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Need to speed up financial inclusion through digital banking

Need to speed up financial inclusion through digital banking

With the advancement of information technology (IT)) terminology of mobile banking, which until beginning of first decade of current century was denoted as bank on wheel providing access to financial services to all disadvantaged segments of population living in unbanked areas is now getting transformed into a multifaceted terminology, which apart from facilitating all banking transactions through mobile/cellular phone, various wireless devices and Internet is integrating all segments of society, particularly in developing countries to an appropriate banking environment, facilitating their participation in economic development process.

According to World Bank report of 2014 in this regard almost 69% of adults , which cover 3.8 billion people were found having an account with a bank or mobile money provider and by the year end of 2017 another 515 million adults could have access to formal banking services. In foreseeable future one can expect abrupt rise in number of digitalized and via cellphone banking services as according to International Telecommunication Union out of seven billion population on the globe 6 billion have access to working mobile phones.

This rapid increase in banking transaction through smart phones in turn has reduced poverty and inequality from the globe. However in this area also large disparities exists between men and women and between rich and poor in developing countries except in East Asia and Pacific countries like Cambodia, Vietnam, Indonesia and China etc where gender inequality is low regarding financial assets ownership.

In almost all middle and low income developing countries women due to lack of financial assets as well as property ownership have added to intensity of poverty in their countries. According to various survey reports conducted at international level women earn 64% less than men yet they spend three times as many hours on unpaid labor that is work on family farms and house work etc. Further it was revealed that women comprise almost 56% of all unbanked adults globally. However there is a positive side of findings of these studies is that where women were found to earn, spend and save and control their own money, they enhance economic well being not only for themselves but also of their communities. Findings of various survey reports regarding women empowerment reveal that if entire global labor force is incorporated in countries’ economies it would add $12 trillion to global GDP by 2025.

In Pakistan despite emphasis on enhancing financial inclusion of all segments of society, still 100 million adults do not have access to formal banking services. However as a result of State Bank’s intervention to promote mobile and digitalized banking services and also as a result of fast growth of cell phone industry in Pakistan (according to World Bank report almost 151 million mobile phones are in use in Pakistan), almost all the commercial and microfinance banks have come up with digital banking as a substitute for conventional bank branches/booths, which has substantially added to their outreach and also has reduced administrative expenses.

It is also interesting to note that cellular banking services now in vogue like Easy Paisa etc are being widely used by people from low and lower middle income groups who are integral part of informal and cash based economy. Transfer of funds particularly funds sent by Overseas Pakistanis reaching to their families in Pakistan have been speeded up.



In Pakistan women’s financial inclusion can be a very powerful lever that can advance gender equality. In particular use of digital banking can be helpful for women entrepreneurs living in unbanked areas. Through digitalized banking like mobile money debit and credit card and e-commerce platforms, while sitting at home/business place can deposit their funds and can borrow easily for their business needs and also can transfer /receive funds in no time at a minimum cost.

Women living in unbanked areas receive government’s sponsored safety net grants in cash used to walk miles and miles to grant disbursing office for getting payment. Now awareness regarding having national identity cards through NADRA women has now formal ID and they can easily receive their funds through mobile account at their convenience while sitting at home. In this regard various NGO working for women empowerment like Karadaz Pakistan are working for speeding up financial inclusion of women and also working to facilitate payment process for Benazir Income Support Program (BISP) through digitalization. It is a matter of satisfaction that almost 90% of women covered under the program are receiving digitalized payments.

Digitalization of BISP program has resulted in financial inclusion of women from low income families. According to a survey report in this regard focussing on success of this program revealed that women covered under the program through digitalization enjoy greater social and political inclusion. The condition of registration with National Database and Registration Authority (NADRA) and to obtain computerized national identity card has established identity of women particularly rural women as citizens of Pakistan, which was not possible otherwise. This has increased the number of legible female voters in all constituencies of national and provincial assemblies.

Due to very low female literacy rate of the country, women covered under BISP program are incapable of making full use of this technology like using ATMs etc for withdrawing money. It is therefore essential that training programs are arranged at all districts level to familiarize women with use of this technology.

For economic empowerment of women country must achieve true financial inclusion for women to ensure wider access to financial services beyond bank accounts through digital net working with firms dealing with them both within and outside the country both for business and financial transactions.

Micro finance banks operating in the country, in order to enhance their outreach in rural areas through mobile banking must tap such clients, not only for financing purchase of cell phone, but also arrange for their clients orientation of this technology and related skills.

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