Seeking Fintech Solutions to Revitalize Agriculture in Pakistan

Digitalization is considered an enabler for its ability to add value and to make life easier for individuals, businesses, and economies. This is done by making existing processes more efficient with customization and innovation. The world is being digitalized at a rapid pace making the process inevitable to a great extent. Governments and regulatory authorities are actively pursuing and encouraging strategies for digitalization. For example, the European Commission announced its “Strategy for Europe Fit for the Digital Age” in 2020 which plans to make digital transformation work for people and businesses while also having a target to make the EU climate neutral by 2020 [1].

Starting in the 1960s with the introduction of credit cards, the use of financial technology (Fintech) is becoming indispensable to financial institutions. Defined as “a new financial industry that applies technology to improve financial activities” it encompasses not only digitalization but innovation in financial products and services as well. The term is now “associated with start-ups and companies that are providing highly innovative and pioneering financial services or products with the combination of information technology (IT) enabling ventures or by using the latest available technology.”[2]

There are challenges that any organization looking to join the digital transformation will encounter. For example, people are reluctant to adopt new technologies, specially after reaching a certain age. There is a lack of understanding of new technologies and digital literacy, specially in developing countries. Individuals also have a distrust of digital financial solutions and options. Overcoming this lack of trust is even more crucial for Islamic finance organizations. Another issue the existence of sporadic and obsolete infrastructure in most economies. Organizations in the fintech space will have to work on building awareness and trust, ensuring data security, and managing redundancies in technologies. There is a cost involved in every aspect when converting processes from traditional to digital. Not many businesses and organizations are able to pay these costs.

In Pakistan, there has also been a push towards digitalization. The government launched the Digital Pakistan Policy in 2018 with aims such as the digital transformation of government processes and services, their integration and standardization, their efficiency and transparency. The plans also include increasing connectivity, developing human resources, increasing financial inclusion and cyber-security and more. [3]