The report “Framework for rooting FinTechs in Pakistan” discusses the opportunities and gaps that exist in the FinTech eco-system of Pakistan and what can be done to promote it in the country.
FinTech, short for Financial Technology, is the use of technology to provide financial services. What mobile apps are to smartphones, FinTechs are to financial service providers. FinTechs have been experiencing remarkable growth over the past few years globally. According to the report, FinTechs are categorized as:
“Traditional FinTechs collaborate with incumbent financial service providers as their technology providers through traditional pricing models.
Emergent FinTechs are a new category of FinTechs that partner with a bank through new engagement models or simply displace financial institutions.”
Pakistan is mainly a cash-based economy. There is a lack of awareness about the importance of FinTech in Pakistan. 72% of the organizations do not know which FinTech are out there and looking to collaborate. For economies to transition to a cashless society and increase financial inclusion, new technologies, government programs and customer preferences are primary factors that facilitate this shift.
Global FinTech investment is soaring every year while in Pakistan FinTechs face many challenges. Karandaaz Pakistan, a company which promotes financial inclusion by employing technology enabled solutions, and FinSurgent, a FinTech startup that focuses on harnessing emerging technologies in existing business models, have conducted a survey to identify the opportunities and gaps in FinTech ecosystem and future of digital financial services in Pakistan. Some of the gaps identified through the research are mentioned below:
FinTech industry in Pakistan faces many hurdles including a lack of larger organisation’s support, unfavorable regulatory environment etc. A list of challenges identified through a survey are:
With the world’s 5th largest young population and an increasing usage of internet and smartphones, Pakistani market shows the potential of adapting to the new financial technologies. The research points out favorable factors in Pakistan for FinTech growth:
FinTech industry has a huge potential to grow in Pakistan. The researchers recommend following:
Pakistan, 6th largest population in the world, provides an excellent opportunity for FinTechs to grow and operate and contribute to the country’s economic and GDP growth. It is the need of the hour to not only invest and support the local upcoming FinTechs in the country but to create an environment conducive to the growth of FinTechs in Pakistan.
The whole report can be read here.
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