Pakistan launched its first FinTech Center in February, which will focus on the development of payment-related financial technologies and growth of early stage startups looking into emerging markets such as bitcoin, the blockchain and peer-to-peer (P2P) payments.
At the two-day Startup Lahore conference, Information Technology University (ITU) vice chancellor Umar Saif and University of Washington Department of Computer Science and Engineering (DFSRG) head Richard Anderson revealed the establishment of a Memorandum of Understanding (MoU) between the two educational institutions.
According to the MoU, ITU and DFSRG will launch the first FinTech center in Pakistan in February to facilitate the growth of the financial industry and startups within the Pakistani market. Researcher and partner companies of the University of Washington will also collaborate with Pakistani startups and entrepreneurs to lead joint collaborative projects between Pakistan and the US.
Various areas in the field of FinTech will be targeted, including cyber security, authentication, financial education, fraud prevention, payments, data analytics, and customer experience studies in digital financial services. Amongst these categories, a spokesperson of ITU stated that the center would focus on digital payments and other technologies such blockchain technology or bitcoin that can operate as the base infrastructure of financial networks.
In an official statement, the Information Technology University said:
“Richard Anderson said that it was the first ever collaboration in the World with Pakistan, which will be extended in the Africas and other Asian countries. While Umar Saif stated that it would facilitate smartphone transactions and establish transparency in the [financial] system.”
While Pakistan has relatively limited infrastructure available to the general public due to its weak banking and financial sector, the demand for bitcoin and FinTech services is on the rise. The popularity of new technologies should continue to rise in the country of 200 million, with Pakistan’s economy set to perform strongly in 2017. According to bitcoin data company Coinhills, local bitcoin exchanges including Urdubit are processing nearly nine bitcoin on a daily basis.
LocalBitcoins, a P2P bitcoin trading platform wherein users facilitate direct trades with each other, also oversees more than 6.3 bitcoin in daily trades in the Pakistani market, settling close to $6,000 worth of bitcoin per day. In total, the two bitcoin exchanges Urdubit and LocalBitcoins are handling over $14,300 worth of bitcoin trades every day.
In comparison to other Asian markets, the daily bitcoin trading volume of Pakistan is substantially small. However, if the size of the Pakistani financial service market is taken into consideration, the local bitcoin market is comparatively large.
Local publications including the Express Tribune and bank executives such as Tameer Bank CEO Nadeem Hussain have revealed that the bank penetration rate including credit cards and bank accounts only stands at 8.7 percent in the Pakistani financial market. Less than 10 percent of adults in the country have access to financial services and proper banking.
If FinTech centers can spur the growth of startups and increase the adoption of P2P payment methods such as bitcoin in the country, digital currencies, and innovative FinTech services will be preferred against traditional banking, pushing the mainstream adoption of bitcoin in Pakistan as it did in India.