AKISTAN stands at a defining economic crossroads. With a population of over 240 million, a young demographic, rising smartphone penetration, and rapidly evolving digital infrastructure, the country should have been one of the world`s most vibrant digitally banked economies.

Yet financial exclusion remains deeply entrenched.

According to the State Bank of Pakistan (SBP), nearly 53 per cent of Pakistan`s adult population remains financially excluded, while only around 2.4pc of the population has access to formal credit facilities.

These numbers represent millions of Pakistanis who continue to rely on undocumented cash transactions,informal borrowing, and economically inefficient systems that limit productivity and upward mobility.

Over the past decade, Pakistan has made meaningful progress in digital financial services. SBP deserves credit for introducing progressive frameworks around branchless banking, Payment System Operators (PSOs), Payment Service Providers (PSPs), Electronic Money Institutions (EMIs), and more recently digital retail banking initiatives. The launch of Raast has transformed real-time payments and accelerated digital adoption across the country.

Today, digital channels account for nearly 88pc of retail transaction volumes, while Raast has processed transactions worth over Rs44 trillion since launch. Yet despite these impressive numbers, one critical question remains unanswered: has digitalisation materially improved the economic wellbeing of the average Pakistani? So far, Pakistan`s digital banking conversation has largely been viewed through a payments lens.

Success has been measured through wallet growth, transaction volumes, and payment throughput. While important, these developments alone do not necessarily depict meaningful financial inclusion.

A person sending money digitally instead of physically is progress. But if that same individual still lacks access to productive credit, savings, insurance, or opportunities for income enhancement, then the larger economic impact remains limited.

Pakistan`s challenge is not simply digitising payments. Pakistan`s challenge is digitising economicopportunity.

This is why the next phase of digital banking must be approached through a productivity lens with a focus on access to credit for the average Pakistani and MSMEs.

It is no coincidence that formal credit penetration remains extremely low. In the absence of accessi-ble finance, millions continue to depend on informal lenders and exploitative borrowing structures.

Interestingly, despite its relatively small scale, the microfinance sector has consistently been at the forefront of serving underserved communities and MSMEs. Yet low capital bases, fragmented models, and limited technology integration have restricted its ability to scale.

However, one reality stands out clearly: Pakistan`s two most meaningful branchless banking successstories Easypaisa and JazzCash were both built on the foundations of microfinance/branchless banking licences and balance sheets through Tameer Microfinance Bank and Mobilink Microfinance Bank respectively.

This is empirical evidence that these models work.The opportunity now is to evolve this model further by combining digital banking infrastructure with mass-market deposit mobilisation, scalable credit underwriting, and strong treasury capabilities to create a truly sustainable digital banking proposition for Pakistan.

There is also a common misconception that a digital bank in Pakistan can operate purely through apps without meaningful physical infrastructure. In developed economies, perhaps. In Pakistan, certainly not.We remain a heavily cash-based economy. According to SBP data, there are more than 666,000 branchless banking agents across the country because physical cash conversion points remain essential.

The first challenge is bringing trillions of rupees from the informal cash economy onto digital rails. Thatsimply cannot happen without omni-channel infrastructure, whether through proprietary branches, retail partnerships, or super-agent networks.

A successful digital bank in Pakistan must therefore not only be digital in capability but also physical in reach.

This understanding has shaped our vision at the Abhi Group as we begin our journey towards building a digital bank on the foundation of a microfinance bank and branchlessbanking license similar in regulatory structure to existing operators that have scaled, but with a sharper focus on productivity, credit, and financial empowerment.

Our objective is not merely facilitating payments. Our objective is enabling economic participation through meaningful access to finance.

Through our Banking-as-aService (BaaS) model, we are pursuing a differentiated B2B2C approach where partner organisations contribute to customer acquisition, sector expertise, and risk sharing.

This allows financing to flow towards productive and income-enhancing activities while strengthening portfolio quality and scalability.

We believe this model can contribute meaningfully across multiple sectors by providing muchneeded funding to underserved individuals, businesses, and communities that traditional banking models have failed to serve.

Pakistan`s financial inclusion journey will not be defined by who processes the most payments. It will be defined by who succeeds in improving the productivity, resilience, and economic mobility of ordinary Pakistanis.

Technology alone cannot solve Pakistan`s financial challenges. But technology combined with responsible credit, scalable infrastructure, and an understanding of Pakistan`s socioeconomic realities will.

The writer is an industry veteran currently serving as Entrepreneur in Residence with the Abhi Group, responsible for building its digital bank in Pakistan. He is also the former chairman of the Pakistan Microfinance Network. •