Pakistan — A Vision of Financial Inclusion

Financial inclusion is crucial for the economic growth and development of any country, and Pakistan is no exception. The term ‘Financial Inclusion’ refers to the process of ensuring individuals and businesses have access to useful and affordable financial products and services, such as savings accounts, credit, insurance, and payment systems.

Financial inclusion is important for a number of reasons, including:

  1. Reducing poverty: Financial inclusion can help to reduce poverty by providing individuals and businesses with access to the financial tools they need to manage money, invest in the future, and generate income.
  2. Promoting economic growth: By increasing access to financial services, financial inclusion can help to promote economic growth by enabling individuals and businesses to make investments, start new enterprises, and create jobs.
  3. Facilitating access to credit: Financial inclusion can increase access to credit for individuals and businesses, particularly for those who have been previously excluded from formal financial systems, such as women and low-income groups.
  4. Enhancing financial stability: Financial inclusion can help to improve financial stability by increasing the number of people and businesses that are included in the formal financial system. This can reduce the risk of financial crises.
  5. Improving overall financial literacy: Financial inclusion can also help to improve overall financial literacy by providing individuals and businesses with the knowledge and skills they need to make informed financial decisions.

In Pakistan, financial inclusion is particularly important as the country is facing a number of economic challenges, including a large unbanked population and high poverty rates. According to the World Bank, only around 25% of adults in Pakistan have an account at a formal financial institution.

However, despite these efforts, financial inclusion remains a significant challenge in Pakistan. One of the main issues is the lack of access to financial services in rural areas. Many of these areas are remote and underserved, making it difficult for individuals and businesses to access financial services. Additionally, the high cost of providing financial services in these areas can also be a barrier to financial inclusion.

To address these challenges, the government of Pakistan has implemented a number of initiatives to promote financial inclusion including the National Financial Inclusion Strategy (NFIS) to set national vision for achieving universal financial inclusion in Pakistan. The State Bank of Pakistan (SBP) has launched several digital initiatives, such as the launch of a national payment system, in order to provide individuals and businesses with access to digital financial services. The State Bank of Pakistans stated objectives are “To improve access to financial services for the poor and marginalised groups and for micro, and small enterprises in Pakistan”. The SBP has also introduced regulations to encourage financial inclusion, such as the requirement for banks to open a certain number of branches in underbanked areas.

Another issue is the lack of trust. Due to a lack of financial literacy and limited understanding of the benefits of financial services, many people are hesitant to open accounts at formal financial institutions.

To overcome these challenges, it is important to focus on implementing initiatives and policies that promote financial inclusion. This can include increasing access to digital financial services, implementing regulations to encourage financial inclusion, and providing financial education and literacy programs to empower individuals and businesses to make informed financial decisions. The government is working closely with the private sector to develop innovative solutions that can help to increase access to financial services in remote and underserved areas.

Digital onboarding can improve financial inclusion in Pakistan by making it easier for individuals and businesses to access financial products and services. Digital onboarding, like Avid AML’s eKYC Digital OnBoarding, allows customers to access financial services remotely, making it more convenient for those in remote or underserved areas. Additionally, digital onboarding can help to reduce costs for financial institutions and reduce the risk of fraud and financial crimes. By using digital onboarding, financial institutions can make it easier for customers to open accounts and access services, even if they are in remote or underserved areas.

In Pakistan, digital onboarding can be particularly beneficial for increasing financial inclusion among women and low-income populations. For example, many women in Pakistan may face barriers to accessing financial services due to cultural or social norms. Digital onboarding can make it easier for women to open accounts and access services, as they can do so from the safety and privacy of their own homes.

Additionally, digital onboarding can also help low-income populations access financial services, as they may not have the necessary documents or identification to open accounts in person.

Digital onboarding can also help to improve the efficiency and cost-effectiveness of financial institutions. For example, by using digital technologies to onboard customers, financial institutions can reduce the need for physical branches and staff. This can help to lower costs and improve access to services in remote or underserved areas. Additionally, digital onboarding can help to reduce the risk of fraud and financial crimes, as it can make it easier to verify customer identities and detect suspicious activity.

In addition to digital onboarding, there are other strategies that can be used to improve financial inclusion in Pakistan. For example, increasing access to mobile banking and digital payments can make it easier for people to access financial services, even if they are in remote or underserved areas. Financial education and literacy programs can help to empower individuals and businesses to make informed financial decisions. By using digital technologies to onboard customers, financial institutions can make it easier for people to access financial services, even if they are in remote or underserved areas.

Financial inclusion is the process of ensuring that individuals and businesses have access to useful and affordable financial products and services. In Pakistan, digital onboarding can be an effective way to improve financial inclusion by making it easier for people to access financial services. The success of digital onboarding in Pakistan depends on the country’s digital infrastructure, regulations and government policies towards digital banking, the willingness of financial institutions to adapt to digital onboarding, and the level of trust of the population in digital financial services.

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