Fernando Morillo, Group Head of Retail Banking at Mashreq – a Middle East-based financial institution holding a NOC from the banking regulator to commence a digital bank in Pakistan – remarked that one of the widest gaps between using digital platforms and having access to digital banking tools lies in Pakistan.
Despite Being the 4th Most Populous Country in the World, Cash Is Still Dominant in Pakistan
During a recent interview with Dawn at a business conference, Mr. Morillo stated that the gap presents an “extraordinary possibility” to affect people’s habits in terms of fulfilling their banking needs.
While the State Bank of Pakistan (SBP) issued NOCs in January to five out of twenty or so applicants searching for authorization to inaugurate digital banking initiatives, Muhammad Imran Khan, an entrepreneur from Islamabad, stated that it is not simply a game where only one side wins. He went on to say: “Pakistan is the fifth most populous country and has a cash economy, but unfortunately, this doesn’t work as savings, nor does it add any value when making payments since it’s very costly.” Digital banking platforms will be able to provide services without having physical branches and can thus potentially assist many citizens in overcoming their financial struggles.
Despite the surge in digital payment methods, cash remains king. An astonishing Rs7.5 trillion of currency is circulating in the economy – representing more than 27% of the total money supply!
The Majority of Pakistani Adults Do Not Have Bank Accounts
In the most recent financial inclusion survey conducted by not-for-profit Karandaaz, it was found that an overwhelming 81% of Pakistani adults did not possess a bank account as of 2022. The primary reason for this lack of banking activity was “I don’t need one and have never thought about using one,” which comprised 68% of those surveyed without a checking or savings account.
According to Mr. Morillo, Mashreq is the premier digital banking provider with extensive experience in this field. Astonishingly, 85 percent of their branches were closed five years ago, yet they managed to double their client base concurrently! Their representative office based out of Pakistan has been operational for two decades and currently handles nearly 10% of the nation’s foreign payments due to its status as a prominent “global clearing house” operating across thirteen key jurisdictions.As a matter of fact, nearly 2 million Pakistani workers are based in the United Arab Emirates. We’ve been one of the most significant remitters for years and feel right at home here.
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