Only 21% of the adult population falls in the banked category, the government is trying it best to increase the ratio. In order to bring about financial inclusion, the best bet the government has is the fintechs. As they have the potential to optimize the process of financial inclusion beyond expectations.
Current statistics show that the number of bank accounts in is about one-fifth of the total adult population in Pakistan, which is too low in comparison to many developing countries. However, in Pakistan, account ownership has doubled, starting with a low base of 10.3% in 2011.
The need to increase the bank accounts in order to have a direct impact on the national economy, as the economy that is not formal is not included in the gross domestic product (GDP) is at an all time high.
It is estimated that the fintechs can create four million jobs, $263 billion new deposits, $23 billion new credits, and help reduce corruption in government matters by reducing $7 billion in government leakages according to Karandaaz Digital Financial Services Director Rehan Akhtar. Moreover, in many countries, fintechs have created products and services, in conjunction with existing banks and regulatory regimes of countries to serve the unbanked people.
Therefore, in order to promote fintechs in Pakistan, the finance industry has held multiple fintech competition and has funded seven start-ups in the last two years. In the past two competitions held by Karandaaz, four fintechs got $100,000 each, while three were given $20,000.
Karandaaz is all set to to host their third fintech disrupt challenge, in collaboration with Fintech Factory, in which 18 fintech start-ups are to take part.