Financial Inclusion Challenges in Pakistan - 80% of Pakistan's 250 million people are financially excluded [3] - 11 trillion rupees are outside the formal sector [4] - Over 40% of agricultural produce is wasted due to lack of storage [4] - 266 billion children are out of school [5] - Microfinance reaches less than 1 million households despite 30 years of formal microfinance [8][9] Institutional Landscape and its Limitations - Pakistan has approximately 35 commercial banks and 12 microfinance banks, plus nearly 40 non-bank financial institutions [7] - Microfinance serves about 12 million microloans, but only around 4 million unique clients [7][8] - Larger microfinance institutions serve only two to three lakh (200,000-300,000) clients, significantly less than institutions in Bangladesh and India [9] Required Institutional "Killer Apps" - Capital: Need for a spectrum of capital, including tier one and tier two capital, for non-bank financial service providers [12][13] - Funding: Need for diverse funding sources beyond shareholder capital, including capital markets activity (retail TFCs, commercial papers, etc) [14][15] - Risk Predicates: Safety nets like collateral (gold), first loss guarantees, and party passive guarantees are needed to encourage lending to vulnerable populations [16][17] - Technology, Product Strategy, and Channel Strategy: Leveraging Pakistan's high teledensity (around 120 million unique SIMs) and the NADRA database for KYC/AML [20] Banking as a Service (BaaS) - Banks need to evolve from product providers to ecosystem enablers, offering "banking as a service" [21] - BaaS involves banks becoming platforms where fintechs and digital companies can access funding and scale [24] - This can enable instant access to financing for e-commerce merchants and women entrepreneurs [24]