Adoption – The Bottleneck in Scaling Mobile Financial Inclusion

Aug 31, 2016
Tags :
  • Digital Financial Services,
  • Financial Inclusion,
  • Financial Services,
  • The second edition of The Brookings Institute’s Financial and Digital Inclusion Project (FDIP) Report (August 2016) presents findings on financial access and usage from a diverse set of 26 countries. The publication is built around a scorecard generated using four composite indicators: country commitment, mobile capacity, regulatory environment and adoption of financial services. A primary aim of the report is to provide policy makers, the private sector and non-governmental organisations (NGO’s) perspectives that can inform and catalyse the pace of financial inclusion.

    Pakistan has attained an overall score of 69 percent for financial inclusion in the FDIP report. For each of the composite indicators the score varies widely, with 100 percent for country commitment, 83 percent for mobile capacity, 89 percent for regulatory environment, but only 36 percent for adoption of traditional and digital financial services.

    As per the FDIP report, as well as other international publications such as the annual Global Microscope of the Economist Intelligence Unit, it will not be incorrect to conclude that much of the upfront investment and preparedness required for scaling financial services is already in place in Pakistan. Which brings us to the matter of adoption and why Pakistan is lagging. The FDIP report offers a valuable window to assess low adoption rates in Pakistan: of the 26 countries showcased in the report, 21 have a higher adoption score than Pakistan; 12 have an adoption score above 50 percent. The countries with the highest adoptions rates are Kenya (78%) and Chile (75%).

    Exhibit 1: Pakistan’s Scorecard


    Source: FDIP Report 2016

    Both top performing countries showcased in the FDIP report demonstrate that adoption of financial services is an attainable target. This post will therefore attempt to unpack the following: (1). The way adoption has been measured in the report, and (2). Attempt to tease out insights from a deeper look at efforts taken by Kenya and Chile to drive adoption.

    Defining Adoption

    A total of 12 variables form the building blocks of the adoption index. The variables focus on traditional as well as digital financial services (details in Exhibit 2 below).

    Exhibit 2: Adoption Indicator Variables Defined


    Source: FDIP Report 2016

    Driving Adoption in Kenya and Chile

    To demonstrate the variance in performance, five of the twelve adoption indicators are illustrated for comparison in Exhibit 3 below.

    Exhibit 3: Comparison of Selected Adoption Indicators Across Pakistan, Kenya and Chile


    Source: Global Findex 2014

    A closer look at the narrative indicates that in Kenya adoption has been driven significantly by the variety of mobile financial services made available. March 2015 saw the coming together of Safaricom with Kenya Commercial Bank (KCB) to offer KCB M-PESA, a mobile-based loan and savings account. With the rollout of KCB M-PESA, 640,000 subscribers registered for the service within three weeks. Most recently, cross-border remittances have been initiated by Safaricom in Kenya in partnerships with both Vodacom Tanzania and MTN Rwanda.

    Some of the initiatives put into place by Chile include a road map by the The Ministerio de Desarrollo Social de Chile (Ministry of Social Development) for digitizing all benefit payments by the state as a default channel for delivery. Since 2014, through the coordination by Consejo Nacional de la Inclusion Financiera (CNIF), public institutions are moving towards greater commitment to financial inclusion and enhanced financial literacy.


    Although the adoption rate for Pakistan has increased by 3 percentage points from 2015, there is a need for sustained and deeper focus supported not only by tracking measureable targets for each variable, but also for improved products and services, financial literacy and awareness campaigns and exploring options of public sector champions to reinforce the efforts to develop a robust digital financial ecosystem.

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