KARACHI – In a bold call to action, Pakistan’s central bank has urged financial institutions to adopt artificial intelligence (AI) and alternative data sources to expand access to affordable financial services. The State Bank of Pakistan (SBP) governor, Jameel Ahmad, highlighted the need for AI to play a pivotal role in enhancing financial inclusion, particularly for small and medium-sized enterprises (SMEs), the agricultural sector, and women. His remarks were made at the Pakistan Banking Summit 2025, which underscored the urgency of rethinking banking models to promote a more inclusive financial ecosystem.
The central bank’s message came at a crucial time, as Pakistan continues to face challenges related to financial inclusion. Ahmad stressed the importance of using innovative technologies like AI, which can harness alternate data sources such as cellular and satellite information. This approach could provide cost-effective and alternative delivery channels, enabling banks to reach underserved populations, particularly SMEs and women, who have historically faced barriers to accessing traditional banking services.
The governor specifically called for a transformation in the way banks approach financial intermediation, urging them to rethink their current business models. He emphasized that banks must reassess their priorities, adopting a more proactive role in channeling credit to underserved sectors. He pointed out that Pakistan’s banking sector remains heavily skewed towards large corporates, with around 74% of lending directed to this segment, while a mere 5% goes to SMEs. This imbalance, Ahmad suggested, needs to be addressed if the country is to achieve sustainable economic growth.
Additionally, Ahmad underscored the significance of increasing private sector credit in the country, which has long been a critical driver of economic development. He expressed concern that low levels of private credit could hinder Pakistan’s overall growth, calling for more active steps to mobilize deposits and increase lending to sectors that can stimulate job creation and economic diversification, including agriculture and SMEs.
To achieve this vision, the SBP governor encouraged financial institutions to better utilize AI in assessing creditworthiness, particularly in rural and underserved areas. AI, when integrated with alternate data such as mobile phone usage and satellite imagery, could provide a more accurate and comprehensive view of potential borrowers, making credit more accessible and affordable for those who traditionally have been excluded from the formal banking sector.
Alongside these technological advancements, Ahmad called for a focus on sustainability in banking practices. He highlighted the need for financial institutions to consider the impact of climate change on credit, market, liquidity, and operational risks. The banking sector, he argued, must evolve to integrate environmental, social, and governance (ESG) factors into their lending practices and risk assessments.
The governor also outlined the SBP’s Strategic Vision 2028, which seeks to build an innovative and inclusive digital financial ecosystem that enhances the overall stability and fairness of the financial system. This strategic vision is closely aligned with the central bank’s efforts to improve financial inclusion, a goal that has been central to the SBP’s agenda in recent years. Ahmad pointed to the significant progress made over the past decade, with bank account coverage rising from 47% of the adult population in 2018 to nearly 64% today. The gender gap in financial inclusion has also narrowed, from 47% to 34%, he noted.
Looking ahead, the SBP’s latest National Financial Inclusion Strategy (NFIS) 2024-2028 sets ambitious targets for the next phase of growth. The central bank aims to increase bank account coverage to 75% of the adult population and reduce the gender gap in financial inclusion to 25% by 2028. To achieve these goals, Ahmad emphasized that the financial sector must focus on enhancing the depth, breadth, and quality of financial services, particularly for low-income individuals, microfinance, SMEs, and the agricultural sector.
The SBP’s push for greater financial inclusion, supported by AI and innovative financial technologies, signals a transformative shift in Pakistan’s banking landscape. By embracing these digital advancements, the country hopes to create a more equitable financial ecosystem that provides affordable, accessible services to all, particularly the underserved and marginalized communities.
As Pakistan continues to evolve its financial infrastructure, the adoption of AI and alternative data sources will be essential to achieving a more inclusive, sustainable, and robust economy.