UNDP, USAID emphasize on role of Fintech in Expanding Financial Services in KP

UNDP and USAID held a panel discussion in Islamabad on the role of fintech in expanding financial services in Khyber Pakhtunkhwa including Merged Districts.

According to the details, during the discussion of UNDP & UAID on the role Fintech, Tanya Rzehak, Programme Manager, Stabilization & Development Programme, UNDP, Muhammad Ali Asghar, Chief Economist, Government of KP, representatives from USAID, the banking sector, entrepreneurs, start-ups, experts on fintech, and others participated in the discussion.

The discussion highlighted and explored opportunities to leverage the fintech innovation for growth and access to financial services in Khyber Pakhtunkhwa and Merged Districts.  The private sector plays a vital role in propelling the economic uplift of KP including MDs. Constraints in access to finance limit this growth pushing local enterprises into increased financial vulnerability.

The penetration of formal financial services in the merged districts is among the lowest in Pakistan. Limited formal banking facilities exist (with variations across districts) that restrain private sector activity, adversely impacting job creation and growth. The business has low access to finance, microfinance has only recently started to gain steam, and average loan sizes remain small.

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The panel emphasized that the rapid technological development in the financial sector should be explored for underdeveloped areas (such as NMDs) to address the emerging issues that the conventional banking system is facing in expanding financial services.

Globally, the fintech market is continuously evolving and expanding with an increasing diversity of funding sources, the scope of business, and geographic spread. Improved financial and other literacies enable individuals to better engage with artificial intelligence. The rapid growth in mobile users and internet penetration brings MDs a big opportunity for fintech-based systems. The use of smartphones for banking transactions is rapidly growing in the country. The fintech revolution can offer major opportunities to accelerate financing with reduced costs, and innovative business models.

Since 2015, UNDP Pakistan has been providing support to the Government of KP in the uplift and development of the Merged Districts. The USAID-funded FATA Economic Revitalisation Programme (FERP), implemented by UNDP, is contributing to the long-term economic growth of the Merged Districts by supporting the Government of KP in creating an enabling environment for businesses, engaging entrepreneurs, and working with the private sector to build capacities for inclusive economic growth.