Fintech AI sees surge in Pakistan's financial system

March 01, 2024

Qudsia Bano

In recent years, Pakistan has witnessed a surge in the adoption of financial technology, commonly known as fintech, as a catalyst for innovation and efficiency in its financial sector. One particular area garnering significant attention is the integration of artificial intelligence (AI) within fintech applications, promising to revolutionise the way financial institutions operate in the country. Fintech AI, a subset of artificial intelligence tailored for financial services, holds immense potential in streamlining operations, enhancing security, and providing personalised services to customers. As Pakistan's financial institutions grapple with increasing competition and the need for modernisation, the infusion of AI is seen as a game-changer. "The potential of fintech AI in Pakistan's financial institutions is significant, promising greater innovation, efficiency, and improved customer experiences. As the country continues to embrace technological advancements, the integration of AI in the financial sector is expected to play a pivotal role in shaping the future of finance in Pakistan.

Financial institutions that adapt and invest in these technologies are likely to be at the forefront of a transformative era in the country's financial landscape," said Syed Junaid Imam, Member of IT at the Ministry of Information Technology and Telecommunication (MoITT). He emphasised the critical point that Pakistan's current standing in artificial intelligence was hampered by incomplete digitisation. "The absence of comprehensive digitisation implies a lack of necessary infrastructure, a deficiency in inclusive practices, and a notable absence of digital connectivity among our populace. As it stands, merely 50% of the population is currently engaged through digital platforms, resulting in a substantial 50% reduction in the potential scope of fintech applications." "Consequently, the imperative at this juncture is the expansion of our infrastructure. It is evident that without a robust digital framework, the realisation of our potential in the field of AI and fintech remains constrained.

By addressing the gaps in our digital ecosystem, we can bridge the divide and foster an environment conducive to the broader implementation of AI technologies," he added. Junaid Imam stressed that this infrastructure expansion not only served as a technological imperative but also as a key driver for financial inclusion, ensuring that a larger segment of the population could actively participate in the digital landscape. "The need for such expansion is indeed the need of the hour, as it underpins the foundation for unlocking the full potential of AI and ushering in a new era of technological advancement and economic growth." Meanwhile, talking to WealthPK, Asfand Yar Khan, Director General IT at MoITT, said one of the key advantages of implementing fintech AI lies in automating routine tasks, allowing financial institutions to reallocate human resources to more complex and strategic functions. "Tasks such as data entry, document verification and customer support can be efficiently handled by AI algorithms, freeing human capital to focus on critical decision-making processes."

"Furthermore, AI-driven algorithms can analyse vast amounts of data in real-time, enabling financial institutions to make more informed decisions and identify patterns that may go unnoticed through traditional methods. This has the potential to enhance risk management, fraud detection, and credit scoring, ultimately contributing to the overall stability and security of the financial system," said Asfand Yar. "Despite the promising prospects, some challenges must be addressed for the successful integration of fintech AI in Pakistan's financial landscape. These include concerns related to data privacy, regulatory frameworks, and the need for skilled professionals who can develop, implement and maintain AI-driven systems," he said.

INP: Credit: INP-WealthPk