"Pakistani consumers’ general perception regarding the (in)significance of formal finance in their daily lives, difficult banking procedures, low outreach, and unsuitable products provides an opportunity for fintechs to design personalized products," according to a 2018 report in the Lahore Journal of Economics.
Nascent cooperation between traditional Pakistani banks and fintechs augurs good prospects for the country's fintech ecosystem. For instance, the fintech startup FINJA is cooperating with Pakistan's FINCA Microfinance Bank to develop a mobile wallet application. FINCA has the branchless banking license that allows FINJA to providing banking services.
"Under this collaboration, FINCA has created a partnership with FINJA on a revenue-sharing basis and both the companies co-own the SimSim brand. This is a new model of innovation and partnership," FINCA CEO Mudassar Aqil told Business Recorder in an April interview.
China's tech giants are also entering the Pakistan fintech market. In January, Pakistan launched a remittance service to Malaysia - its first cross-border remittance service - supported by Ant Financial's blockchain technology. The virtual wallet allows Pakistanis living in Malaysia to send money home instantly and securely via Valyou, a Malaysia-based remittance service provider.
"The new remittance service is one of the examples of how emerging technologies can help countries meet their digital and financial inclusion goals," Eric Jing, chairman and CEO of Ant Financial, said in a statement.
Looking ahead, Pakistan's fintech community hopes for a regulatory sandbox that would allow startups to experiment with a wide variety of new products and services without falling afoul of existing regulations.
FINCA's Aqil urges the Pakistani government to incentivize traditional banks to digitize their consumer-facing operations and back-end financial processes. "That would consequently encourage fintechs to assist banks in rapid digitization," he told Business Recorder. "Banks in this way will build internal capability to work with external partners for tangible benefits."