In Pakistan, usually formal financial services are provided by banks and other financial institutions authorized by the State Bank of Pakistan (SBP). The National Financial Inclusion Strategy (NFIS) was adopted by Government of Pakistan in 2015. The aim of the strategy is to enhance accessibility of transaction accounts and increase their usage to include 50% of the adult population by the year 2020. In 2014, 10.3% of adults were using transaction accounts.
Government entities such as the Central Directorate of National Savings (CDNS) and Pakistan Post can play an important role in spearheading the financial inclusion in Pakistan. In order to achieve the target set in the NFIS, active engagement of such entities is needed as they have an established network all over the country which can be used to provide financial services to the masses especially in rural areas.Currently, due to the outdated systems being used by many such entities, they face challenges in providing efficient services to the customers. If such entities are to aid in achieving the NFIS target, their mode of operations needs to be updated first.
The above mentioned national institutions have played an instrumental role in giving the masses access to basic financial services. They have been involved in the provision of financial services even before the partition of the subcontinent in 1947.At present, Pakistan Post is serving 3.5 million saving product customers in addition to 435,000 customers who have been issued the insurance policy in the last 5 years. An estimated 5.2 million customers also use Pakistan Post for collecting domestic remittances every year. CDNS also boasts more than 7.7 million saving account customers. The numbers give a clear indication that these institutions are trusted by their customers even though there are far superior products and services available in the market.
Innovation centres such as Karandaaz Pakistan are making efforts to help such public entities improve their products and services and enhance financial inclusion by enabling them to go digital. Partnering with other important stakeholders is also important in this regard.
Today’s digital age offers innovative solutions that can greatly enhance the products and services of an organization but often the transformation faces resistance from within. The digital transformation requires the stakeholders of the organization to show willingness to adopt new techniques and systems. Pakistan Post and CDNS offer services and products that are very valuable for their customers but if the quality is compared with other institutions offering the same, then there is a significant difference. These two entities have a substantial amount of customer data collected and stored which can be used to highlight the needs of the underserved customers and come up with products and services that bring them in the fold of financial inclusion. However, sadly data processing is not being done and this can be changed by the digital transformation of these entities.
More often, conventional players hold considerable size of real-estate. It is an underutilized asset that can be used for offering variety of products and services. For instance in case of Africa and India, the postal service offers solar energy solutions on credit – the solar energy products are sold on credit and the customer pays back in instalments. Postal real-estate and outreach is leveraged by solar energy suppliers for sales and distribution management that also exhibits a perfect case of public-private partnership.
The E-commerce industry in Pakistan has grown manifolds during the last couple of years and this has created opportunities for the growth of financial services in the country. Currently, the most widely used payment method for online purchases in the country is cash-on-delivery and the product is delivered to the customer by a designated courier company of the online vendor. This is where Pakistan Post can play its part and partner with E-Retailers such as Daraz.pk to deliver their product to end consumer and provide a reliable payment method. As Pakistan Post, has a strong countrywide network, it can deliver products to remotest of areas in the country
Countless success stories from all over the world have shown the wonders that can take place when a traditional brick and mortar model undergoes digital transformation. For Example, Indian Post has gone digital and transformed itself into a payments back. It is connected with the national payments infrastructure of India which has allowed it to use digital technology to provide alternative delivery channels for financial institutions involved in credit and savings products.
Digital transformation is not easy for organizations that have traditionally favored a less technology intensive culture as the process is resisted by its stakeholders. Selling the idea of transformation to the organization is the biggest challenge among others