Creating digital readiness through financial literacy

Yes, we all know that the current market push towards a digital economy has resulted in numerous industry players to explore ways to match the pace of change. From this stems an immense sense of urgency, which prevails in promoting digital financial services at a global level. Pakistan, as a developing nation, transitions towards a similar path aimed at emerging environmental readiness for this new age economy. However, a question arises — has the core issue that creates a barrier towards a financially inclusive society been addressed? The answer lies in financial literacy.

There has been a vast amount of advocacy emphasising the importance of literacy as a core element in creating viable financial services delivery models. Alongside this, the United Nation’s Sustainable Developmental Goals re-iterate the criticality of economic development as a roadmap towards ‘promoting sustained, inclusive and sustainable economic growth’. Many of the tools required for such forms of sustainable development complement one another. Such is the case for promoting economic growth through the means of financial inclusion.



In Pakistan, 42% of the population (Pakistan Economic Survey 2017-2018) lacks access to formal education, resulting in literacy levels well below the threshold required for achieving a society that can be empowered to achieve a desired level of economic progression. A highly literate society will be better equipped to reap the benefits associated with digital financial services, thus leading to a financially empowered society.

Digital finance solutions inherently possess an opportunity to design tailor made programmes that can educate end users. An avenue for this can be availed by leveraging the platform of a closed value chain sourced with reliable suppliers. By identifying cash based areas that need to be digitised, this value chain can serve as a base to conduct a needs assessment steered towards promoting operational efficiency. It is here that implementation of customised digital finance solutions are most fruitful as this exercise provides the opportunity to engage in collaborative efforts with established verticals that hold the ability to exercise influence over the value chain in order to develop an all-inclusive financial services delivery model.

While most incumbents in the industry focus on the race to launch numerous digital finance solutions, a critical factor often overlooked is that end users are, more often than not, able to quantify the amount of convenience derived from availing such services. Encouraging individuals to open mobile wallets is merely a stepping stone into a financially included universe.



Without filling the literacy gap, incumbents are still at large, in a continuous struggle to push for an active user base, while not being able to fully address this issue. There is no doubt that the problem faced is of such large magnitude and can only be addressed through a purpose-built approach. However, closed value chains can easily support the simultaneous rollout of such solutions alongside being able to instill knowledge within a targeted user base. If addressed, all of this will translate into a consumer centric approach and will ultimately result in an uptick in usage of a wide range of financial services that can be availed through digital means.

Creating social acceptance and awareness of digital financial services lies at the core of financial literacy. If included in the design stage of development of a financial services delivery model, it can lead to higher levels of consumer readiness and will ease the transition towards a sustainable ecosystem — an environment in which all industry participants can benefit. Financial literacy is more of a means to an end, rather than an end in itself.

Published in The Express Tribune, November 21^st, 2018.

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