As one of Asia’s largest economies and a wellspring of digital financial innovation, India has long dominated the fintech industry in wider South Asia. Historically, neighboring countries have been slower to adopt digital financial technology.
That is changing with the ascendancy of fintech in Pakistan, Bangladesh, and, to a lesser extent, Nepal. The payments segment is growing fast in all three countries, while digital banking is ascendant in both Pakistan and Bangladesh, which have two of the world’s largest unbanked populations.
Crucially, and in contrast to most of East Asia, in South Asia, digital banking could become a big business because the market need is real, regulators are motivated to support the digibanks, and incumbents have limited capability to co-opt digital upstarts.
Pakistan: The Fintech Sleeper Awakens
Pakistan’s fintech funding surged from just US$10.4 million in 2019 to US$150 million by 2022, seemingly positioning the South Asian country to become one of the top emerging digital finance markets. However, funding plummeted in 2023 to just US$12.5 million as global macroeconomic conditions deteriorated. Surging interest rates increased the cost of capital while investors also became warier of growth-focused tech startups.
Yet funding has recovered in the past two years, roughly doubling to US$26.3 million in 2024 and US$52.5 million through the first half of 2025. As of late November, Pakistan’s 450 fintech companies have in total raised US$391 million in VC money.
The biggest deal of the year so far has been the US$52 million pre-Series A by B2B supply chain and payments fintech Haball that closed in April. The deal is significant not just for its size but also because it represents one of the most notable tie-ups to date between an incumbent Pakistani lender and a digital upstart. Meezan Bank, Pakistan’s largest Islamic bank, provided US$47 million of Haball’s funding. Haball is the first Pakistani fintech to receive a digital invoicing license from the Federal Board of Revenue and is currently working toward becoming a regulated payment initiation service provider with connectivity to Raast, the South Asian country’s instant payment system.
The uptick in Pakistan’s fintech funding dovetails with growing regulatory support for the industry. For instance, the state-backed Pakistan Startup Fund offers equity-free grants to encourage venture capital inflows. Pakistan has also established a licensing and regulatory framework for digital banks, with five entities (including Easypaisa and Mashreq Bank) launching pilot operations by early 2025.
Collectively, these efforts aim to boost adult financial inclusion from the 64% rate in 2023 to 75% by 2028. “When more people have access to financial services, it creates a broad base of consumers, savers, and entrepreneurs and helps stimulate economic growth. This is all the more important in developing economies like Pakistan, where the informal economy has a substantial share in overall economic activity and contributes to the widespread prevalence of informal and unsafe savings and investment avenues,” Jameel Ahmad, Governor of the State Bank of Pakistan, said of the government’s financial inclusion efforts in March 2024.
Bangladesh’s Digital Banking Opportunity
With a population of 176 million, of whom 40% to 50% lack a bank account, Bangladesh offers a large market opportunity for digital banks. Although the digital lenders have not been approved and set up as quickly as hoped, that does not diminish market demand. Similarly, regulatory support remains strong as Dhaka aims for at least 75% of local transactions to be conducted digitally by 2027, as part of its goal for a “Smart Bangladesh” by 2041.
13 entities applied to the Bangladesh central bank in early November for a digital bank license. Applicants included mobile financial service providers, telecom operators, commercial banks, and large conglomerates. Several applicants have foreign partnerships, while some have also operated digital banks abroad. The list includes the large Bangladeshi payments firm bKash and telecoms provider Banglalink’s parent company VEON. Other notable applicants include Japan-Bangla Digital Bank, Digital Banking of Bhutan, and Amar Digital Bank, respectively backed by DBL Group, DK Bank, and microfinance institutions.
Digital banking draft guidelines require the digital lenders to issue customers bank cards and QR codes as well as use technologies like artificial intelligence, machine learning, and blockchain to facilitate transactions. It should be easy for the digital lenders to fulfill these requirements since most fintechs do these things anyway to ensure they remain competitive.
Among the applicants for digital bank licenses, bKash has some of the best prospects. It is Bangladesh’s largest mobile financial services provider, with 82 million verified users and a network of more than 360,000 agents. The company says that it processed 5.2% of mobile money transactions globally in 2024—though it does not reveal its data sources for that bold claim.
Nepal: Baby Steps
Compared to Pakistan and Bangladesh, Nepal has a smaller and less developed fintech sector, but that is changing with payments as the initial focus. To address the lack of interoperability among banks and e-wallets in the country, Nepal launched a national payment switch initiative in November 2021. The payment switch will serve as the country’s key retail payment rail, allowing banks, e-wallets, and non-financial institutions to easily transfer money.
Over the next few years, Nepal’s fintech sector grew briskly—albeit from a low baseline. By July 2023, mobile banking penetration was 73% and digital wallet penetration 64%. “The growth of instant payment systems like ConnectIPS, which saw its user base swell from just over 162,000 in 2020 to more than 1.1 million by 2023, underscores the increasing consumer appetite for real-time, convenient transactions,” notes Nepalese marketing agency Gurkha Technology.
In March, Nepal’s central bank (NRP) launched a digital finance innovation hub to support fintech innovators. It is a fintech sandbox in all but name, allowing startups to test out their products and services in a supervised regulatory environment. “From a regulatory standpoint, this marks a significant first for the fintech sector in Nepal,” Nepalese fintech expert Sanjib Subba told The Kathmandu Times.
Additionally, NRB published the National Payment Switch (NPS) and National Payment Ecosystem—Master Reference Document in October. The document serves as a national guideline and policy blueprint for Nepal’s digital payment ecosystem. The draft document is open for public feedback until December 5.
Digital Asset Ambitions
Pakistan, Bangladesh, and Nepal are all steadily adopting fintech, but Pakistan is the most ambitious of the three countries in digital finance. For this reason, Pakistan is beginning to explore digital assets. While both Bangladesh and Nepal have declared cryptocurrencies illegal, Pakistan is less opposed to digital assets. Rather than ban crypto, Pakistan has historically taken a hands-off approach. However, that is changing as Pakistan begins work on its virtual asset framework.
Notably, Pakistan recently secured a seat in global rule-making on cryptocurrencies and blockchain governance after Bilal Bin Saqib, chairman of the Pakistan Virtual Asset Regulatory Authority (PVARA), joined the World Economic Forum’s Steering Committee on Digital Asset Regulations. “This participation strengthens Pakistan’s presence in international policy discussions and signals growing recognition of the country’s role in shaping the global conversation on digital asset governance,” the Pakistani finance ministry said.
Meanwhile, VC giant Andreessen Horowitz recently led a US$12.9 million funding round for Pakistan’s ZAR, a fintech startup that aims to make dollar-backed stablecoins accessible to everyday consumers in Pakistan and emerging markets. ZAR plans for a stablecoin distribution network that spans local stores, phone kiosks, and money agents – the same network already used for mobile top-ups and remittances.
Having reached No. 3 in crypto adoption on Chainalysis’s Top Crypto Adoption 2025 index (after No. 1 India and No. 2 the United States), Pakistan is undoubtedly a rising star in digital assets—even if this is a honeymoon phase for the South Asian country in that notoriously mercurial fintech segment. To get a sense of how committed Pakistan really is to digital assets, we will have to see how it handles its first big crypto crisis.