Documenting history is unfortunately not one of the strongest suits of Pakistan, at least beyond the same old themes of security and civil-military relations. The lesser-known stories of social change, driven by technology and innovative businesses, hardly ever make it out in written form even though they may provide us with far more room for optimism. Perhaps we are so used to self-deprecation that anything positive is just not worth pursuing or highlighting.
One of those grand changes has been the growing access to financial services in Pakistan. From being a basket case around a decade ago, we have come a long way as far as account ownership and transaction activity are concerned.
The latest Karandaaz Financial Inclusion Survey (KFIS) attests to this transformation, noting that 35 per cent of adult Pakistanis in 2024 had a registered account with a formal institution, ie a bank, wallet or non-banking financial institution. In 2014, this figure stood at just 7pc. Though disparities exist, this improvement has been broad-based, with female registered users rising from 3pc to 14pc, whereas the corresponding proportion of males went from 11pc to 56pc.
Region-wise, the differences were more visible, with Punjab showing comfortably the best performance, with 40pc of its adults reported having an account with a formal financial institution in 2024, compared to 8pc in 2014. Khyber Pakhtunkhwa, which was the biggest laggard at just 5pc a decade ago, also made massive strides and now stands at 29pc.
Moving away from the bureaucratic nightmares of banks, telco mobile wallets have helped significantly boost access to financial services
On the other hand, both Balochistan and Sindh continue to lag behind. The latter, in particular, used to be the leader at 9pc in 2014 but since then has only managed to increase this figure to 26pc. Only Balochistan managed a smaller improvement of 14 percentage points during this period.
Unfortunately, the official statistics from the State Bank of Pakistan (SBP) do not give a regional distribution all the way back to 2014 and cover all types of financial institutions. But they do have data since at least 2018 until September 2024 on branchless banking, which has been the biggest driver of growth in account ownership.
According to an analysis by Data Darbar, Punjab has understandably seen the biggest jump in wallets, roughly accounting for 60pc of all new branchless accounts opened between December 2018 and September 2024. However, in percentage terms, it had the slowest growth of 145pc over this period. On the other hand, Gilgit-Baltistan witnessed by far the biggest spike of 860pc, followed by Azad Jammu & Kashmir at 600.5pc, thanks to both their low bases.
While more detailed analysis will follow once the SBP releases numbers for the last quarter of 2024, all evidence so far points to Punjab punching well above its weight. By adoption, Punjab leads once again with 2.61 billion transactions out of a total of 3.94bn in 2023, making up 66.31pc of the national aggregate. In other words, it accounts for a bigger piece of the pie even relative to both agent networks and account ownership.
Though there’s no denying the success in account ownership expansion or the surge in digital transactions, rising annually just under triple digits for the last many years, it’s also setting the bar a bit too low. Financial institutions are supposed to provide credit instead of just holding your money without any remuneration, as is the case with the vast majority of accounts in Pakistan.
So far, the needle hasn’t moved much with respect to credit. Just look at the advances-to-deposits, standing at a mere 39.8pc in May, while the investments relative to deposits remain north of 105.8pc. In over three years, the number of individual accounts to have outstanding loans has averaged just 2.9 million, even as deposit accounts were over 97m.
As per the KFIS, 28pc of adult Pakistanis expressed a need for loans, with 31pc males and 25pc females. The demand was the highest among the self-employed, at 36pc, understandably due to their unpredictable cash flows, followed by blue-collar workers at 35pc. Among the financially included, the biggest reason (28pc) for not going for formal loans was the high interest, almost on par (27pc) with the view that paperwork is too complicated. Another 20pc reported having other means to borrow from.
So far, we’ve solved the easy part — getting people accounts and helping them transfer money. We’ve even somewhat managed to make government systems work (Raast); the mobile money revolution succeeded because it worked around our institutional failures rather than fixing them. Banks were bureaucratic nightmares, so the more agile telcos invented mobile wallets and built a vast distribution network.
But the missing piece of the puzzle is how to expand it beyond personal usage and replicate it for the retail sector, be it for merchant payments or working capital loans. The success on that front looks disappointing, with Raast Person-to-Merchant processing just 1.5m transactions worth Rs4.5bn during January-March, compared to 368.3m and Rs8 trillion via Person-to-Person. However, any meaningful change there will probably require the will of the state and not just a standalone regulator.
Mutaher Khan is co-founder of Data Darbar and works for the Karachi School of Business and Leadership
Published in Dawn, The Business and Finance Weekly, June 30th, 2025