Bridging Web3 divide: leveraging blockchain and fintech for Pakistan’s digital economy

The next generation of the internet is here; it is decentralised, communally controlled, and runs on blockchain technology. Web3, as it is 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 decentralised 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 US to Pakistan takes 2-5 days to settle via bank transfer whereas 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, tokenised assets, and settlement networks. Even central banks are experimenting with blockchain by digitising 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.

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 centralised 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 undeserved areas.

In a way, blockchain may be uniquely suited for Pakistan’s needs. Decentralised 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 the Pakistan’s economy. CBDCs (digitised national currencies) and stable coins (crypto currencies tied to a stable assets like 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 centralised control (national) with decentralised (blockchain) efficiency—bringing millions into the digital economy without sacrificing monetary oversight.

Moreover, blockchain will secure the digital identities of people. Pakistan Financial Crime Survey (PwC) 2024 recognises fraud and identity theft as the biggest threat to banking in Pakistan. Similar trends have been witnessed globally as the increase in the number of digital cyber-attacks 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 cryptographic hash, a digital print of that data, will be difficult to tamper with because any attempt to alter would not match the original hash.

While blockchain offers immense utility on several levels however, it is not without its challenges. 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 rate, infrastructure issues, and regulatory uncertainties regarding the operationalisation of cryptocurriences within Pakistan’s legal framework.

That being said, the launch of the Pakistan Crypto Council in March 2025 and 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 but for 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.