Mobile Banking: A Potential Catalyst for Financial Inclusion and Growth in Pakistan

Abstract

Almost half the world’s adult population lacks access to a formal bank account and other financial services. Pakistan is no exception and it is also among those countries at the lower end of the spectrum of financial inclusion. However, steps are being taken by government regulators and the private sector to improve access to financial services such as credit, savings, remittances and insurance. The introduction of mobile banking is a notable step in this context. Mobile banking, which comprises mobile wallets and over-the-counter transactions, is rapidly growing around the world and has the potential to reduce barriers to financial inclusion and thus transform economies. The benefits of this platform are even more pronounced for economies with a weak financial architecture and where formal banking entails considerable costs in terms of time and distance. This paper traces the history of mobile banking in Pakistan, studies various models of mobile banking and assesses its current state using the available data to understand how this segment has evolved and transformed conventional banking structures in the country. It also touches on the ecosystem that needs to be built in Pakistan to utilize the full potential of mobile technology.

Financial literacy, financial self-efficacy and financial account ownership behavior in Pakistan

“…Source: (World Bank, 2015) Although a number of studies have studied the financial inclusion in context of Pakistan (Kemal, 2019;Kumail Abbas Rizvi et al, 2017;Shaikh et al, 2017;Zulfiqar et al, 2016). Almost all of them remain focused on the supply side factors, and hardly none of the one has examined the role of demand side factors such as financial capabilities including financial literacy and financial self-efficacy.…”

Consumers’ Perception of Risk Facets Associated With Fintech Use: Evidence From Pakistan

“…The current study found that consumers are less worried about the legal issues because all the fintech companies have to register themselves to get a license from the government’s recommended organizations, for example, the state bank of Pakistan. The government is also trying to digitalize the country by allowing more fintech companies to work (PSPs, 2014; Rizvi et al, 2017).…”

“…The state bank's efforts to encourage electronic and branchless banking (such as mobile payments) have been meticulously recorded. One research looks at the past and frameworks of online banking to see how far the sector has developed and changed the country's traditional banking systems in Pakistan (Rizvi et al, 2017) This study differs from the other studies, such as more latest studies have identified various variables that determine fintech adoption. Only a little research has been done on the limitations and risks that deter customers from using fintech.…”

“…A lack of access to capital has long hampered Pakistan's economy (World Bank, 2017). According to the report, 93% of the grown-up populace doesn't have bank accounts (Rizvi et al, 2017). Pakistan has a lower economic inclusion position than regional and worldwide norms (Nenova & Niang, 2009).…”

“…The state bank’s efforts to encourage electronic and branchless banking (such as mobile payments) have been meticulously recorded. One research looks at the past and frameworks of online banking to see how far the sector has developed and changed the country’s traditional banking systems in Pakistan (Rizvi et al, 2017). In 2008, the State Bank of Pakistan (SBP) supported the branchless banking sector by issuing branchless banking laws and developing a regulatory mechanism strategy.…”