancing. However, there is a challenge to acquire data because of high costs. There is a need to diversify the products offered that should focus on solving the problems like efficient credit scoring for underserved communities. Some prominent success cases around the globe are Kenya’s mobile money based products and account-aggregator framework in India. The adoption of virtual assets in Pakistan by PVARA is a fair move towards innovation. However, it also brings challenges of cyber security and mistrust among the users, especially the underserved communities.
In this context, the scarcity of Industry-Academia collaboration has also been a challenge for Pakistan. There are isolated efforts from both higher education Institutions (HEI) and Industry. However, there is a desperate need to work on National Fintech research agenda. The HEIs, Research centres, SBP and fintech companies are required to put a coordinated effort in order to tackle the specific challenges brought by fintech revolution. Problem-solving research must be the key in HEIs rather than just focusing on publishing in academic journals. The performance of researchers should be evaluated on the basis of solving real-time issues faced by the industry rather than just focusing on the number game. The research output of the coordinated partnership must result in product development.
Fintech has also changed the public sentiment, which is also critical to strengthening the financial system through fintech-based financial inclusion. The incorporation of transaction patterns and social media sentiments can provide the insight while examining the factors of scarcity of fintech-based financial inclusion. The clear and transparent dataset on fintech-based transactions is inevitable to improve the financial inclusion. It will also help monitor the improvements in the financial system. Digital financial literacy is also one of the keys, especially for women in underserved areas. Provision of fundamental knowledge of financial management at grass-root education curricula may bring a positive impact.
The State Bank of Pakistan must take measures to reduce the gender disparity in terms of digital bank account ownership. Underserved areas must be focused by providing them the products that fulfills their specific needs and build trust rather than serving them as urban communities are dealt. A special attention must be given to digital financial literacy, consumer protection, responsible AI adoption, increase in financing for SMEs and agriculture through public-private collaboration. The success of fintech should be measured by how it finances emerging entrepreneurs and manufacturers, includes rural women in the formal financial system, and helps farmers manage climate risks. Pakistan’s economy, therefore, stands at a critical crossroads regarding the adoption of fintech and its use as a catalyst for economic transformation. The former one has been achieved especially in the context of digitizing payments. However, the latter requires sound infrastructure regulations, evidence driven policy making, industry-academia linkages and customized product diversification focusing underserved communities. Fintech can become a significant driver of inclusive growth, increased productivity and economic resilience which ultimately lead to the economic transformation.
Copyright Business Recorder, 2026
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