In recent years, Pakistan has witnessed a remarkable transformation in its financial sector with the advent of fintech. This technological shift has not only revolutionized traditional financial services but also introduced innovative solutions, reshaping the landscape of financial transactions. Over the last decade, Pakistan’s digital financial services sector has seen significant growth due to factors like increased high-bandwidth penetration, widespread mobile usage, and a young population under 30. The introduction of NBFCs paved the way for mobile wallets and digital payment platforms, offering convenient alternatives to traditional banking. The years 2020 and 2021 were pivotal for Pakistan’s fintech sector, pushing it to the forefront. While financial inclusion is around 14%, fintech firms focusing on e-wallets and P2P gateways are vital in improving access. Despite challenges, venture capital has poured into Pakistan’s fintech scene, supporting ventures like CreditBook, ABHI, Sadapay, and Nayapay with notable investments in 2021-2022. Fintech in Pakistan encompasses various categories, including payment processors, digital wallets, crowdfunding platforms, P2P lending, and more. These fintech services are primarily regulated by the Security and Exchange Commission of Pakistan and the State Bank of Pakistan. The State Bank of Pakistan (SBP) oversees payment systems, digital wallets, and branchless banking, while the Securities and Exchange Commission of Pakistan (SECP) regulates non-banking financial companies (NBFCs). However, the rapid growth of unregulated nano-lending companies operating outside regulatory boundaries has posed challenges for borrowers. The absence of proper oversight resulted in fraudulent lending practices, excessive interest rates, and inadequate disclosure of terms. Borrowers, enticed by quick loans, fell victim to debt traps, adversely impacting their financial stability and overall well-being. Pakistan’s digital financial services sector has seen significant growth due to an increased high bandwidth penetration, widespread mobile usage, and a young population under 30. In response to these challenges, the SECP introduced Circular 10 of 2023, which enforces exposure limits on digital lenders and borrowers. The aim is to encourage responsible lending and prevent borrowers from falling into debt cycles due to multiple loans. Individual borrowers are restricted to a maximum loan of Rs25,000 from a single app and an aggregate limit of Rs75,000 from multiple apps. The loan period for a nano-loan through personal loan apps is capped at 90 days. The SECP continues to adapt policies to enhance financial access, considering potential pricing and total cost caps on digital nano loans through consultations. This approach seeks to foster financial innovation while safeguarding borrowers from exploitation. Two prominent types of NBFCs in Pakistan are Earned Wage Access (EWA) platforms and digital nano-lending apps. EWA platforms offer a debt-free means for employees to access earned but unpaid wages before payday, fostering financial wellness. On the other hand, nano-lending apps provide short-term loans with high-interest rates, which, if not managed responsibly, can lead to debt accumulation. During a gathering, Mohammad Zaidi, Chief Commercial Officer of ABHI expressed his appreciation for the efforts of the SECP in empowering the fintech industry and creating proper checks and balance measures. He further added that instead of providing unsecured loans ABHI provides EWA (Earned Wage Access) through which employees can access the portion of their earned salary via the app. Fintech holds tremendous promise for Pakistan’s financial landscape. The regulatory initiatives by the SECP establish a safer environment for consumers and encourage responsible innovation among fintech companies. These efforts align to bridge the gap between traditional financial services and the unbanked population, potentially reshaping the country’s economy and enhancing financial literacy. In conclusion, the field of fintech has transformed Pakistan, changing how people access and use financial services. While the growth of fintech has been promising, it has also shown that robust regulations are essential to protect consumers from predatory practices. The SECP’s regulatory efforts show their commitment to fostering a fintech ecosystem that promotes responsible innovation and ensures the financial well-being of all stakeholders. As fintech expands, Pakistan’s financial landscape stands on the brink of a transformative future. The writer is a journalist with more than 15 years of experience in electronic media.