The State of FinTech In Pakistan

 In Fintech, Startup Thought Leaders

Situated in South Asia, Pakistan is a federal parliamentary republic, which was created after the partition of the Indian sub-continent in 1947. It shares its boundaries with the India in the east, Afghanistan in the west, Iran in the Southwest and China in the far northeast. The South of Pakistan is surrounded by the Arabian Sea and the Gulf of Oman.

Neighbors like India and China, which have strong startup presence, can play a decisive role in promoting the startup culture in Pakistan. According to the Pakistan’s economic survey, it’s the sixth most populous country in the world, and it estimated population in 2015 was 191.71 million with a population growth of 1.92%. The Labour Force Survey of 2013-14 says that 56.52 million people out of total 60.09-million labor force are employed and rest 3.50 million is unemployed.

Experts believe that Pakistan’s young age population presents a great opportunity for the country to engage them in innovative technology for economic benefits of the country. Rising cellphone users ? from 5 million in 2004 to 134 million in March 2015 ? shows that there is a ready ground for emergence and growth of financial technologies based startups. However, the literacy rate is a cause for concern as 74% in urban, and 49% in rural areas are literate. Government produces skilled workers to send them abroad to ensure higher foreign exchange.

Startup Scene in Pakistan:

Till 2011, Pakistan’s startup eco-system was completely nascent however in the last five years, it has shown some positive development and energy in this sector. Among the initiatives, which have been changing the startup horizon in Pakistan is the launch of Invest2Innovate (i2i) ? Which was commissioned by the Consultative Group to Assist the Poor (CGAP) of the World Bank. Since 2012, i2i has helped 21 startups firms, which have raised one million dollars.

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Since Pakistan has been in the news in the world for all the wrong reasons such as corruption, violence, and political instability, it has deterred a substantial chunk of foreign investors to enter the country due to perceived risk of unsafe business scenario.

In one way, this problem has proved to be a boon in disguise. It has encouraged the local talent to look inward and create a local network on the line of other successful startup hubs. So the Pakistani startup eco-system is largely dependent on local support and talent who are coming up with the regional chapter of global brands such as TEDx, Startup Weekend and Startup Grind.

Since 2/3rd of Pakistani population is below 30 years of age, the country has the immense opportunity and local talent, which can be engaged with the innovative technologies with the help of policies and regulations, say experts.

Pakistan’s participation in global startup movement GITEX, which also witnessed participants from 40 plus countries, shows its eagerness towards tech innovation. The sponsorship for the participation came from Trade Development Authority of Pakistan (TDAP) and the Pakistan Software Houses Association (P@sha).

Some of the Pakistani startups which have made their presence felt in the innovation sector are Bioniks, which is in 3D printed customized prosthesis; Find Ur Meal, a platform for foodies to get food in their desired budget; MotionCue which provides video marketing solution; Hayat Tech which deals in software and mobile application development services; RaideIT, which gives consultancy and solution in information technology; Art Fusion Labs which is a media player that plays all formats on mobile devices to name a few.

Local startup Convo has raised US$5 million in 2013 from US-based VC firm Morgenthaler Ventures that has invested in Apple and Evernote. Another startup PakWheels has also raised US$3.5 million from Malaysia-based VC Frontier Digital Ventures.

Popinjay is a fashion startup which has earned international accolades. The government agencies and private players also organize tech events, such as TechJuice Circle and the Digital Youth Summit 2014 and these events present excellent opportunities for youths to network and exchange ideas.

How big is the FinTech pie in Pakistan:

Since the whole Pakistani startup scene is at the fledgling stage, financial technology startups are on a slow but steady path of growth.

Though Pakistan is eager to have PayPal, Amazon, and Ebay to start their operations, lack of infrastructure such as cheap and fast internet payment getaways does not make it possible for them to operate in Pakistan entirely. But the good thing is that 90% of Pakistan is under cell-phone coverage area.

With financial inclusion a huge problem in Pakistan, many websites such as MyBankersOnline, CompareBanks, CompareHero.My KarloCompare has come up to present banking and finance options in the country.

Good tech startups have been able to get investment. For instance, Finja, has recently raised $1 million seed funding which it will use to launch a mobile wallet product in collaboration with a microfinance bank. The company claims to disrupt the current mobile wallet market with price, process, and functionality.

Pakistan is also slowly joining the high-speed Internet world, and this augurs well for its FinTech sector. The 4G, which arrived in the country in April 2014, managed to have 8 million subscribers by the end of 2014. Half of the total number of Internet users in the country accesses the internet from their mobile. Tech experts believe that the total number of broadband subscribers will go up to 45 million in 2020.

Investors of Pakistani origin settled abroad have also played a key role in encouraging startup scene in Pakistan, but experts believe that there is a need for a concerted effort from some players to support and nurture startups from the beginning till the time they mature.

Segments of Fintech:

Out of all the FinTech segments, one, which has made some considerable presence in the country, is the mobile wallet. Despite enormous potential for growth, FinTechs or disruptive innovations yet to take shape in Pakistan.

Mobile money such as EasyPaise, Omni, Mobicash, Timepay etc are some instances of branchless banking which have been operating in Pakistan for quite some time. Some of such mobile money companies like Mobicash are also offering a platform for third party integration. There is considerable growth in this segment however experts believe that there is still a vast potential to tap.

With the mobile wallet, a recently-launched payment scheme PayPak, first in Pakistan, has stimulated the payment segment. Segments such as Blockchain technology are yet to make its presence felt in the country.

Status of policy regulation for startups In Pakistan:

Experts also say that there is no incentive scheme from the government at the central level to support such investors and initiatives. Schemes like Plan9 and PlanX are good schemes, but they are on the provincial level.

So far fledgling entrepreneurs are concerned, there are a lot of challenges for them, and despite the fact there is a need for startups to solve several local issues, in the want of ready paid up capital and right mentorship, very few youngsters are coming forward. There is a need for startup friendly regulatory policies and tax incentives in the country.

The risk-taking capacity among youngsters is very low due to lack of job securities. This poses a big challenge for startups to get skilled workforce as people don’t want to join startups due to job insecurity.

Startup Incubators In Pakistan:

Both government agencies and private entrepreneurs are working towards creating opportunities for youngsters. One of the country’s largest incubators, Plan 9, was launched by the Punjab Information Technology Board which runs a startup acceleration program PlanX.

Another tech-based incubator, Next i/o was launched by IT trade association, Pakistan Software Houses Association for IT & ITES with assistance from global partners such as Google for Entrepreneurs, Samsung, and the US State Department. It aims at providing space, infrastructure, facilities and knowledge for budding entrepreneurs.

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The Lahore University of Management Sciences (LUMS) has a Center for Entrepreneurship, which is ranked one in Pakistan and 11 in Asia by Gust Accelerator Report 2015 for Asian and Oceanian Region.

Similarly, the Karachi Institute of Technology & Entrepreneurship (KITE), has also come up with an alternative and innovative learning program for those students who want to enter the technology sphere.

Besides incubators, co-working spaces such as Basecamp, DotZero, HQ, TecchHub are also providing space and opportunities for fledgling companies.

Along with these, hackathons and startup weekends are being given due importance in the country as these programs have produced startups like Savaree, an application for ride sharing or Groopic an application which assists in photo-editing.

Current status of financial institutions in Pakistan

In 2008 only 8% people in Pakistan had access to formal financial services. In March 2008, the State Bank of Pakistan, which has the mandate to supervise and monitor all other banks, for the first time came out with the regulations for branchless banking which allowed financial institutions to services through an alternative agent and mobile based delivery channel.

This allowed mobile companies to partner with banks. Even today, only 15% population has access to formal banking services, which means only ten branches for 100,000 people. This shows a great need for financial inclusiveness in the country.

Experts believe that recent innovations have revolutionized the banking sector in Pakistan. For instance, branchless banking such as EasyPaise (a collaboration of Telenor Pakistan and Tameer Microfinance Bank) is a mobile wallet which serves needs such as utility bill payments, domestic remittances, airtime purchase, other bill payments, salary disbursements, international remittances, loan disbursements/repayments and savings product combined with insurance.


A strong young population is a unique advantage for Pakistan, and this can prove to be a game-changer in the startup segment if the government wants to make full use of the asset. It needs government’s focus to invest in disrupting technologies, entrepreneurship and innovation-based skilling and thinking.

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