Blockchain and Fintech
The next generation of the internet is here; it is decentralized, communally controlled, and runs on blockchain technology. Web3, as it has been called, is bound to take over every sector that has a digital presence in the coming years, including the economic sector, with a specific focus on fintech. Fintech is already a buzzword, and Pakistan has exhibited considerable growth within this sector. However, the convergence of fintech and Web3 provides new pathways for financial inclusion, and seizing this opportunity requires bridging the gap between these two parallel evolutions.
Fintech uses digital technologies to innovate financial services and currently operates mainly through central banks. Blockchain is decentralized and makes use of tamper-proof ledger technology that is open to all without a central authority. If one were to estimate the merits of blockchain integration into fintech in terms of speed alone, a traditional remittance from the US to Pakistan takes 2-5 days to settle via bank transfer, whereas a blockchain-based transfer will only take a few seconds to minutes.
The world is catching the blockchain bug, with major companies such as PayPal, Visa, and JP Morgan creating blockchain-based infrastructure products, including digital currencies, tokenized assets, and settlement networks. Even central banks are experimenting with blockchain by digitizing the local currencies into central bank digital currencies (CBDCs), like China’s Digital Yuan (eCNY), and the European Central Bank’s Digital Euro, so they can conveniently make use of blockchain in the coming years. It reflects their future readiness.
Integrating Fintech & Blockchain in Pakistan
For Pakistan, the motivation to adopt fintech is significant, as evident in the rise of mobile wallets and government-backed initiatives like Raast. However, the pace is rather slow because people mainly rely on cash, whereas full-scale adoption requires a high level of trust in centralized entities like banks and solid regulatory frameworks in place. Blockchain, on the other hand, does not need traditional intermediaries, nor does it depend on the existing system, allowing an alternative and potentially faster route to financial inclusion, especially in the unbanked and underserved areas.
In a way, blockchain may be uniquely suited for Pakistan’s needs. Decentralized Finance (DeFi), which is blockchain’s major strength, allows people to lend, borrow, and save money without needing banks. Considering that around 66% of women remain unbanked in Pakistan despite a tremendous increase in the number of bank account holders from 16% in 2015 to 64% in 2023, blockchain offers a pathway to financial inclusion.
Such financial inclusion will also come at lower transaction costs. For instance, remittances contribute significantly to the foreign exchange reserves and play an important role in Pakistan’s economy. CBDCs (digitized national currencies) and stablecoins (cryptocurrencies tied to a stable asset like the US dollar) can lower transaction costs by removing extra steps and fees usually charged by middlemen. This will require exploring a digital version of Pakistan’s currency, called the digital rupee, managed by the State Bank of Pakistan, and it could bridge centralized control (national) with decentralized (blockchain) efficiency, bringing millions into the digital economy without sacrificing monetary oversight.
Moreover, blockchain will secure the digital identities of people. The Pakistan Financial Crime Survey (PwC) 2024 recognizes fraud and identity theft as the biggest threats to banking in Pakistan. Similar trends have been witnessed globally as the increase in the number of digital cyberattacks on smartphones in an attempt to steal users’ banking credentials rose by 164% in 2024. The encrypted version of people’s CNIC and other details stored in the form of a cryptographic hash, a digital print of that data, will be difficult to tamper with because any attempt to alter it would not match the original hash.
While blockchain offers immense utility on several levels, however, it is not without its challenges. The digital divide cannot be ignored while considering leveraging Web3 for greater financial inclusion. As of 2024, nearly half of the population still lacks access to the internet. Coupled with these access issues, bridging the gap between fintech and blockchain also requires addressing basic hurdles like low digital literacy rates, infrastructure issues, and regulatory uncertainties regarding the operationalization of cryptocurrencies within Pakistan’s legal framework.
Conclusion
That being said, the launch of the Pakistan Crypto Council in March 2025 and the appointment of the founder of Binance, the world’s largest cryptocurrency exchange, as its advisor in April 2025 show momentum in the right direction. Although it might not be an immediate solution to these challenges, in the long term, such initiatives introduce an enabling environment that would kick-start necessary developments.
Considering that Pakistan is in the top ten crypto adopters and is already the third-largest freelance economy, the fintech space is growing, and the determination to upskill youth in blockchain for strengthening Pakistan’s digital economy is not devoid of a cause; it remains a key pathway for bridging the Web3 divide.
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The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
Nida Khattak is a research assistant at the Centre for Aerospace and Security Studies (CASS), Lahore. She can be reached at [email protected].