The role of Pakistani expatriates who send money to Pakistan is vital in digitalizing finance in Pakistan. Pakistan has emerged as a potentially lucrative digital finance market. Fintech has grown rapidly in the region, but with such a difficult environment, long-term change has become a source of concern. As per the World Bank, in 2017, just 18% of Pakistanis had a banking system account. Financial services — safe money storage, competitive loans to smooth consumption or buy properties, insurance to weather financial shocks, low-cost money transfers to families, and making and receiving payments quickly and affordably — are increasingly recognized as a basic need modern economy.
After the outbreak of the coronavirus pandemic, digital banking has grown in popularity in Pakistan, according to the central bank, which recorded 253.7 million electronic transactions worth Rs19 trillion in the new fiscal year’s first quarter.
Online banking and mobile banking transactions saw the most promising growth, with the number of registered smartphone banking customers hitting 8.9 million, up 41% from Q1-FY20.and the number of internet users including expatriates who send money to Pakistan online reaching 4.3 million, up 26% from the same time.
Does COVID-19 Brought People Towards Utilization Of Digital Payment System?
Based on the current Global Economic Prospects, the COVID-19 (coronavirus) pandemic and subsequent containment steps are expected to trigger a 2.8 percent economic contraction in 2020. Among the many negative consequences of the global economic downturn, the crisis poses a serious threat to global financial inclusion efforts.
Bank branches were closed, and mobile money operators’ operations, including money transfers to Pakistan and worldwide, were suspended to comply with restrictions imposed by blockades and lockdowns designed to prevent the spread of the disease. Digital solutions such as mobile financial services, online banking, and other financial technology advancements will benefit small businesses and low-income communities. Recent evidence indicates that, provided the right regulatory structure, digital financial inclusion could dramatically boost economic growth, minimize poverty and narrow income disparities without jeopardizing financial stability.
The number of digital payments in the industry grew at an exponential pace during COVID-19. In comparison to the previous year, ACE Money Transfer’s annual throughput grew by 64%, hitting PKR 1.5 trillion in 2020. Similarly, the number of active ACE money transfer App users who monthly perform online money transfers to Pakistan surpassed 3.44 million, a 54 percent improvement over the previous year.