81pc Pakistanis do not have bank accounts: survey

ISLAMABAD: Mobile Money Wallet registrations in Pakistan have doubled just in two years, increasing from nine percent in 2020 to 19 percent in 2022, Karandaaz Financial Inclusion Survey (K-FIS) disclosed.

Interestingly, the trust in Hundi/Hawala system remained stagnant at 28 percent during the last two years from 2020 to 2022 as shown by the results of K-FIS 2022.

However, it is a worrying indicator that there are just 19 percent of adult Pakistanis who have registered a bank account. The bank account is used for depositing money into own account (95 percent), followed by withdrawal of money from the bank account (38 percent) and receiving wages (27 percent). Eighty-one percent of Pakistanis do not have bank accounts. The leading reason for not having a bank account is “Do not need one and have never thought of using one” reported by 68 percent of those without a bank account.

Karandaaz Pakistan, funded by the UK’s Foreign, Commonwealth & Development Office (FCDO) and Bill & Melinda Gates Foundation, launched key findings of the Karandaaz Financial Inclusion Survey 2022 (K-FIS), a nationally and provincially representative survey tracking financial inclusion in the country.

The purpose of the survey is to track access to and demand for financial services especially digital financial services, adoption among underserved groups and to identify drivers and barriers to adoption. This survey has been carried out on the sample of 6,672 adults covering Islamabad Capital Territory and all the provinces as well as AJK and Gilgit-Baltistan.

In a worrying indicator, the financial literacy stands at just 19 percent in Pakistan and ability to send and receive a text message at 34 percent.

The survey found reasons for not using mobile money whereby 63 percent of Pakistani adults are not using mobile money despite being aware of at least one mobile money (MM) service. The main reason for not doing so is a lack of need, 53 percent, followed by being unaware, 42 percent, and not having enough money to make mobile money transaction, 43 percent.

Awareness of Electronic Money Institutions (EMI) account is very low as only 2 percent of Pakistani adults could recognise at least one EMI brand.

There are only nine percent Pakistanis who have multiple financial accounts. Multiple accounts are common for mobile money wallets at eight percent. This was significantly higher than for banks as only two percent of adult Pakistanis had multiple bank accounts. 14 percent of adult Pakistani men had multiple bank accounts compared to four percent of women.

28 percent of those with higher education possessed multiple financial accounts compared to only one percent of those with no formal education.

Overall, nine percent of Pakistani adults have insurance policies with 12 percent men and six percent women. The higher adoption rate for those with higher education was 26 percent and lowest adoption rate with no formal education was one percent.

The overall financial inclusion in the country, including banking, mobile money wallet and Non-Banking Financial Institutions (NBFIs), have gone up from 21 percent in 2020 to 30 percent in 2022. Registered mobile money users more than doubled with an increase from 9 percent to 19 percent while registered bank users increased by four percent, going up from 15 to 19 percent.

The federal capital has the highest level of financial inclusion at 45 percent, followed by Gilgit-Baltistan (GB) at 35 percent and Azad Jammu & Kashmir at 34 percent. In terms of gender, men show a significant higher level of financial inclusion compared to women across all regions of Pakistan.

In 2022, more than one third Pakistanis (37 percent) reported to ever using a full-service financial institution, up from 29 percent in 2020. Bank access increased from 17 percent in 2020 to 26 percent in 2022 while mobile money access grew from 16 percent in 2020 to 25 percent in 2022. However, access to NBFIs reduced from eight percent in 2020 to six percent in 2022.

Some 29 percent smartphone owners knew about QR codes while another 17 percent recognised it after seeing a QR code. Only 2.2 percent Pakistanis have made a payment via QR codes.