Fintech to Enhance Financial Inclusion in Pakistan

About 100 million Pakistani adults lacked access to formal and regulated financial services as of 2016, according to a World Bank report on financial inclusion.  Only 2.9% of adults in Pakistan had a debit card, and only 1% of adults used them to make payments. Just 1.4% of adults used an account to receive wages and 1.8% of adults used it to receive government transfers in 2014. Since then, Pakistan has been leading the way in South Asia in digital finance and branchless banking.

According to the latest State Bank statistics on branchless banking (BB) sector, mobile wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% in July-September 2017 over previous quarter. A McKinsey and Co analysis shows that adoption of financial technology (fintech) can help dramatically increase financial inclusion in Pakistan.

Karandaaz Pakistan , a non-profit organization, set up jointly by UK’s Department for International Development and Bill and Melinda Gates Foundation, is promoting financial technology in the country. Finja and Inov8 are among the better known fintech startups in the country. Chinese e-commerce giant Alibaba's Ant Financial's recent entry in Pakistan is creating a lot of excitement in Pakistan's fintech community.

Financial and Digital Inclusion in Pakistan. Source: Brookings Institution

Importance of Financial Inclusion:

Access to regulated financial services for all is essential in today's economy. It allows people and businesses to come out of the shadows and  fully participate in the formal economy by saving, borrowing and investing.

Those who lack access to regulated banking services are often forced to resort to work with unscrupulous lenders who trap them in debt at unaffordable rates. Such loans in extreme cases lead to debt bondage in developing countries.

Financial inclusion is good for individuals and small and medium size businesses as well as the national economy. It spurs economic growth and helps document more of the economy to increase transparency.

Status of Financial Inclusion in Pakistan:

About 100 million Pakistani adults lacked access to formal and regulated financial services as of 2016, according to a World Bank report on financial inclusion.  Only 2.9% of adults in Pakistan had a debit card, and only 1% of adults used them to make payments. Just 1.4% of adults used an account to receive wages and 1.8% of adults used it to receive government transfers in 2014. Since then, Pakistan has been leading the way in South Asia in digital finance and branchless banking.

M-wallets Growth in Pakistan in millions. Source: Business Recorder

Mobile wallets, also called m-wallets, are smartphone applications linked to bank accounts that allow users to make payments for transactions such as retail purchases. According to recent State Bank statistics on branchless banking (BB) sector, mobile wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% seen in Jul-Sep 2017 over previous quarter. Share of active m-wallets has also seen significant growth from a low of 35% in June 2015 to 45% in September 2017.

“The benefits of digital payments go well beyond the convenience many people in developed economies associate with the technology,” says Dr. Leora Klapper, Lead Economist at the World Bank Development Research Group. “Digital financial services lower the cost and increase the security of sending, paying and receiving money. The resulting increase in financial inclusion is also vital to women’s empowerment.”

A McKinsey and Co analysis shows that adoption of financial technology (fintech) can help dramatically increase financial inclusion in Pakistan. Pakistan is ranked 16th among 26 nations ranked by Brookings Institution with an overall score of 69% in "The State of Financial and Digital Inclusion Project Report" for 2017. The Internet revolution is enabling rapid growth of financial technology (fintech) for increasing financial inclusion in Pakistan.

A McKinsey Global Institute report titled "Digital Finance For All: Powering Inclusive Growth In Emerging Economies" projects that adoption of financial technology (fintech) in Pakistan will add  93 million bank accounts and $36 billion a year to the country's GDP by 2025.   It will also create 4 million new jobs and add $7 billion to the government coffers in this period.

McKinsey report says that "Pakistan has solid digital infrastructure and financial regulation in place and has even had some success in digital domestic-remittance payments".

Fintech Players in Pakistan:

There are a number of companies, including some startups, offering fintech applications for smartphones that are linked to bank accounts. EasyPaisa operated by Telenor Microfinance is already well established. Among some of the better known startups working to disrupt the financial services sector in Pakistan are Finja and Inov8.

China's e-commerce giant Alibaba runs a major global e-payments platform Alipay. It also owns Ant Financial which has recently announced the purchase of 45% stake in Pakistan-based Telenor Microfinance Bank.

Telenor Pakistan runs its own e-payments platform EasyPay which will likely link up with Alipay global payments platform after the close of the Ant Financial deal.   Bloomberg is also reporting that Alibaba is in serious talks to buy Daraz.pk, an online retailer in Pakistan. These developments are creating a lot of excitement in Pakistan's fintech and e-commerce communities.

Alibaba and Alipay and other similar platforms are expected to stimulate both domestic and international trade by empowering small and medium size Pakistani entrepreneurial businesses and large established enterprises.

Karandaaz Fintech Promotion:

A key player promoting financial inclusion is Karandaaz Pakistan , a non-profit organization, set up jointly by UK’s Department for International Development and Bill and Melinda Gates Foundation.  It is providing grants for a number of local initiatives to develop and promote financial technology solutions in Pakistan.

Karandaaz Pakistan is promoting Fintech startups in  5 areas of focus:

1) Access to Financial services

Credit Scoring Models, Formalize savings through need based products, Digital lending services, and Insurance

2) Payments

Retail payments solutions through QR code,  Supply / Value Chain Digitization,  Ideas around digitization of online payments and merchant payments

3) E-Commerce

Smoothening of on-boarding process, Enabling Escrow Accounts for a retail merchant, Alternate payment modes other than COD

4) Interoperability

Innovative ideas to address the lack of interoperability among m-wallets

5) Early stage ideas related to:

 M-Wallet Use cases, Education of Financial Services through technology, Customer Engagement / Experience, Micro Credit, Digital Savings

Summary:

About 100 million Pakistani adults lacked access to formal and regulated financial services as of 2016, according to a World Bank report on financial inclusion.  Only 2.9% of adults in Pakistan have a debit card, and only 1% of adults use them to make payments. Just 1.4% of adults use an account to receive wages and 1.8% of adults use it to receive government transfers in 2014. At the same time, Pakistan is leading the way in South Asia in digital finance and branchless banking.

According to the latest State Bank statistics on branchless banking (BB) sector, m-wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% seen in Jul-Sep 2017 over previous quarter. A McKinsey and Co analysis shows that adoption of financial technology (fintech) can help dramatically increase financial inclusion in Pakistan.

Karandaaz Pakistan , a non-profit organization, set up by UK’s Department for International Development and Bill and Melinda Gates Foundation, is promoting financial technology in the country.  Chinese e-commerce giant Alibaba's Ant Financial's recent entry in Pakistan is creating a lot of excitement in the country's fintech community.

Related Links:

Haq's Musings

South Asia Investor Review

Fintech Revolution in Pakistan

E-Commerce in Pakistan

The Other 99% of the Pakistan Story

FMCG Boom in Pakistan

Pakistan's Financial Services Sector

Bank Deposits Growth in Pakistan

Riaz Haq's Youtube Channel

Viewpoint From Overseas Channel 

Comments

Riaz Haq said…
Pakistan’s booming e-commerce market is just getting started
Sarfaraz A. KhanUpdated March 26, 2018


https://www.dawn.com/news/1397446


Pakistan’s e-commerce market has witnessed phenomenal growth recently.

The number of registered e-commerce merchants has risen by 2.6-times and e-commerce payments have surged 2.3-times in a span of just twelve months, as per a State Bank of Pakistan (SBP) report. But this is still a young market with significant room for growth.

Pakistani businesses have embraced e-commerce. Hundreds of retailers, ranging from clothing outlets to electronic equipment stores, are now using websites to sell goods to customers.

The emergence of several online marketplaces, such as Daraz.pk and OLX Pakistan, has made it easier for retailers to sell goods on the web. At the same time, a number of new online businesses have also propped up.

As per the SBP’s Payment Systems Review (Q2FY18), there were a total of 344 e-commerce merchants in the country registered with banks at the end of 2016. By the end of 2017, that number had climbed to 905.

This growth was accompanied by a surge in e-commerce transactions from these merchants from Rs3.9 billion in the last three months of 2016 to Rs9.1bn in the last three months of the previous year. The central bank’s report also indicates that around 800 million payment transactions totalling Rs4.5bn were booked in the last three months of 2017. That’s also considerably greater than the Rs2bn e-commerce payments that happened in the same period of 2016.

The actual value of e-commerce sales, however, is likely several times larger than the above-mentioned numbers. That is because the central bank’s report only shows those transactions that occurred through debit or credit cards.

But Pakistani consumers mainly use the cash-on-delivery (COD) system to buy goods online. As per one estimate, almost 85 per cent of online sales occur through COD. Using this, we can speculate that roughly Rs25.5bn e-commerce payments may have occurred in the Oct-Dec period through the COD system.

It wasn’t long ago when the Pakistan Telecommunication Authority noted in its annual report for the previous fiscal year that the size of Pakistan’s e-commerce market could grow from $60m-$100m in 2015 to $1bn by 2020.However, industry experts now believe that the country could hit the key milestone by as soon as this year.

If the country continues to witness e-commerce sales of Rs30bn in every quarter from electronic card and COD system, just as it likely did in the last three months of 2017, then the total sales for the ongoing fiscal may clock in at Rs102bn, or $1.1bn at the current exchange rate. If however, Pakistan witnesses an increase in online sales, which could be driven by the Eid shopping season, then the market could go way past the $1 billion threshold in 2018.

At $1 billion, however, the size of Pakistan’s e-commerce market will still be tiny. Global e-commerce retail sales are expected to be around $2.8 trillion in 2018, as per data from Statista, a provider of market and consumer data.

China is the world’s largest e-commerce market where the online retail sales are forecasted to be around $600bn for 2018, followed by the US with $461.5bn of expected sales. India could report $25bn of retail e-commerce sales in the current year.

That being said, Pakistan is still a young e-commerce market where less than one-fifth of the total population uses the internet.

As per latest data from Internet Live Stats, the global internet penetration rate is around 46pc. In developed markets like the US, the metric is over 80pc. In Pakistan, however, a little less than 18pc of the population has access to the internet. That’s less than half of the global average, which means that there’s significant room for growth although internet penetration in the country has already grown significantly from just 8pc in 2010.
Riaz Haq said…
Pakistan now has 53 million 3G and 4G subscribers, PTA

https://www.techjuice.pk/pakistan-now-has-53-million-3g-and-4g-subscribers-pta/

The number of internet users in Pakistan is rising fastly. According to report by Pakistan Telecommunication Authority (PTA), the number of 3G and 4G customers in Pakistan reach 53.24 Million by the end of March 2018. PTA observed the number of mobile users in Pakistan reached 149.10 million by March 2018 as compared to 147.204 million at the end of February 2018.

If you look at the individual mobile network count then Jazz is a top-notch telecom operator and its total count for 3G users stood at 14.98 million by March, compared to 14.88 million by end of February 2018, marking an increase of 0.1 million. Jazz 4G user numbers jumped from 2,590,092 by end February 2018 to 3,155,686 by 31 March.

Zong 3G subscribers elevated from 8.893 million by 28 February 2018 to 9.187 million by 31 March, whereas the variety of 4G customers jumped from 5,830,231 by February 2018 to 6,373,061 by 31st March.

The count of 3G customers of Telenor community jumped from 10.878 million by the end of February 2018 to 10.928 million by the end of March 2018. The number of 4G customers jumped from 2,154,238 by February 2018 to 2,451,057 by end-March.

Ufone added 0.147 million 3G users on its network during the month of March and the total count reached to 6.165 million by end-March compared to 6.018 by end of February 2018.

Teledensity for cellular mobiles reached 74.98 % and broadband subscribers reached 55,558,824 by the end of March in comparison with 53,554,231 by the end of February 2018.

The telecom sector of Pakistan has undergone through huge transformations after the arrival of 3G and 4G services in the country. However, the Pakistani government is going to introduce 5G technology as well that will be at least 100 times faster than the speed of 4G technology. The government has finally allowed the Pakistan Telecommunication Authority (PTA) to let telcos conduct 5G trials in Pakistan.
Riaz Haq said…
Pakistan Adopting Advance Technologies Rapidly: Anusha Rehman
Daniyal Sohail

https://www.urdupoint.com/en/technology/pakistan-adopting-advance-technologies-rapidl-321642.html

Minister for Information Technology and Telecommunication Anusha Rehman Friday said, Pakistan was one of those countries that had been adopting the advance technology most rapidly to counter challenges of modern, digital era.

While addressing the concluding ceremony of five-day "Huawei mobile Pakistan Congress 2018" the minister said, the technology advancements were coming in Pakistan adding "we also hope that we can have huawei made in Pakistan as soon as possible." Anusha said, Ministry of IT had started projects for Baluchistan worth Rs 26 billion to provide 3g service to the people there.

In the history of IT of Pakistan, this was the biggest investment for Balochistan, which aimed to target hundreds of villages to connect these remote areas with 3G service, she added. She said,a population of about 196,177, covering 269 mauzas and an area of 39,434 sq kms would get modern broadband facilities through this project.

The project would cover Awaran, Jhal Jao and Mashkai tehsils/sub-tehsils of Awaran district and Bela, Lakhra, Liari, Uthal, Dureji, Hub, Sonmiani and Kanraj of Lasbel district, she added. The Minister said, after launching 3G services in Baluchistan, other services like careem would be start in in the province which would be a great achievement of Ministry of Information Technology.

She emphasized the importance of technological advancement and virtual assistance for the generations to come to bring this nation on path of Technology evolution and prosperity. "Government is making all out efforts to introduce 5G technology in Pakistan by 2020 to bring it at par with Developed economies in term of technology advancements." She emphasized that women's economic empowerment was at the heart of the sustainable development and essential to achieve gender equality, poverty eradication and inclusive economic growth.

She shared initiatives steered by IT ministry in this regard, particularly ICT for Girls program. She said, achievements of Pakistan in the arena of ICT and future plans for continued growth in this sector would enable transformation into "Digital Pakistan".

Anusha described the DigiSkills program as an important part of Information Technology initiative of the government that would create online employment opportunities to enable youth to earn 200 to 300 dollars per month and with the help of this program, youth from across the country would provide services across the globe.

She appreciated the Huawei Technology role in setting such precedent to promote emerging technologies in Pakistan by involving Industry players and engaging the Government to make it reality. The Minister hoped that people of Pakistan were going to use the opportunities that were created by Huawei, the technology giant.
Riaz Haq said…
#Alibaba's entry in #Pakistan hailed as boost for #DigitalEconomy. Experts predict #Islamabad likely to lower high taxes after #Chinese e-retailer's investment. #ecommerce #fintech #Daraz #AliPay #Telenor #Telecom #payments

https://asia.nikkei.com/Business/Companies/Alibaba-s-entry-in-Pakistan-hailed-as-boost-for-digital-economy

KARACHI -- Alibaba Group Holding's recent purchase of a Pakistan-based online retailer has positioned the Chinese technology conglomerate to make inroads in e-commerce across South Asia, but the acquisition has raised expectations of robust growth in an industry that many experts say performs well below its potential.

Gaps such as the absence of a global online payments system can now be filled through Alibaba's Alipay service, said Shuja Rizvi, a Karachi based senior stock market analyst at Al-Hoqani Securities. "With the entry of a major player like Alibaba, Pakistan's policies will be molded to face global competition and our environment will hopefully improve," Rizvi said in an interview with the Nikkei Asian Review, citing one of the most commonly discussed benefits of Alibaba's arrival in the country.

Alibaba announced earlier this month a deal to buy Daraz Group, a Pakistani digital marketplace company, for an undisclosed amount. Since it was founded in 2012, Daraz has steadily expanded its services to Myanmar, Bangladesh, Sri Lanka and Nepal, say analysts who regularly track the e-commerce sector.

The acquisition comes as Pakistan prepares to receive more than $60 billion in Chinese investment under the China-Pakistan Economic Corridor -- a cornerstone of Chinese President Xi Jinping's Belt and Road Initiative. Alibaba's arrival in Pakistan also has been preceded by significant growth in cellular phone services and high-speed internet across the country in recent years, analysts say.

According to the Pakistan Telecommunication Authority, or PTA, the official regulator of the telecom sector, more than 73% of Pakistan's population, or roughly 149 million people, have cellular phone subscriptions. Especially important for the growth of digital businesses is the estimate of 56 million people, or more than 27% of the population, who subscribe to broadband services -- a key figure indicating the number of internet users, many of whom will be potential future online customers.

"Today, the number of internet users in Pakistan are more than the entire population of many countries around the world," a senior official with the Ministry of Information Technology and Telecommunication in Islamabad who requested anonymity because he was not allowed to speak to journalists, told Nikkei. "For investors like Alibaba, there is fertile ground for a strong future expansion."

Other PTA officials said that online retail businesses in Pakistan have much room to grow as they have an advantage over traditional retail outlets that have to invest heavily in commercial real estate to sell their products to consumers.

"In the most prized commercial markets of Pakistan -- in big cities like Karachi, Lahore or Islamabad -- rents have more than doubled for the top-end premises just in the last 10 years," said the Ministry of Information Technology official. "And the overhead costs -- especially rents -- continue to rise."

Barkan Saeed, chairman of the Pakistan Software Houses Association, the main representative body of the country's software industry, welcomed Alibaba's purchase of Daraz and entry into the country "as a major milestone" for Pakistan's e-commerce sector. Saeed said that while the government estimates the annual value of e-commerce transactions in Pakistan at approximately $600million, the actual figure could be five times that amount.
Riaz Haq said…
Ant Financial is about to upend the entire Pakistani retail banking sector
‘There is ZERO realization of what is coming and how big this sea change will be

http://www.atimes.com/article/ant-financial-is-about-to-upend-the-entire-pakistani-retail-banking-sector/

anking in Pakistan has not, to put it diplomatically, reached its full potential. It is so inefficient, according to one industry insider, that more than 35 banks provide services to only about 12% of the population. But Omer Salimullah, a fintech specialist with Karachi-based JS Bank, wrote in a post last week that the days are numbered for this sorry state of affairs, and China’s Ant Financial will be the catalyst.

The Alibaba subsidiary took the plunge into the Pakistani financial services market with an acquisition earlier this month, looking to tap into the potential of around 100 million un-banked individuals. Ant Financial’s acquisition of Telenor Microfinance Bank for the sum of US$185 million is “a VERY big deal,” Salimulla emphasized. “As a comparison, 100% of RBS Pakistan was sold to Faysal Bank for US$ 50 million. Please note that Ant has not valued a Pakistani micro finance bank at US$ 410 million. What they have valued is the almost complete takeover of the retail financial services market from incumbent banks,” he said.

Ant’s partnership with Telenor’s mobile banking brand, Easypaisa, is going to transform banking services in the country, and synergy with a possible acquisition of Pakistan’s largest e-commerce player Daraz, will expand the ecosystem even further. The Chinese fintech giant stands to swallow up a huge chunk of the youth an un-banked market, according to Salimulla, and many small to mid-sized banks will not survive the next several years.

“There is too much old-world thinking in corridors of powers in banks. There is ZERO realization of what is coming and how big this sea change will be,” he warned.
Riaz Haq said…
How Ant Financial Will Completely Change the Pakistani Retail Banking Landscape

https://www.linkedin.com/pulse/how-ant-financial-completely-change-pakistani-retail-omer-salimullah/?trk=eml-email_feed_ecosystem_digest_01-recommended_articles-6-Unknown&midToken=AQG4-FJ6lIvEmQ&fromEmail=fromEmail&ut=33KMcFs0XpJUc1

Banking in Pakistan is an extremely in-efficient industry where 35+ banks have only been able to bank 25 million Pakistanis in the last 70 odd years. This means that as an industry, banks are providing their services to only 12% of the population. The branchless banking industry has not fared much better either with only 35 million wallets out of which 50% are inactive (no activity in the past 3 months). This is a sorry state of affairs by any yardstick. In the new world, wherever there has been inefficiency in an industry, it has been disrupted – big time! Uber, Didichuxing, Careem, Grab have decimated the taxi industry worldwide. AirBnB has dented the hotel industry significantly to the extent that Airbnb is now bigger than the world's top five hotel brands put together. PayTM in India (Ant owns more than 50% of Paytm and has injected close to US$ 1 billion into this company) has now become the biggest financial firm in India, in less than five years. and plans to become the world's largest digital bank with 500 million account holders. With all the inefficiencies found in it's midst, the retail banking industry in Pakistan is a prime candidate for this type of massive disruption.

In this backdrop comes the Ant Financial Services Group (“Ant Financial”), established by Alibaba Group and its founder Jack Ma acquisition of 45% of Telenor Microfinance Bank (TMB) for US$ 185 million at a total post money valuation of US$ 410 million. Make no bones about it - this is a VERY big deal. As a comparison, 100% of RBS Pakistan was sold to Faysal Bank for US$ 50 million. Please note that Ant has not valued a Pakistani micro finance bank at US$ 410 million. What they have valued is the almost complete takeover of the retail financial services market from incumbent banks. They realize that Pakistan is one of the most in-efficient banking markets in the world and it will be simple to take every last morsel of the retail banking pie from banks. The market potential of some 100 million un-banked individuals is a mouth-watering prospect for Ant.

How Will “Ant Paisa Bank” Take Over Retail Banking in Pakistan?

Go big on QR: Ant will introduce Alipay (or a local variant) here in Pakistan. This will be their big play to capture a huge chunk of retails payments which are currently happening in cash. QR uptake has been slow in Pakistan where only small players like FonePay are pushing it. With the financial & marketing muscle that Ant brings, they will make QR payments common with incentives on both the merchant and customer side.

- Digital Lending: This will be the secret sauce which finally tips the scale for digitization payments in Pakistan. Consumer lending via Ant has reached $95 billion in China and Paytm in India launched Paytm Score in February which they will use to lend to users of their platform. Our biggest hurdle in digitizing cash payments has been the reluctance of users (especially merchants) to document their cash flow fearing tax implications. In a country where less than 1% of the population pays tax, this has always been the biggest impediment in digitizing payments. However, once the conversation switches to these merchants receiving funding/loans from Ant based on their throughput via Ant channels (i.e. giving loans to small businesses for purchasing goods from Ali Baba), they will be more than happy to roll the transaction through digital channels.

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Riaz Haq said…
How Ant Financial Will Completely Change the Pakistani Retail Banking Landscape

https://www.linkedin.com/pulse/how-ant-financial-completely-change-pakistani-retail-omer-salimullah/?trk=eml-email_feed_ecosystem_digest_01-recommended_articles-6-Unknown&midToken=AQG4-FJ6lIvEmQ&fromEmail=fromEmail&ut=33KMcFs0XpJUc1

Technology Stack: In a recent interview post the Ant investment, Shahid Mustafa, CEO of Telenor Bank said “….there’s a sunset date for the current technology and that’s when we will look to upgrade the back-end technology”. With all the financial clout that Ant will bring, the thing that will break the proverbial camel’s back (the camel being the Pakistani financial industry) will be the tech prowess that Ant will introduce in Pakistan. MIT Tech Review published an article with the headline “Meet the Chinese Finance Giant That’s Secretly an AI Company” referring to Ant’s AI, computer vision and natural language processing capabilities. This is how important AI is to Ant. Last year the company acquired EyeVerify, a U.S. company that makes eye recognition software. Ant will bring AI powered payments, lending, insurance, and anti-fraud capabilities to Pakistan and completely transform the way financial services are delivered. Think Instant and Frictionless.

- Amazing User Experiences: The news of Ant buying Daraz, the largest e-commerce player in Pakistan, has been doing the round for quite some time. If this deal goes through, Ant will bring it’s world class e-commerce expertise via Ali Baba to Pakistan. Digital payments has always been a challenge for e-commerce in Pakistan. Having both the payment and e-comm side under its control, Ant can make a huge dent into both these fledgling areas. Imagine being offered an AI-powered personalized & instant loan on shopping done on Daraz. Imagine being able to file an insurance claim for a car accident where all you need to do is take a picture of the accident and Ant’s AI image processing engine will finalize the findings in seconds. Imagine bots talking to Pakistanis in any regional language to handle customer service or conduct transactions (voice will remove the last block in making digitization widespread in Pakistan where lack of education prevents reading and writing based solutions to gain traction)

Why Does This Matter to Existing Banks?

With the marketing and tech muscle that Ant will bring into Pakistan, the next 24 months are going to be critical for small to mid-sized banks. Easypaisa is a brand that resonates both with the un-banked and the youth. These markets are major growth areas for banks going forward and if these are taken away by Easypaisa due to providing delightful user experiences, the oxygen will be sucked out of this industry. Expect to see a LOT of mergers among the incumbent banks. The big-5 may survive due to their corporate and treasury business but the mid to small sized banks will go under water due to the coming tsunami. It may seem that I may be overstating the threat but this is not the case. There is a high level of digital illiteracy on the management boards of Pakistani banks and the average age of C-level suites in banks is 50+. There is too much old-world thinking in corridors of powers in banks. There is ZERO realization of what is coming and how big this sea change will be.

What Can Existing Banks Do?
Are we looking to help banks that charge customers an average of PKR 50 for an Interbank Fund Transfer (IBFT) transaction (some are charging more than PKR 150) while giving out free checkbooks? Most banks think they’ve become digital because they’ve rolled out a mobile app. All the other important areas like account opening, lending, payments continue the way they were implemented in the mid-90s. This is not digital. And no Head of Digital Transformation or a Head of Innovation can convert a dinosaur into an agile cheetah. Transforming an organisation is next to impossible due to legacy systems and legacy mindsets (Nokia and Kodak couldn't do it).
Riaz Haq said…
#PTI's 14-Point for #Digital #Pakistan. #Elections2018 #ImranKhan https://www.techjuice.pk/pti-unveils-digital-policy-naya-pakistan/ PTI’s 14 Points for Digital Pakistan:
$2 billion set aside for National digital transformations & provision of different services to citizens through mobile.
Using technology to open government data to increase transparency
IT education of 50,000 students
Establishment of 120 new campuses to produce 100,000 technology graduates/year
Mathematics and Science teacher training and certification program
Five new major technology clusters (Special Economic Zones)
A focus will be on creating enabling environment for start-ups and entrepreneurs.
50,000 call center seats available on a turn-key basis
One window operation to register a new company
A global PR campaign involving expat community
Visa issuance on green passport for Businessmen and professionals
Simplification of processes for foreign ownership of companies
Public-Private Partnership on projects
Target will be set to increase the global ranking of Pakistan in ease of doing business
Riaz Haq said…
#Technology firms Avanza Group & Premier Systems announce investment of $5 million in the #payment #gateway to connect individuals with merchants and banks via joint venture as Avanza Premier Payment Services (APPS) in #Pakistan #mobilepayments #ecommerce https://www.techjuice.pk/two-technology-firms-to-establish-online-payment-gateway-in-pakistan/

Two technology groups in Pakistan have collaborated to develop a local online payment gateway system to take a share in the growing e-commerce market of Pakistan.

Avanza Group and Premier Systems announced to invest over $5 million in the gateway which is aimed to connect individuals with merchants and banks. According to sources, the two companies will set up the joint venture as Avanza Premier Payment Services (APPS).
Mahmood Kapurwala, CEO of Avanza Group said, “the size of Pakistan’s e-commerce market is estimated to be $1 billion, which should be $30-$40 billion in a country with a population of 207 million.’ He also partnered with NCR, Avaya, Microsoft, and IBM. He added, “We are looking at this gap as an opportunity.”

APPS claims to be the first Financial Technology (fintech) in the country to obtain payment system provider (PSP) and payment system operator (PSO) licenses from the State Bank of Pakistan (SBP). According to McKinsey and Company, a worldwide management consulting firm, Fintech will add about 4 million jobs, 93 million bank accounts and $36 billion annually to the gross national product (GNP), and $7 billion to the government’s net revenue by 2025.

The newly-founded company plans to incentivize brick and mortar businesses with free online services, like building websites and digital marketing. It will only take a certain share in the profit that comes through online businesses. Adnan Ali, CEO, APPS said: “It will move Pakistan towards digitizing major institutions, such as merchants, schools, billing industries, mutual funds and other corporate entities by providing a digital gateway.”

Avanza Group CEO said, Increase in e-commerce acceptance will also help grow the overall retail market when people will have the choice to buy products present in other cities, He said, “If everything remains on track, earning a revenue of Rs400 million will not be a big deal.”
Riaz Haq said…
#Pakistan #digital #banking growth accelerates. Fiscal 2017-18 saw 3.4 million #ecommerce transactions worth Rs18.7 billion, representing year over year growth of 183.3% and 98.9%. #fintech https://www.globalvillagespace.com/pakistan-banking-sector-witnesses-growth-on-digital-front-and-agriculture/ via @GVS_News

The State Bank of Pakistan (SBP) in its ‘Payment Systems Review’ for the financial year 2017-2018 has provided a statistical snapshot of the payment systems in the country, showing growth in various traditional and modern payment systems.

During the financial year 2018, the country’s core payment systems infrastructure remained operationally resilient. All the channels of payment systems showed significant growth compared to the previous year. The large-value payment system i.e. Pakistan Real Time Interbank Settlement Mechanism (PRISM) processed 1.7 million transactions amounting Rs361 trillion.

There were 1,094 locally registered e-Commerce Merchants having their merchant accounts in 8 banks as of the end of June 2018 showing limited boarding of e-Commerce merchants in the country

These transactions showed significant growth of 54.5 percent and 29.2 percent in both volume and value of transactions compared to the previous financial year. In these transactions, the transactions with regards to third-party customers’ transfers have the highest share of 1.3 million transactions (i.e. 79 percent of the overall recorded transactions) whereas Government securities settlement transactions have the highest share of Rs256 trillion in a value of transactions.

There were 1,094 locally registered e-Commerce Merchants having their merchant accounts in 8 banks as of the end of June 2018 showing limited boarding of e-Commerce merchants in the country. Consumers carried out 3.4 million online transactions of worth Rs18.7 billion on these locally registered e-Commerce Merchants during the year FY18.

These transactions showed a significant YoY growth of 183.3 percent and 98.9 percent compared to the previous year. In addition to the above, domestically issued Debit, Credit and Pre-paid cards processed 6.8 million transactions of Rs. 39.7 billion on local and International e-Commerce merchants. In these e-Commerce transactions, Credit Cards has the highest share both in volume and value of transactions.

While no specific information has been provided on the number of users of these cards, the number of transactions processed through these cards has increased by 37.3 percent with total transactions, as on June 2018, having been reported at 34.4 million, at a value of Rs201.5 billion during the fiscal year 2018.

Agriculture loans in 2017/18 were 38.1 percent higher than the previous year’s disbursements of Rs704.5 billion, the State Bank of Pakistan (SBP)

Having grown at a pace of 21.8 percent and 23.4 percent in the volume and value of transactions respectively, during the year under review, debit cards processed a total of 441.1 million transactions worth Rs5.1 trillion, far greater than the size and value of transactions conducted using credit cards.

However, the bulk of this usage has been on transactions concerning ATM withdrawals whereas the share of transactions with respect to Point of Sale usage has been merely 8.6 percent in volume and 2.9 percent in the value of transactions.

Credit cards, on the other hand, has been the predominant medium for Point of Sale usage, with the 87.2 percent of the total volume of credit card transactions being made on Point of Sale payments and 10.2 percent in e-Commerce transactions.

Meanwhile, Banks disbursed agriculture credit of Rs972.6 billion during the last fiscal year of 2017/18, falling short of Rs1 trillion target set by the Agriculture Credit Advisory Committee (ACAC), the central bank said on Thursday.
Riaz Haq said…
‘Alipay to start operations in #Pakistan by end of 2018’.
#Alipay seeking approval from State Bank of Pakistan to pave the way for international payment gateways to enter in Pakistan. #payments #Alibaba #ecommerce https://tribune.com.pk/story/1780902/2-alipay-start-operations-pakistan-end-2018/

Alipay, the China-based third party mobile and online payments platform, will start operations in Pakistan by the end of this year, according to Irfan Wahab Khan, the Telenor chief executive officer.

Khan is also a board member of the Telenor Microfinance Bank in which Ant Financial, the parent company of Alipay and the financial services affiliate of Alibaba, acquired a 45% stake at an investment of $184.5 million in March 2018.

Currently, Ant Financial is in the process of taking approval from relevant authorities such as the State Bank of Pakistan (SBP) and Competition Commission of Pakistan (CCP) to commence financial services in the country.

As Pakistan embraces digital technology after the spectrum auction that saw the arrival of 3G/4G services in the country, a payments solution was the need of the hour. While mobile phone infrastructure and service penetrate 72% of the population, according to the latest data available with the Pakistan Telecommunication Authority (PTA), future growth will rely on digital payments becoming more accessible.

Khan agreed that the opportunity exists.

“The opportunity exists in data, digital payments and e-commerce,” Khan told The Express Tribune.

Pakistan has 58 million broadband subscribers including 56 million 3G/4G subscribers. Its e-commerce market is estimated at $1 billion, and gaining momentum.

Recently, Alibaba, the Chinese e-commerce giant, acquired Daraz.pk from venture capital company Rocket Internet, and is tipped to be expanding its footprint in the country.

Its financial muscle and experience will help it against competition that includes the likes of PayPak of 1link, Fonepay, and Avanza Premier Payment Services (APPS) that have also entered the digital payments space with investments to the tune of millions of dollars.

Telenor – with its network and infrastructure – is also looking at the next growth segment as mobile broadband penetration slows down in the next five years.

Additionally, as users opt for over-the-top applications that bypass the traditional calls-receiving and calls-making processes, cellular mobile operators (CMOs) are now eyeing growth in the digital payments segment.

“We are putting a site an hour on 4G and will complete 80% of them by the end of this year,” said Khan, who took over as CEO Telenor Pakistan on August 1, 2016.

Mobile payment firms struggle to dethrone cash in Southeast Asia

Telenor is currently placed second as the CMO with the highest number of subscribers. It has 43 million subscribers after Jazz, which is the market leader with 55 million.

Telenor also has a 23% market share in the Next Generation Mobile Services (NGMS) market, which puts in third place after Jazz (34%) and Zong (29%).

On the other hand, Telenor also invested in an agriculture sector-related app, ‘Khushhal Zameendar’, which provides location-specific weather forecast and agronomic advisory to small-scale farmers.

“It’s about incentive. Customers are sensible to adopt new technology when it offers incentives to them,” Khan said.

Published in The Express Tribune, August 15th, 2018.
Riaz Haq said…
SBP to increase financial inclusion of SMEs to 17pc

https://pakobserver.net/sbp-to-increase-financial-inclusion-of-smes-to-17pc/


Assistant Chief Manager, SBP’s Banking Services Corporation, Ms. Rabia Yaqoob Khan gave a detailed presentation to the business community on financing schemes of SBP for SMEs.
Rabia Yaqoob Khan said that only six percent SMEs were currently availing loans from banks despite the fact that 40 percent of them have relationship with banks. She said that SBP has set target of increasing financial inclusion of SMEs from current 6 to 8 percent to 17 percent by 2020 so that these businesses could achieve better growth and development.
Assistant Chief Manager, SBP’s Banking Services Corporation said that SBP has launched 9 financing schemes for SMEs at 6 percent markup to facilitate them expansion and growth. She said that for this purpose, regulatory framework and taxation system would be simplified for SMEs.
She said that the incumbent government was taking keen interest in promoting SMEs and hoped that maximum SMEs should avail these schemes for fast growth and development.
In his welcome address, Senior Vice President ICCI, Muhammad Naveed Malik said that SMEs were the backbone of our economy as they constituted over 90 percent of total business enterprises in Pakistan. He said SMEs contributed 30 percent to GDP, 25 percent to exports and 78 percent to industrial employment that showed their important role in the economic development of the country.
The SVP ICCI said the tough collateral conditions of banks were the major hurdle for SMEs growth and urged that SBP should ask banks to offer soft term credit facility to SMEs that would help them to grow fast and play effective role in strengthening the economy.
Vice President ICCI Nisar Mirza said that strengthening SMEs would yield multiple benefits for the economy as it would promote trade and industrial activities, enhance exports, encourage investment, create more jobs and increase tax revenue of the government. He emphasized that government should pay special attention to promoting SMEs that would pave way for sustainable development of the economy.
Sardar Tahir, President, Islamabad Estate Agents Association, Zahid Rafiq General Secretary, Ch. Nadeem, Khalid Chaudhry, Dildar Abbasi, Muhammad Faheem Khan and others were present at the occasion.—INP
Riaz Haq said…
#PayPal Could Soon Launch In #Pakistan: PayPal has now entered agreements with 5 #Pakistani banks in the country to accept payments through its Xoom money transfer service for #damsfund. #damsforpakistan https://www.valuewalk.com/2018/10/paypal-launch-pakistan-report/ via @valuewalk

The dam fund was set up to collect donations to support construction of the Diamer Bhasha and Mohmand dams. Since it was created, various lawmakers and public officials have been making contributions to it, and many Pakistanis living abroad are also wanting to help out.

To support that effort, PayPal has now entered agreements with five banks in the country to accept payments through its Xoom money transfer service. According to Xoom’s own website, the five banks it is working with in Pakistan are Allied Bank, Bank Alfalah, MCB Bank, the National Bank of Pakistan and United Bank Limited.

The SBP is recommending PayPal’s money transfer service to Pakistani expatriates as a faster way for them to move their donations into the dam fund. According to ProPakistani, many expats have already been sending donations via debit or credit cards, but using that method takes a few days for the funds to reach the SBP account for the dams.

By using Xoom, Pakistanis living abroad can send donations faster and have them reach the account in the same day in some cases. So far, expats have donated more than Rs. 379 million toward the construction of the two dams.

We must emphasize that the State Bank of Pakistan is only temporarily allowing PayPal transfers via Xoom, and it’s only for donations made to the dam fund. At this time, no other PayPal payments are being allowed in the country.

It sounds like this could change very soon. ProPakistani said that if Xoom helps significantly grow the amount of money in the dam fund, it could “pave the way” for PayPal to launch its mainstream service in Pakistan. Additionally, Pakistan Finance Minister Asad Omer hinted in a TV interview recently that PayPal or a similar digital payment service could launch in the country some time in the next three or four months.

We should point out that we’ve been hearing that PayPal could launch in Pakistan since at least 2015, so the deal with Xoom is far from a guarantee that this will happen. On the other hand, just working with Xoom is the closest PayPal has come to actually launching in the country, so we will just have to wait and see what happens.

Riaz Haq said…
Technology Can Address Problems Plaguing Pakistan Economy By Henny Sender, Financial Times

#Technology can address problems plaguing #Pakistan #economy. #Investments by #China’s #Alibaba and promise of local start-ups highlight potential for innovation. #startups #ecommerce #fintech #exports #trade https://www.ft.com/content/6f2633d4-e7f9-11e8-8a85-04b8afea6ea3 via @financialtimes

In May Alibaba bought Daraz, the biggest local e-commerce platform in Pakistan, from Germany’s Rocket Internet for about $200m. By joining the platform, smaller manufacturers can reach new customers in China. Already the site has 6m registered buyers and thousands of sellers. Two months earlier, Alibaba’s Ant Financial paid $185m for a 45 per cent stake in Telenor Microfinance Bank — a deal that promises to improve financial inclusion and support small businesses in Pakistan......Shahid Mustafa, Telenor’s chief executive, says: “In five years we will be the largest tech company in Pakistan.”...... Already Telenor, which says it has 75,000 agents and 176 branches across the country, has recruited thousands of software engineers. At an incubator on the outskirts of Karachi, young companies are addressing even more daunting problems.......Muhammad Khurram founded Aqua Agro, which specialises in smart irrigation. Mr Khurram estimates that farmers who use his smart devices need half as much water, yet they increase yields of crops such as lemons by 30 per cent. He is also using crowdfunding to raise money.
At the same time, another member of the same incubator, Fatima Anisha, has devised a technique to treat organic waste and turn it into fertiliser which improves yields without using harmful chemicals......While the efforts of the country’s start-ups are in many cases modest, they offer a vision of how the country — often with help from bigger Chinese technology groups — could start to find solutions.
Riaz Haq said…
Fintech Factory, Pakistan’s first and only financial technology focused accelerator program in collaboration with TPS, Sybrid, Rapidcompute, JS Bank & Takaful Pakistan, is progressing towards Karandaaz’s 3rd Fintech Disrupt Challenge finale. Karandaaz, Pakistan’s leading promoter of financial inclusion and associated technology, partnered with Fintech Factory to induct selected applicants for FDC III (2018) into the accelerator program and help them reach a market-tested scalable MVP for the challenge.

Fintech Factory’s unique financial technology accelerator program takes startups with market validation and offers them access to state-of-the-art workspace, industry-leading mentors, skillset development through personalized training, and networking opportunities. The program aims to develop the ecosystem in a self-sustaining manner to catalyze innovation in the fintech space to reduce the digital divide and improve the lives of Pakistanis.

https://www.techjuice.pk/7-trainees-from-pakistans-first-fintech-accelerator-to-participate-in-karandaazs-3rd-fintech-disrupt-challenge-finale/
Riaz Haq said…
#Legacy #banks #payment platform fights back. #Swift takes on #fintechs with new faster, more efficient system. SWIFT platform is now owned by 2,500 banks and is used to move more than $200 billion around the world daily. #blockchain https://www.ft.com/content/05d41660-f7c8-11e8-af46-2022a0b02a6c via @financialtimes


Legacy payments platform Swift is piloting a new system to speed up banks’ cross-border transfers and reduce errors, firing a shot across the bow of a blockchain-based project that claims to do the same thing and payments fintechs that offer cheaper, faster services.

Founded in 1973, Swift was banks’ original answer to the question of how to move money around the world more quickly and easily. The platform is now owned by 2,500 banks and is used to shift more than $200bn around the world daily.

Inefficiencies, however, have left the platform ripe for competition from payments start-ups such as Revolut and TransferWise, as well as the Interbank Information Network (IIN). More than 130 banks, led by JPMorgan Chase, have signed on to the blockchain-based IIN project, which shares information between banks on a mutual distributed ledger. That allows them to quickly resolve errors and compliance issues that can delay payments by weeks.

In a testament to how banks are hedging their bets on the future of payments, several of those banks are now part of a pilot for Swift’s own fix for lengthy payment delays — — a new “prevalidation” system in which banks use an application programming interface (API) to access each other’s data to check things such as the validity of bank account numbers when a payment is initiated.

Under the blockchain-based system information is shared on a mutually distributed ledger hosted on the cloud that can be accessed and edited by all participants in real time. The API system, by contrast, allows banks to access each other’s data on a bilateral basis, ensuring the recipient’s account information is correct before it is sent in an effort to reduce delays.

“We know that there are still some payments which are badly formatted and missing some information,” said Luc Meurant, chief marketing officer of Swift. “Instead of correcting that later in the chain and delaying payment, we are trying to anticipate as many of those issues as possible (with prevalidation) so payments can be processed faster.”

Swift estimated that around 10 per cent of all payments on its platform were held up because of errors. Manish Kohli, global head of payments and receivables at Citi, said the new system would “considerably reduce” the costs banks incur to resolve problematic payments and would improve customer experiences. That would “absolutely” allow banks to cut pricing and compete more effectively with fintechs, he added.

Mr Meurant said that while the solution was going after “exactly the same kind of issues” as IIN, Swift’s fix was superior because its angle is “one of scale and industrialisation” and the solution could be rolled out to Swift’s 10,000-plus members relatively quickly.


JPMorgan Chase has been the leading voice on the IIN, but is also one of the 15 banks taking part in the Swift pilot. A spokesman declined to comment on the relative merits of the two projects and JPMorgan’s decision to back both.

Mr Kohli said his bank, which has not joined the IIN, believed the Swift solution was more viable because APIs were already widely used within banks in applications such as sharing customer data to give people an aggregate view of their accounts in one place.

“We felt this would be faster to scale,” said Mr Kohli, adding that payments solutions only really work if they are ubiquitous.

He pointed to Swift’s success in introducing its global payments innovation (GPI) as evidence that it can achieve quick adoption. GPI, which allowed payments to be tracked end to end and introduced transparency on fees, was introduced more than a year ago and is being used in more than 50 per cent of Swift’s payments. It will be used exclusively by 2020 by users of the Swift network.
Riaz Haq said…
#Alibaba's #Alipay's entry to tap great potential of #Pakistan #ecommerce market. US$184 million investment to expedite mass adoption of digital #payments in Pakistan. #Internet penetration rising with estimated 60 million subscribers of 3G and 4G. https://on.china.cn/2EO9fAc

Alipay, a subsidiary of Hangzhou-based Ant Financial, has been cleared by the Competition Commission of Pakistan (CCP) to acquire a 45 percent stake in Pakistan's Telenor Microfinance Bank.

The investment of over US$184 million will expedite widespread adoption of digital payments in Pakistan. With internet penetration continuously on the rise, there are an estimated 60 million subscribers of 3G and 4G in the country that can become potential users of the service.

Several mobile payment services are presently operating in Pakistan. Primarily, these have been offered by telecom operators with a large number of cellular subscribers. However, limited international application has kept the penetration rate of the payment portals relatively low. Entry of Alipay, the world's largest mobile payment platform, will intensify competition higher, improve the quality of service and reinvigorate the entire landscape of the industry.

Pakistan's growing young population makes it suitable for embracing cashless payments on a large scale. People under the age of 30 form 64 percent of the population who are always the most likely to take up any new technology. On top of that, high cellular phone use will be a facilitative factor, since the mobile-first strategy for internet-based businesses is very valid in Pakistan.

Commencement of Alipay's operations in Pakistan will also provide a major push to e-commerce. eBay CEO Devin Wenig recently identified emerging economies like Pakistan as the fastest growing e-commerce hubs of the world. The trend is spreading like wildfire across the country with new online shops emerging constantly. A reliable e-payment gateway with worldwide collaborators is all that Pakistanis need to streamline their online transactions.

Alibaba had already acquired Pakistan's leading e-commerce platform Daraz. Utilizing the reach of Alibaba, Pakistani sellers will now be able to connect with global buyer.

The digital payment boom will be most beneficial for small and medium-sized enterprises that form the backbone of the national economy. Many of these businesses face difficulties in financial transactions due to being located in rural areas. Alipay might prefer to focus on them as the Pakistani government wants to reduce their business costs and difficulties.

Across the border in China, a new policy is on the cards to increase e-commerce purchases from overseas. Around 63 additional categories are being added to a product list of what can be imported duty-free through online platforms. Moreover, 22 cities, such as Beijing, Nanjing and Shenyang, are also being included in e-commerce pilot zones.

With several food items in the revised e-commerce import list, there is much potential for Pakistani farm produce. Fruits like mango and the mandarin hybrid kinnow can gain extended reach in the Chinese food market and the recent push to increase meat and poultry production could further boost Pakistan's exports.

The targeted online shoppers in China are increasingly focusing on foreign brands. Large businesses and premium brands from Pakistan can reach out to these buyers through Tmall Global – another Alibaba operated e-commerce platform allowing Chinese consumers to purchase products from abroad. Pakistan's small to medium businesses might not have the logistic prerequisites for this platform, but international-standard large companies certainly can.

Ant Financial is coming to Pakistan at a time when trade between Pakistan and China is touching new heights through the flagship project of Belt and Road Initiative (BRI) known as China Pakistan Economic Corridor (CPEC).
Riaz Haq said…
How Chinese companies are planning a global fintech coup
Jayadevan PK Shadma Shaikh December 11, 2018


https://factordaily.com/chinese-fintech-goes-global/

A company document that FactorDaily reviewed lists eight major mobile wallet players in South and Southeast Asia among Ant Financial’s investee companies. These are Easypaisa in Pakistan, BCash in Bangladesh, TouchnGo in Malaysia, Kakaopay in South Korea, GCash in the Philippines, Ascend in Thailand and Emtek in Indonesia. And, of course, Paytm in India.

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“Many of these people are either geographically remote, live in rural areas that are not served by banks, or that are not covered by branches and ATMs. The traditional banking services are not adequate or too expensive for these people,” says Konstantin Peric, Deputy Director, Level One Digital Payment Systems, Financial Services for the Poor (FSP) at the Bill & Melinda Gates Foundation.

To that end, Peric and a few other partner companies have built MojaLoop, an open-source software that can be used to build national digital payments platforms. In Swahili, Moja means One. Projects that use Moja Loop are underway in Kenya, Uganda, Tanzania, and Nigeria in Africa, and in Indonesia, India, Bangladesh and Pakistan in Asia.


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urugan is the owner of a small cloud kitchen in Shanghai. He speaks fluent Tamil, passable Mandarin, and a bit of English. The 41-year-old small time entrepreneur supplies Indian food to universities and office establishments in the city.

“I do it all on WeChat,” says Murugan, explaining how he runs a WeChat group called Murugan’s Kitchen where he posts a daily menu, takes orders and receives payments. “Most of my expenses are managed through WeChat,” he says. He serves between 100 and 200 customers daily.

If you want to gallivant about the galaxy, the Hitchhiker’s Guide to the Galaxy recommends getting a towel. But if you ever go to Beijing, a smartphone will do just fine.

Besides the ability to help you with obvious things, what makes the smartphone truly powerful here is that you can pay for everything using the phone. Not just in China’s large cities like Shanghai or football field sized shopping destinations such as China Mall in capital Beijing, but also in small towns and villages and tiny establishments.

Millions of entrepreneurs like Murugan, do business on mega platforms run by Alibaba and WeChat. China’s fintech growth, on the back of these platforms, has been unprecedented. With a record $12.8 trillion in mobile payment transactions in the 10 months to October last year, China even surpassed the United States, at only $49.3 billion during that period.

Mainly two apps – WeChat and Alipay – make all this possible. These apps owned by Chinese internet giants Tencent and Alibaba, respectively, control 93% of the country’s mobile payments market. As China pursued an industrial policy that made it the factory of the world and millions of Chinese came out of poverty, these apps played a big role in making their lives easier in the mainland.

Both Tencent and Alibaba, have reaped economic benefits of this growth. Tencent, which became China’s first company to cross $500 billion in market cap, is now valued at $374 billion. Alibaba has a market cap of $377 billion. Founders of these companies have also become immensely wealthy. Pony Ma, the founder of Tencent, is the world’s 14th richest person with a net worth of over $50 billion. Jack Ma is worth over $34.7 billion. Both are also members of the Communist party in China.

Next, they, along with dozens of hyper-funded upstarts, have designs on the world. They are quietly taking over the global fintech market at a scale that’s unheard of before. “If you said in 2010 that software is eating the world, in 2018, you should say Chinese software is eating the world,” says Nikhil Kumar, a volunteer with Indian software products think-tank iSpirt who was recently in China to learn more about the fintech ecosystem there.

Riaz Haq said…
#Pakistan’s First #Blockchain-Based #Remittance Service Launched Using #Alipay’s #Technology. Pak #Telenor and #Malaysia's #fintech firm Valyou offer the service. Service is expected to enhance the #efficiency and #speed of remittances
https://www.ccn.com/pakistans-first-blockchain-based-remittance-service-launched-using-alipays-technology/

A Pakistani financial institution has rolled out a cross-border remittance service based on blockchain technology developed by Alibaba affiliate, Alipay.

Telenor Microfinance Bank and Malaysian fintech firm Valyou have partnered to offer the service to that will operate between Malaysia and Pakistan. The service is expected to enhance the efficiency and speed of remittances from the former to the latter.

Additionally, Pakistan’s first blockchain-based remittance service will eliminate intermediary costs making it cheaper to send money. Users will also be able to track the remittances at ‘every step of the way’, according to a statement.

Lucrative Remittance Market
At the moment, it is estimated that Pakistanis living and working in Malaysia send around $1 billion annually. This is about 5% of the estimated $20 billion in remittances that is sent by the combined Pakistani diaspora spread across the globe. The State Bank of Pakistan’s governor, Tariq Bajwa, noted during the launch of the service that remittances contribute significantly to the country’s economy.

At around USD 20 billion per year, international remittances are important from the perspective of overall macroeconomic stability and their positive spillover in improving lives of millions of families. Home remittances contributed to over 6% in GDP, equivalent to over 50% of our trade deficit, 85% of exports and over one-third of imports during FY 2017-18.

This is not the first time that Alipay is involved in a blockchain-based remittance solution in Asia. Mid last year, Hong Kong-based AlipayHK announced a blockchain-based money transfer service between Hong Kong and the Philippines.

https://twitter.com/CryptoCoinsNews/status/101157117132065177

During the launch of the service the founder of Alibaba, Jack Ma, indicated that he had long wanted to reduce remittance costs between China and Pakistan:

This comes from a promise I made a long time ago when Alipay was just launched. I have friends who are Filipino and they asked me when they could use Alipay to send money home because it was too expensive through banks, which charge too much.

Filipino Remittance Market
Currently, the Philippines is the world’s third-largest remittance market. In 2017, inflows into the Southeast Asian country amounted to approximately $3 billion. A significant proportion of the expatriate community in Hong Kong hails from the Philippines. In 2016, Filipinos in the city-state are estimated to have remitted $561 million to their home country.

Another Chinese firm that recently announced plans to launch a remittance service in the Philippines is Huaren Capital. Unlike Alipay, Huaren Capital will launch a stablecoin pegged to the Filipino Peso and partner with local banks.
Riaz Haq said…
How technology is driving financial inclusion around the world

https://www.worldfinance.com/banking/how-financial-technology-is-driving-financial-inclusion-around-the-world

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The vast majority of unbanked adults live in developing economies. Compared with developed nations, banks in these regions tend to have far fewer branches. For instance, in Pakistan there were fewer than 11 commercial bank branches per 100,000 adults in 2017, compared with 31 in the US, according to the World Bank.

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This financial flexibility helps families meet unexpected economic setbacks and allows entrepreneurs to invest in their businesses and create jobs, Wald added. “Most importantly, digital financial inclusion allows economies to grow stronger and more inclusive.” For this reason, countries like Pakistan have come up with financial inclusion strategies in recent years. Pakistan’s government adopted a National Financial Inclusion Strategy (NFIS) in 2015 that aims for 50 percent of adults to have bank accounts by 2020 – including 25 percent of women.

Out of Pakistan’s population of around 210 million, only 21 percent of adults had bank accounts in 2017, according to the World Bank. But with high mobile penetration rates, this could soon change: research by Financial Inclusion Insights (Fii) found that 84 percent of men and 71 percent of women in the country have access to a mobile phone.

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201m
Population of Pakistan
21%
of adults in Pakistan had a bank account in 2017
34%
of men in Pakistan had a bank account in 2017
7%
of women in Pakistan had a bank account in 2017


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Both Smith and Wald cited India as something of a success story for financial inclusion. Its cash-based economy quickly digitalised over recent years, and the rate of bank accounts opening has been “absolutely extraordinary”, Smith said.

In neighbouring Pakistan, however, many locals are still wary of financial institutions. In a 2015 survey by Gallup Pakistan, 65 percent of respondents said they would rather deal with someone they knew than a bank.

Rehan Akhtar is the chief digital officer of Karandaaz, a non-profit that promotes financial inclusion and access to finance for micro, small and medium-sized enterprises (SMEs) in Pakistan. He told World Finance that convincing Pakistanis to adopt digital financial services over cash would require new policies, including digitalising all government transactions and enabling an environment for e-commerce transactions.

NFIS has prompted a number of new initiatives, including mobile bank account schemes, biometric identity verification and the promotion of fintech services. These policies have already strengthened the country’s microfinance sector.
In Pakistan, Akhtar said SMEs account for over 90 percent of the country’s 3.2 million businesses and 30 percent of GDP. “As a consequence, growth of SMEs can have a direct impact on achieving the targets of poverty alleviation and sustainable growth for Pakistan’s economy.”------------------

Investors are increasingly realising the opportunity unbanked populations offer. For instance, Chinese payment provider Ant Financial bought a 45 percent stake in Pakistan’s Telenor Microfinance Bank (TMB) for $184.5m in 2018. Ant Financial aims to develop mobile payments and digital financial services at TMB, which owns Easypaisa.

Stephen Rasmussen, who leads CGAP’s work on sustainable digital financial-services ecosystems, argued in a blog post that Ant Financial’s interest in Pakistan could be a game-changer by “spurring other businesses to become more ambitious about increasing mobile wallet uptake and use” and “[establishing] an investment benchmark in the market that could encourage additional investment into other fintech businesses”.

Riaz Haq said…
#Pakistan's Woman-Led Startup Tez #FinTech Wins Visa Everywhere Initiative Women’s Global Edition After Worldwide Search. Tez is first fully #digital financial institution in Pakistan providing #financialservices to unbanked/underbanked via smartphone apps https://www.fltimes.com/business/national/tez-financial-services-and-green-girls-organization-selected-as-winners/article_189b9976-9b6a-5057-a376-6aba79b44f4b.html

The FinTech competition measured how applicants leveraged their companies’ unique ability to solve or transform consumer and/or commercial payment experiences locally, regionally or globally. The FinTech winner Tez Financial Services from Pakistan, represented by Naureen Hyat, is the first fully digital financial institution in Pakistan providing frictionless financial services to the unbanked and under-banked via a smartphone application.

“The Visa Everywhere Initiative has been a remarkable opportunity for Tez, Pakistan and our cause to enhance financial inclusion,” said Naureen Hyat, Co-founder and Business Head of Tez Financial Services. “It has not only served as a driver for growth but has also allowed us to tap into the connectivity and numerous partners at Visa. I’m honored to be a part of such a thriving group of women entrepreneurs. All of these finalists have already achieved so much – I’m excited to continue to be a witness to our growth collectively beyond this competition.”

The Social Impact Challenge sought women-led businesses around the world who are supporting sustainable and inclusive livelihoods and strengthening their local or regional economies. The Social Impact winner Green Girls Organization from Cameroon, represented by Monique Ntumngia, is a non-governmental organization that trains women and girls to harvest and create renewable energy from the sun and bio-waste.

“This opportunity will allow Green Girls to reach more women and girls and expand our footprint to provide renewable energy,” said Monique Ntumngia, Founder of Green Girls Organization. “Visa’s network and support will not only help my organization scale but will provide a number of rural African communities sustainable energy sources from the sun and bio-waste – creating a ripple effect of impact.”

In addition to Green Girls and Tez, the following entrepreneurs competed for the two top prizes:

FinTech Finalists:

WeCashUp of France, represented by Annicelle Kungne, is the largest Pan African payment gateway that enables eCommerce companies to accept mobile money, cash and cards online in 36 African countries.
Papaya Global of Europe, represented by Eynat Guez, is a SaaS platform that supports total workforce management (payroll, PEO, and contractor management) along with benefits and a full cross-border payments solution in over 100 countries.
DinDin of Latin America, represented by St├ęphanie Fleury, provides basic financial services to the unbanked and underbanked individuals and businesses in Brazil, through their app, web-based internet banking and API platforms. Their goal is to promote financial inclusion to more than 115 million people through their B2B2C financial ecosystem.
PoshVine of Asia Pacific, represented by Garima Satija, helps financial services organizations increase customer loyalty and share of spends through contextual, personalized perks and rewards administration. They are building a coalition customer loyalty program through their network of more than 15,000 merchant partners whereby users can earn and easily redeem points using linked debit or credit cards.
Alloy of North America, represented by Laura Spiekerman, provides real-time identity and risk decisioning for financial services, including KYC/AML and fraud checks.
Riaz Haq said…
Tez Financial Services Becomes the First #Pakistani #Startup to Raise $1.1 Million in Seed Round Led by #Ebay founder's Omidyar Network. #fintech #Pakistan #technology https://prn.to/2XiruCC



KARACHI, Pakistan, Oct. 19, 2018 /PRNewswire/ -- Tez Financial Services, the first fully digital Non-Bank Microfinance Company (NBMFC) in Pakistan, today announced that it has raised USD$1.1 million in a seed round led by Omidyar Network, the impact investment firm established by Pierre Omidyar, the founder of eBay. Other investors on this round include Accion Venture Lab, the seed-stage investment initiative of global nonprofit Accion, and Planet N. Funds will help the company build its credit portfolio, enhance its mobile technology platform, and secure the company's NBMFC license.

You can learn more about the challenge, opportunity, and impact in this video.

"Our aim is to become the primary financial service provider for the unbanked and underbanked in Pakistan," said Nadeem Hussain, co-founder and CEO of Tez, who has more than 30 years of experience in the global financial services industry. "Tez delivers a seamless experience for our customers, providing loans in under 15 minutes as opposed to the usual month timeline from local commercial banks. Soon, we will be able to process life and health insurance claims in a similar timeframe."

In Pakistan, more than 50 percent of the population is unbanked, with only 23 percent of the population served by formal channels, and another 24 percent by informal channels, according to the World Bank. Despite the fact that the country has 43 banks, low penetration of formal financial services including credit (14%), savings (12%), and insurance (2%) is persistent.

Most unbanked and underbanked consumers use a variety of informal financial tools to manage their finances, but those can be unreliable, expensive, and inefficient. With more than one-third of the population living below the poverty line, minor fluctuations in income can raise significant short-term financing needs. That can mean the difference between paying a bill at the end of the month, such as tuition, or buying groceries.

Mobile phones are changing all of that. The GSMA estimates that in two years, more than 80 percent of Pakistan will have 3G/4G coverage. The country already boasts 28 million mobile accounts—an indicator of consumers' readiness to adopt digital financial services, especially in remote areas not served by traditional banking.

"New technologies, higher smartphone penetration, and falling data costs are fueling a great momentum for financial inclusion in frontier markets such as Pakistan. Tez is leveraging this to push the boundaries of banking in the country with an all-digital offering," said Kabir Kumar, head of Policy and Ecosystem Building at Omidyar Network. "Tez's diverse team is also well-positioned to bring about the products and services that really speak to the next generation of consumers in that country."

"Tez marks our first investment in Pakistan, a country with a significant need for innovative products that can bring its population into the formal financial system," said Michael Schlein, President and CEO of Accion. "By supporting Tez's all-digital model, we can help make an important difference for millions of underserved Pakistani families and businesses."

Tez uses some of the latest technologies, such as artificial intelligence, to analyze consumers' digital footprint trends, social behavior, and consumption patterns in order to customize its offerings to meet each individual's needs through an all-encompassing, easy to use app, as follows:
Riaz Haq said…
Pakistani startup Tez Financial Services wins at Inclusive Fintech50

https://www.samaa.tv/technology/2019/06/pakistani-startup-tez-financial-services-wins-at-inclusive-fintech50/

Pakistani fintech startup Tez Financial Services has been selected as one of the winners of 2019’s Inclusive Fintech 50. Tez was the only Pakistani startup to have qualified for the competition, reported Clarity.pk.

The winners of Inclusive Fintech 50 were announced on June 17 by the MetLife Foundation and Visa Inc, with global nonprofit Accion and World Bank Group member IFC. The competition was launched in February.

Inclusive Fintech 50 is a competition to help early-stage fintech companies attract capital and resources to benefit the world’s three billion financially underprivileged people.

Tez Financial Services is the first fully digital Non-Bank Microfinance Company focused on serving the unbanked and underbanked in Pakistan.

The founders of Tez were leading forces in the creation of Tameer Bank, Easypaisa, and CheckIn Solutions.

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