How an app can help Pakistani women bank
Pakistani women have some of the worst access to banking in the world.
Just 7% have a bank account, compared to 21% of the global population. This makes Pakistan’s gender gap in account ownership one of the widest globally1,2. This means many women have particular difficulty accessing credit, which restrains their social mobility and economic independence.
“Access to finance is imperative for women,” said Naureen Hyat, Co-founder of Tez Financial, a Pakistani start-up offering an alternative to traditional financial services in Pakistan.
“When Pakistani women have access, they invest in businesses and then in households. They use their money primarily in paying for food and education – things which have an impact on their families and better standards of living for their children.3”
Social interaction limitations, limited mobility and lack of credit histories can deter the access of women to brick and mortar financial services. And when they are able to access formal financial services, be it credit or savings, the process can be time-consuming because of the reliance on legacy systems at many financial institutions.
Often, women turn to the informal economy or their families for loans to meet their daily needs, running the risk of getting stuck in debt cycles that are passed on from one generation to the next.
In a bid to address this issue, Tez is aiming to serve the unbanked and underbanked by offering digital-first banking and small loans. In place of conventional credit histories, Tez uses smartphone data from customers’ digital, social behaviour and consumption patterns to identify the most appropriate products for them.
“The majority of Pakistanis face some constraints hampering their ability to meet their day-to-day needs,” Hyat said.
“Many require instant and easily accessible short-term funds to bridge the gap. The purpose behind Tez was to come up with a solution that provides a significant proportion of the population frictionless access to financial services.”
Tez targets the “nano” finance segment – those whose incomes put them below microfinance levels and above the absolute poverty-stricken segment.
“Liquidity hiccups could really send many people back into poverty – which means that they could not pay for basics like food,” Hyat said.
The typical Tez customer owns an Android phone, works, and earns about 25,000 to 30,000 rupees a month (around $2,000 a year).
Tez offers short-term loans ranging from one to four weeks for $50 to $100. It also offers savings accounts, as well as health and life insurance based on smartphone data.
“We are trying to devise products that are tailored to meet the consumption needs of a huge cross section of society,” said Hyat. “Most institutions are production driven but we are focused on user-centred design.”
Digital infrastructure is ahead of financial infrastructure in Pakistan and the population is becoming increasingly digitally savvy. 78% of the country having telephone connections and over 71 million smartphone users.4
“Since we are a completely digital financial institution, the only touchpoint for customers is the mobile app and our customer support,” Hyat said. “Customers initially were reluctant about sharing their data, so bridging that trust deficit was a challenge for us. However, we have managed to build their trust and provide our customers with comfort about how we are using their data responsibly.”
In order to expand, Tez has partnered with other branchless banks to provide infrastructure for digital payments.
“We can disburse funds directly into mobile wallets,” Hyat said. “This allows customers to cash out from agent networks and cash in for repayment. The banks want to enhance quality activity, this means that Tez enables more people to enter the financial system by using their services.”5
“We want to bank on the current branchless banking railroad and it doesn’t make sense to reinvent the wheel when so much work has been done reaching those areas where current bank branches don’t exist.”
Naureen Hyat is a serial social entrepreneur. In addition to Tez Financial, she co-founded CheckIn Solutions, a fintech focused on enhancing operational efficiencies of microfinance providers, as well as Shopistan, an end-to-end e-commerce service provider.
Naureen has also worked with the Pakistan Credit Rating Agency (PACRA), specialising in microfinance, banking, and non-banking financial companies. She also helped accelerate financial inclusion as an assessor of the SMART Campaign, which ensures consumers are the driving force of financial services in Pakistan.
At Harvard Business School, Naureen studied Inclusive Finance. She has also featured in the Women in Fintech Powerlist, in Innovate Finance.
Tez Financial is the Fintech challenge winner for the 2019 Visa Everywhere Initiative: Women’s Global Edition.
1 https://www.cgap.org/blog/pakistan-enigma-why-financial-inclusion-happening-so-slowly
2 https://karandaaz.com.pk/blog/unbanked-hundred-million-question/
3 http://www.wsj.com/ad/article/mlf-women-around-the-world-face-hurdles-to-financial-inclusion
4 https://www.pta.gov.pk/en/telecom-indicators
5 https://propakistani.pk/2018/12/12/53-of-mobile-wallet-accounts-in-pakistan-are-inactive-report/
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