Digital Financial Inclusion for Women’s Businesses in Pakistan

This Technology Innovation Challenge aims to discover alternative methods of credit scoring that support the collection and analysis of business and other non-traditional data for women-owned small- and medium-sized enterprises (WSMEs) in Pakistan and that will assist banks and Financial Institutions to make informed and gender considerate lending decisions.      

 

With 115 million unbanked adults, of which more than half are women, Pakistan is home to the third largest unbanked population in the world where it has stayed in the last five years (World Bank, 2022). However, through its National Financial Inclusion Strategy and the State Bank of Pakistan’s (SBP) Banking on Equality policy, the Government is determined to change that and have set targets of reaching 21 million unique accounts for women by 2023, and 23% and 9% women borrowers at MFIs and banks, respectively, by 2024.

Getting there will not be easy. Women have been systematically excluded from the formal financial sector because they lack official forms of identification, have lower financial capability, and half as likely as men to have a mobile phone. But there are bright spots: Pakistan does not have a gender payments gap, that is, women mobile account owners are just as likely as men to use their accounts for digital payments and up to 84% of them do (World Bank, 2022); and Banking on Equality mandates sex-disaggregated data reporting by financial institutions on products and services to the SBP.  

  

How can Financial Institutions evolve existing credit scoring mechanisms to improve access to finance for women and women-led businesses in Pakistan?  

 

We welcome fintech and non-financial services-related technology solutions that can help provide a pipeline for alternative data points that could flow into the credit scoring models of Financial Institutions in Pakistan. This increased visibility of alternative data points would enable Financial Institutions to have better visibility and understanding of the Women-led Small and Medium-sized Enterprises (WSMEs) financial position to enable FIs to score them better and fairer.