Pakistan is standing at a digital crossroads, branding itself as a country gearing up for a fintech revolution. Yet, a closer look reveals an uncomfortable contradiction: while government agencies celebrate mobile wallet penetration and digital onboarding, the very foundation of economic health – investment, productivity, exports, and institutional efficiency – continues to erode. The fintech narrative, though fashionable and well-funded, may be turning into an elaborate illusion that risks distracting policymakers from a more grounded revival strategy.
According to the State Bank of Pakistan, digital financial transactions surpassed PKR 16.1 trillion in 2023, and Raast, the instant payment system, has shown exponential growth, with transactions exceeding PKR 1.8 trillion in the final quarter of 2023 alone. Yet these numbers conceal a paradox: less than 30% of Pakistan’s adult population actively uses formal banking services, and among women, this figure drops to just 13%, as per World Bank Findex 2021 and recent SBP estimates. Over 100 million adults remain excluded from financial networks. Bangladesh, by contrast, boasts a financial inclusion rate of nearly 50%, backed by deep integration of services like bKash into the everyday lives of its citizens. Pakistan, meanwhile, struggles with fragmented policies and digital tools that rarely connect with rural or low-literacy populations.
What makes Pakistan’s digital push even more fragile is the chronic infrastructure deficit it is layered upon. Internet penetration remains below 43% as of PTA’s 2024 figures, electricity outages are routine in semi-urban and rural belts, and smartphone access is neither universal nor affordable. The dream of a digital economy assumes a level of technological readiness that simply doesn’t exist. In India, where UPI transformed how over 260 million users transact daily, the groundwork was laid through years of investment in Aadhaar, biometric verification, and broadband expansion. Pakistan has no comparable baseline, but its fintech rhetoric pretends otherwise.
Over 100 million adults remain excluded from financial networks.
Moreover, there is little evidence that fintech is translating into macroeconomic benefits. According to PBS data, exports declined by 7.8% year-on-year in the first half of FY2025. Large-Scale Manufacturing shrank by 3.6% in the same period, and the current account deficit widened to USD 1.9 billion in Q2. The investment-to-GDP ratio remains at 13.6%, among the lowest in Asia. These figures paint a troubling picture: instead of driving growth, the digital economy may be serving as a distraction from much-needed structural reforms.
Foreign comparisons offer a sobering lesson. Rwanda, often celebrated for its digital public services, only launched a comprehensive fintech push after establishing a data governance framework, transparent regulatory oversight, and aggressive digital literacy campaigns. Kenya’s M-PESA succeeded not just because of technology, but because of enabling policies that connected small traders, transport workers, and agrarian communities into a financial web. Pakistan’s fintech model, in contrast, is elite-driven and investor-tilted, with over 70% of venture capital flowing into ventures serving urban middle- and upper-class consumers, leaving the vast informal economy untouched.
Even where progress is visible, it is not immune from abuse. The explosion of unregulated digital lending apps led to widespread data theft, harassment, and at least three confirmed suicide cases, as per FIA and media reports in late 2023. Regulatory agencies reacted too late, issuing bans and suspensions only after public outcry. This reflects a broader problem: Pakistan’s digital ecosystem is growing faster than its institutional capacity to regulate it. There is still no comprehensive Personal Data Protection Law, and the Draft Data Protection Bill has languished in limbo for over four years. In such an environment, digital progress becomes a risk multiplier rather than an economic stabilizer.
Pakistan’s current approach also risks deepening inequalities. Digital exclusion is not just a rural problem; it disproportionately affects women, low-income urban workers, the elderly, and people with disabilities. State Bank figures confirm that most digital financial services are clustered in Tier-1 cities like Lahore, Karachi, and Islamabad. This urban-centric model contradicts the stated goals of inclusion. A 2024 Karandaaz survey showed that over 58% of rural women have never heard of mobile wallets, let alone used one. If digital growth continues to mirror social exclusion, the much-hyped fintech wave may end up reinforcing, not bridging, economic divides.
Constructively, Pakistan must recalibrate its digital strategy. First, data governance must become a national priority. Without laws protecting consumer information and defining the limits of data use, any gains in fintech will remain ethically fragile and reputationally risky. Second, digital financial services should be embedded in broader developmental policies. For instance, integrating agri-fintech platforms with subsidized input schemes, crop insurance, and warehousing finance can directly empower millions of farmers. Third, regulatory agility must match technological speed. The SECP, SBP, and FIA need joint protocols and a shared sandbox for regulating emerging technologies like peer-to-peer lending, crypto-assets, and AI-based underwriting tools.
To make digital meaningful, Pakistan must also strengthen analog foundations. Without judicial reforms, financial enforcement mechanisms, rural electrification, and education system overhauls, fintech will remain cosmetic. There must also be a shift in narrative-from celebrating apps and downloads to measuring how these tools reduce poverty, increase enterprise access to credit, and help stabilize macroeconomic indicators. Countries that have succeeded in digital transformation never confused it with economic recovery; they saw it as a tool, not a target.
Lastly, digital sovereignty cannot be compromised. As Pakistan expands ties with China in digital finance infrastructure and negotiates fintech regulations with Gulf allies, it must adopt a data-localization strategy and implement independent audits of cross-border digital flows. Data centers, encryption policies, and national AI governance frameworks must be fast-tracked. In the age of cyber-dependency, economic autonomy cannot be achieved without digital independence.
Economic revival in Pakistan requires more than a digital mirage. It needs courageous policymaking that reorients fintech from cosmetic to consequential. That involves asking hard questions about who benefits from our digital push, what the opportunity costs are, and whether innovation is being used to uplift the weakest or just to enrich the already connected. Until that clarity emerges, our fintech revolution risks becoming a case study in how not to digitize an economy still struggling to stand upright.
The writer is a financial expert and can be reached at jawadsaleem.1982@ gmail.com. He tweets @JawadSaleem1982