Bridging the Gender Gap in Pakistan’s Banking Sector
With an increasingly gender-conscious environment, Pakistan’s glaring gender disparity among the banked population may soon improve. As Ruth Bader Ginsburg famously stated, “Women belong in all places where decisions are being made.” This sentiment resonates deeply in a country where financial inclusion remains a significant challenge, particularly for women.
The Impact of COVID-19 on Financial Access
The COVID-19 pandemic brought the world to a standstill, transforming daily life and exacerbating existing inequalities. While many adapted to remote work and online services, the most vulnerable populations, particularly the poor, faced severe setbacks. A Findex survey revealed that 1.4 billion people globally lacked access to banking facilities, and in Pakistan, a staggering 91% of the population remains unbanked. This lack of access complicates the ability to save, borrow, and conduct basic financial transactions, making it especially difficult for those in lower-income brackets to navigate economic challenges.
During the pandemic, while a small percentage of Pakistanis turned to online platforms for essential services, the majority struggled to access financial services. Many were forced to seek out shops that defied curfews, while those with bank accounts faced obstacles as physical branches closed. This situation highlighted the urgent need for innovative solutions to enhance financial inclusion.
Understanding Financial Inclusion
Financial inclusion encompasses a range of services, from day-to-day banking to savings, credit, and insurance. It is essential for organizations, particularly those in microfinance and fintech, to collaborate and create solutions that cater to the unbanked population. Technology plays a pivotal role in this transformation. For instance, Raast, a payment service in Pakistan, has made strides in facilitating person-to-person (P2P) mobile payments. As of FY 2021-22, nearly 15 million registered users conducted transactions worth Rs 100 billion, showcasing the potential of digital financial services.
Gender Disparities in Banking
The gender gap in financial inclusion is stark. According to Jameel Ahmed, Governor of the State Bank of Pakistan (SBP), for every three men with a bank account, only one woman has access to one. Numerous studies have shown that financial inclusion can significantly reduce poverty and improve the lives of women, particularly those from lower-income backgrounds. When women gain access to banking services, they are empowered to save, invest in their children’s education, and pursue business opportunities, leading to greater financial security and autonomy.
The Role of Fintech in Empowering Women
Financial inclusion can be viewed through three lenses: women entrepreneurs in fintech, women professionals within financial institutions, and the female user base of financial services. At its core, financial inclusion means providing women with a secure space to manage their money, reducing the risks associated with cash transactions and enabling them to transfer funds to support their families, whether locally or abroad.
As of December 2022, only 18% of Pakistani women had bank accounts compared to 51% of men. Addressing this disparity requires gender-intentional strategies and products. Fintech companies are uniquely positioned to bridge this gap, and several initiatives have emerged in recent years.
Success Stories in Female-Led Fintech
Tez Financial, co-founded by Naureen Hyat, is a prime example of a fintech company addressing the needs of the unbanked. After witnessing the challenges faced by microfinance applicants without credit scores, Hyat established Tez to provide nano loans based on smartphone data and consumption patterns. The company’s innovative approach has garnered attention, culminating in its acquisition by ZoodPay in May 2022.
Another noteworthy venture is Oraan, Pakistan’s first gender-inclusive fintech, founded by Halima Iqbal and Farwa Tapal. By leveraging the Rotating Savings and Credit Association (ROSCA) model, Oraan caters to women who traditionally use informal savings groups. With over 10,000 users, 84% of whom are women, Oraan is making significant strides in promoting financial literacy and inclusion.
Metric, co-founded by Meenah Tariq, addresses the banking needs of small businesses. Recognizing the barriers women entrepreneurs face in accessing financial services, Metric aims to simplify the process of opening business bank accounts and tracking finances. Despite the challenges, Tariq’s team is committed to empowering women business owners to take control of their financial futures.
Established Companies Embracing Gender Inclusion
Beyond startups, established companies are increasingly recognizing the importance of a gender-inclusive approach. The OneLoad Women Empowerment Program is one such initiative, designed to attract female retailers by offering tailored support and incentives. With over 1,000 active female retailers and a throughput of Rs. 129 million, this program exemplifies how traditional businesses can adapt to meet the needs of women.
Growing Female Representation in Fintech Leadership
The trend of women entering the fintech space extends beyond entrepreneurship. More women are taking on leadership roles within established financial institutions. The Central Depository Company and the Pakistan Stock Exchange have made strides in female representation on their boards, with notable figures like Jehan Ara and Shamshad Akhtar leading the charge.
A Future of Financial Inclusion
As Pakistan moves towards a more gender-conscious environment, the glaring gender disparity in the banking sector is poised for improvement. With innovative fintech solutions, a growing number of female entrepreneurs, and increasing representation in leadership roles, the future looks promising for women in Pakistan’s financial landscape. The journey towards financial inclusion is ongoing, but the momentum is building, and the potential for transformative change is within reach.
Maria Umar, a gender inclusion and women economic empowerment specialist, emphasizes the importance of these developments in creating a more equitable financial ecosystem. As we witness these changes unfold, the hope is that they will pave the way for a more inclusive and prosperous future for all.