Jahanzeb Khan
WE have come a long way since the first industrial revolution which began in the late 18th century. From coal-powered factories to smart manufacturing units today, the transformation has been unprecedented. Nowadays, what was left of the conventional systems is being phased out by digital tools and techniques. The world is transforming faster than any other time in history with the onset of the 4th Industrial revolution. With the Coronavirus pandemic threatening world economies, we are witnessing an even stronger shift in conventional practices across the globe and accelerating convergence of digital, biological and physical innovations. The new norm is upon us and we need to recognize it, adapt quickly and leapfrog advancement into the new era of exponential versus incremental change. Developing countries like Pakistan don’t have choice but have to adopt change more rapidly than in the past. Digital transformation in recent times has become inevitable to survive for public and private sector; and stakeholders from various fields are taking active steps for taking country in this direction.
Before the current crisis hit, in December 2019, the Government had announced ‘Digital Pakistan’ initiative focused on five strategic pillars that included connectivity, digital infrastructure, e-governance, digital skills, and innovation and entrepreneurship. This initiative alongside efforts by NITB and other government stakeholders looks to achieve certain goals to prepare the country’s youth for IT-enabled future. The COVID-19 is forcing us to accelerate towards digital self-enabled platforms that can connect public sector with private sector via strengthened public-private partnership. Customer behaviours are shifting and there is a need to leverage learning during these times while preparing youths for digitally connected Pakistan.
Pakistan has immense potential that remains largely untapped while it’s critical that we continue investing in reskilling youth in emerging technologies like AI, Machine Learning, Big Data analytics and AR coupled with Biotech and FinTech specialized skills. An online and digital self-learning knowledge portal alongside training centres providing expertise to millions of youths is the need of hour. The World Bank has estimated our digital finance capacity to be $36 billion and if harnessed properly, it can give economy boost of 7% resulting in increased GDP. Pakistan has a rapidly growing tele-density which stands at more than 77% but our 3G/4G subscribers are only 35% of the whole population. Almost 64% of the country is below the age of 30 and 29% are between the ages of 15 and 29. This segment is most open to embracing digital transformation using enhanced connectivity. We need to empower our youth to pave the way for others via policy enablement of private sector organizations in Telecom and IT sector.
Pakistan has one of the highest estimated ratios of 30% for cash in circulation to monetary aggregate of bank deposit and cash in circulation combined reflecting extremely low propensity of consumers to save deposits through formal banking channels. This is also driven by only 21% of the adult population banking through formal channels. Low financial literacy is an issue but also provides opportunity for financial sector to leapfrog sparse, operationally inefficient brick and mortar banking infrastructure to digital financial landscape. The regulator and government are working effortlessly to encourage digital banking and payments, helping millions to save through formal channels. Digitization of public sector payments, salaries and social welfare programs for needy via public-private partnership is one way the government can take its first step to build confidence and change behaviour of population hesitant to adopt formal channels. The World Bank revealed that successful digital transformation depends on the extensive acceptance of digital systems for online financial transactions.
In these times of health concerns, digitally savvy people prefer online transactions or use of digital services. Moreover, the psychological fears because of COVID-19 are driving many people away from conventional practices of brick and mortar banking requiring physical interactions. Customers want hassle free banking with minimal or absolutely no branch visits. The use of applications provides them access to this facility and banks are taking steps to provide some of the best experiences in this regard. From the use of AI in customer service and biometric authentication, quick access to credit in banking, apps have opened new horizons for users.
The unbanked population is a bigger concern and the initiatives being witnessed in this field are truly the precursors to an evolving digital infrastructure. Playing its role in the Digital Pakistan Initiative, digital financial service providers are enabling the masses to have same banking and credit privileges as those with access to conventional channels. Money transfer, bill payments, salary disbursals and maintaining accounts is not just empowering people to perform daily transactions swiftly but also allowing them become masters of their lives through digital and financial inclusion. Additionally, consumers can have access to social welfare need based payments right in the palm of their hands and pay for their utility bills and school fees from their homes without visiting branch. There is need to raise awareness amongst masses regarding digital tools for gaining financial freedom.
With the economic slowdown being witnessed as a result of widespread restrictions on business operations to comply with social distancing requirements, microfinance solutions are providing many people with means to sustain their businesses and daily life efficiently. Business owners can leverage low cost and free payroll management solutions to disburse salaries directly to employee wallets digitally. FMCG can digitize value chains by digitizing the payments they receive from retailers via digital wallets and enable them access credit in times of need. Experts across the globe agree that the repercussions of the current crisis will be witnessed for times to come. The new norm has arrived and nations that accept and adapt quickly will be the ones to thrive in the new world order. Pakistan with its immense strength of youth and talent can be at the forefront of change with adaptive policies encouraging adoption of digital services. Let’s keep working as one united nation and carve a path that enables optimistic future to digitally enabled Pakistan.
—The writer is Chief Strategy and Transformation Officer, Telenor Microfinance Bank/Easypaisa.
