Growing financial inclusion

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The increasing number of people with bank accounts is a positive development that reflects successive governments' efforts to increase financial inclusion, as well as citizens' general acceptance and trust of modern banking. According to the SBP, the percentage of the adult population with bank accounts has surged from a mere 16% in 2015 to an impressive 64% in 2023. The biggest driver behind this increase is the proliferation of mobile banking services offered by cellular providers, fintechs and traditional banks, eliminating the need to physically go to a bank or offices of other providers to open an account.

What used to take several hours of travel and waiting in lines can now be done from the comfort of one's home in a matter of minutes. The ease of access is also part of why women's financial inclusion has gone from 23% to 47%, according to the government's latest National Financial Inclusion Strategy report.

The massive increase should lead to a significant shift in how people engage with the formal financial system, dramatically increasing transparency in the economy and building pathways toward greater economic stability and empowerment. The rise in depositors may also reflect increasing efforts to move towards financial stability, which can serve as a further driver of investment and growth.

However, challenges remain. The cultural inclination towards cash transactions poses a hurdle to the continued expansion of digital financial services. Simply having accounts doesn't mean people use them. Many people still prefer cash and only use bank accounts or digital wallets for transactions that absolutely require them. While some of this is due to straight-up tax evasion, at the individual level, a lot of it is simply due to mistrust of modern banking and a lack of financial literacy. And among people still completely outside the banking system, a significant number are hesitant to embrace technologies. Addressing these cultural barriers will be crucial to maintaining the momentum of financial inclusion.