Corruption in Pakistan: Using Fintech for Accountability The general approach, in this case, is that all manner of digital solutions can be introduced and implemented to replace current activity being done under the table or through undocumented methods. Having customers not use a bank account due to financial viability concerns is no excuse for leaving them out of the picture entirely. A combined effort by relevant stakeholders should have long ago created a contingency mechanism so that the country’s masses could conduct basic transactions, such as fund transfer and bill payment through mobile device applications. This would help them build a profile, provide proof of identity when making large purchases, and make themselves legible for government support. In doing so, the government would be able to monitor their transactions and include them within the tax bracket. Seeking loans or credit is to become a lot more convenient and easier with the growth of online loan service providers. This phenomenon can be especially trending in the auto finance market where customers can get loan pre-approvals and online credit ratings before purchasing a vehicle Also connected with this is the usage of fintech for security in online transactions, with the usage of escrow accounts to create trust between courier and seller. Growth in usage of digital payment channels for those who do not pay taxes, or keep their money in their mattresses is a compelling way to entice non-contributing members of society to start paying taxes in return for the perceived benefits of being a bank customer and experiencing the perks of mobile finance, something previously only available to the affluent segments. In doing so, these members will stimulate the economy and help prevent price inflation by including their income as a part of the GDP, thereby, supporting directly the stability and health of the economy in general. Fintech for Economic Recovery Fintech can have a positive impact on a country’s economic and GDP growth. Simply because of its ability to cut through traditional red tape and use talent and passion to bring services to the mass markets, allowing them to introduce themselves voluntarily to the tax-paying demographics, thereby ensuring balanced GDP trajectory. According to the financial times, hinting at the impact of the new players, McKinsey and Company has laid out the forecast numbers in its report, Fintech will lead to the following outcomes by 2025 in Pakistan. It will create four million jobs and new 93 million bank accounts; adding $36 billion to the Gross National Product (GNP) annually and increasing Pakistan government’s net revenue by $7 billion. Low-cost financial service products can serve to promote innovation and revival within the financial services industry as a whole, and also the larger economy as a whole, including Mobile wallets, online payments, pre-paid cards, and digital savings accounts are all examples of low-cost financial services that McKinsey Global Institute has considered important in making the digital financial sector a catalyst for stability. Govt Push for Onboarding and Incentivisation of Mobile Banking Onboarding the massive 80 per cent unbanked is the core central project until 2025, and it is this process that will open the possibility of the next 93 million bank accounts being opened. The government is aware of the figures related to how few of the population are served by the numerous mainstream banks: Pakistan has a financial inclusion ratio of 15 per cent, compared to an average of 33 per cent for lower-middle-income countries while banking sector represents 80 per cent of the financial services but serves only 15 per cent of the population. Due to the ongoing pressure from the World Bank and IMF for Financial Inclusion and money laundering concerns, the government of Pakistan and SBP are likely to show a great deal of concern for facilitating onboarding of the masses to the Asaan Account platforms and bringing their incomes into the national register for accountability purposes. The inevitability of the Digital Financial Service Evolution There would be certain trends in the future that will partially if not entirely change the way payments are made with advancements in the Fintech industry. Seeking loans or credit is to become a lot more convenient and easier with the growth of online loan service, P2P lending through distributed ledger technology, and crowdfunding practices. Credit and debit cards will start becoming superseded and the preferred mode of payment will be through mobile wallets. Carrying your mobile phone will become essential for all sorts of transactions. Payment through mobile phones will be incentivised similar to the benefits and point systems for spending on credit cards. The use of prepaid cards can become widespread for specific payments such as utilities, petrol, and other staple services, which helps to budget and also securing money not intended for other purposes. All other transactions remaining can all be done through scanning the user’s QR code at a contactless equipped POS terminal. Although it’s way off in Pakistan, Amazon has long since initiated smart-stores where no POS terminals or checkout staff exist, customers pay using contactless technology through RFID implants which are recognised as a user enters and leaves the store, simultaneously summing up their bill and charging it to the Amazon account. Due to the inherent link between payments, retail/commerce sectors, and banking, progress in financial services can only take place when retail outlets and distributors adopt sophisticated payment methods at the outset. Future Trends within the financial services industry There would be certain trends in the future that will partially if not entirely change the way payments are made with the gradual adoption of Fintech innovation and mobile wallets being popularised as a mode of payment. Carrying your mobile phone will become essential for all sorts of transactions. Payment through mobile phones will be incentivised similar to the benefits and point systems for spending on credit cards. a. Online loan services: Seeking loans or credit is to become a lot more convenient and easier with the growth of online loan service providers. This phenomenon can be especially trending in the auto finance market where customers can get loan pre-approvals and online credit ratings before purchasing a vehicle. In China, internet giants such as Alibaba and Tencent are entering this market where large purchases, such as vehicles or houses are arranged on low down payment and flexible low-interest rates online. The general trends are greater flexibility in financial service types as well as ease in mode/method of payment. Price comparison functions play a central role in this revolution, with relation to its capacity to identify multiple offerings for customers, which is particularly dynamic within the financial services, as it guarantees that customers will be enabled to select the digital financial service offerings which offer the most flexibility/ease, etc. A local case study in this context is Smartchoice.pk, which is offering a one-stop solution for consumers to compare financial products, i.e. insurance, lending and investing. b. Insurtech: The space for digital innovation around Insurance is open to any service providers following the general rationale of better value for customers, tailored service, and flexible payment options. The entire industry is being radically challenged through Insurtech, which insists that the underlying corruption and financial exploitation within insurance, and a one-size-fits-all policy tailoring method should be done away with. Through tailored technology solutions, all key aspects of the Insurance operating process can be modified, including pricing, underwriting and sales. The writer is a research consultant