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Pakistan’s Is Attractive Market of fintech Sector

Pakistan is being witnessed a boom in fintech industry as the companies attracted a significant investment of more than $32 million in the first half of 2021 as against investment of $10 million received in 2020 in the same sector, reported issued by a foreign think tank.
According to ADVANCE.AI, a leading AI and big data company in Asia, the fintech companies including established entities and startups are being largely backed by foreign investors having nearly 75% share and impressive technical expertise.
A few of world-renowned investors including Kleiner Perkins have explored into the country’s fintech market tapping the potential of the country with a wide scope of business, tech savvy young populating, and emerging new trends in economy.

Over the past decade, the country has seen continuous economic growth including the rapid development of the Internet and e-commerce, which, combined with favorable regulatory policies, have created a favorable environment for the fintech industry, the report said.
The report critically highlighted that the low penetration of banking services in the country despite the profitable banking industry with an impressive network of operations. The private sector businesses and individuals have very limited access to loans, only accounting for 25.6% and 3.3% of the total loans, respectively.

Pakistan has some 45 fintech startups, 18 (or 40%) of which provide payment services, which is above average for emerging markets (32%). This indicates that fintech is still in its infancy in this promising market because payment is usually the first to be disrupted by fintech, followed by lending and insurance.

The growing retail, wholesale, and trade (including e-commerce) sectors, the expanding middle class, and an increasing number of tech-savvy young people have combined to raise the requirements on financial services, presenting a great opportunity for fintech.
fintech companies have become able to reach individuals who do not have a bank account. The penetration rate of e-wallets has increased from 9% before the pandemic to 16% by the end of 2020.

The rate of financial inclusion increased from the pre-pandemic level of 21% to 25% by the end of 2020, the report mentioned.
The report listed successful and established fintech companies including Easypaisa, Finja, Creditbook, Tez Financial Services.
Pakistani fintech companies are less attractive to investors than their international counterparts. The country received only $10 million investment in fintech sector during 2020. Although the investment rose to USD 32 million in the first half of 2021, it is still not enough to fill the financial access gap and build a strong and internationally competitive fintech ecosystem.

Pakistan’s fintech industry by the successful cases of existing players and the favorable factors in the industry. These factors include un-met or under-served needs in market segments, strategic partnerships to enable diversified product portfolios, higher service quality and larger customer bases, transaction security guaranteed by reliable and secure payment platforms, and innovative services that help fintech companies to improve productivity and deliver an excellent user experience.

Regulators in Pakistan have given fintech a green light because it helps to increase financial inclusion. Accordingly, the State Bank of Pakistan (SBP) has been promoting the digital transformation of finance. It has devised the National Payment System Strategy (NPSS), approved Electronic Money Institutions (EMIs), launched the instant payment system, Raast, and improved the credit service level, laying a solid regulatory and infrastructure foundation for fintech development.

Moreover, lockdowns and economic stimulus packages amid the COVID-19 pandemic have accelerated the digitization of a sluggish financial sector. During the pandemic, the SBP required banks to provide services via Internet banking and mobile banking, and waived digital transaction charges to boost e-commerce and electronic payments.

Alongside these opportunities are major challenges such as the absence of a trust and credit system, a large number of informal economic activities, high transaction costs, limited investment, and financial fraud.


The underbanked population presents a massive opportunity for fintech. However, many of these people do not fully understand or trust fintech applications. Some of them still prefer physically stamped bank receipts. The industry faces an urgent need to improve its credit system.


Electronic payments cause higher transaction costs than traditional banking does. Raast can cut transaction costs and thereby promote the widespread adoption of digital payments

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