Pakistan’s Youth Demand Change: The Rise of Digital-First Finance for Gen Y & Z
In today’s digital-first world, Gen Y and Z consumers in Pakistan are redefining how they interact with financial services. These digitally native users, who make up more than 65% of the country’s population, demand seamless, relevant, and hyper-personalized banking experiences. They compare their banking apps not just to other banks, but to everyday digital services like Instagram, TikTok, Spotify, or Foodpanda—platforms that are highly responsive, curated, and user-centric with personalized experiences tailored to individual preferences in real time.
In this context, traditional, one-size-fits-all banking no longer suffices. The future of digital banking in Pakistan will be shaped by how well we understand and serve individual customer journeys—not generational stereotypes, but real behavior, preferences, and life stages.
The Rise of Pakistan’s Digital Banking Behavior
Over the last five years, Pakistan has experienced a significant shift in financial behavior driven by digital acceleration. According to the State Bank of Pakistan (SBP), the volume of internet and mobile banking transactions rose by 62% (74% by value), reaching over PKR 70 trillion in value last year.
This growth has been enabled by a progressive regulatory approach and a rapidly evolving payments infrastructure. Fintechs and electronic money institutions (EMIs) such as Sadapay and Nayapay have leveraged this modern, efficient, and accessible landscape to build intuitive, mobile-first solutions, offering everything from instant digital account opening to virtual cards, P2P transfers, and utility bill payments. For many urban and semi-urban Pakistanis today, this is the default banking experience.
But as these services become increasingly commoditized, differentiation lies in personalization—knowing the user and curating experiences just for them.
Personalization as the New Differentiator
Personalization in banking is no longer a luxury—it’s a strategic imperative. A 27-year-old Sara from Lahore and a 41-year-old Bilal from Karachi may log into the same app but expect entirely different experiences based on their personas, preferences and propensity.
Sara might find her dashboard highlighting cashback offers on food delivery, travel insurance for digital nomads, or short-term saving goals with gamified trackers. Bilal, on the other hand, might see reminders for utility bills, an AI-driven nudge to move idle funds into a term deposit, or budgeting insights for his children’s education.
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Such contextual journeys are enabled by AI and behavioral analytics. Transaction patterns, preferred payment methods, login habits, and even typing speed can inform tailored financial advice. Behind the scenes, behavioral biometrics continuously assess user patterns to prevent fraud – flagging anomalies in location, device usage, or login rhythm.
This deeply personalized experience builds trust with customers leading to increased loyalty and engagement. It also empowers customers with financial literacy tools, helping them make better-informed decisions – whether saving for a wedding, managing freelance income, or planning travel expenses.
Global Examples of Personalization in Banking
While global players have made strides, their examples can be adapted for Pakistan’s context:
- Real-time spending insights and budgeting tools—features that resonate strongly with urban salaried professionals – are being offered by Monzo and Starling Bank in the UK
- Currency management and micro-investments is a use case especially relevant for Pakistani freelancers managing remittances or foreign earnings – something Revolut is known for across the world
- Personalized lending using AI is growing rapidly globally (e.g. AliPay in China and SoFi in the US) and is very relevant to Pakistan’s consumer but also SME market
Key Technologies Powering Personalization
Delivering these hyper-relevant experiences requires banks to invest in core technologies:
- Big Data and Analytics: Big data allows banks to collect vast amounts of customer information. Every transaction, bill paid, or app interaction generates valuable data. When analyzed intelligently, this data enables banks to anticipate needs, detect risk, and deliver real-time offers by extracting actionable insights from this data.
- Cloud computing and Data Storage: Cloud infrastructure enables agility, faster go-to-market, and scalability. It allows banks to quickly deploy new services and test personalized modules at scale.
- Artificial Intelligence (AI) and Machine Learning (ML): AI models analyze customer behavior using predictive modelling to recommend relevant financial products and services, whether that’s suggesting the right savings plan for a freelancer or auto-categorizing business expenses for a young entrepreneur. Machine learning systems can also offer real-time insights, such as advising customers on the best times to make purchases, pay off loans, or save for specific goals.
- Chatbots and Virtual Assistants: AI-powered chatbots, speaking Urdu or regional languages, can engage with customers in real-time, answer questions or guide users through actions like applying for a loan, checking balance, or setting up a recurring payment—all based on prior interactions making it more seamless.
- Open Banking and APIs: Open banking, still awaited (but on the cards) in Pakistan, has vast potential. Open banking allows third-party developers to build applications and services that integrate with a bank’s system. With customer consent, banks could access holistic financial data across institutions—enabling services like consolidated dashboards, cross-bank budgeting and investments, or tailored financial coaching.
The Role of Regulation: Building an Enabling Environment
For personalization to thrive, Pakistan’s regulatory landscape must continue to evolve. An Open Banking framework—anchored in transparency, data privacy, and consent—can be transformational. It would allow banks and fintechs to securely share data, unlocking use cases like personalized credit scoring, dynamic insurance premiums, or cross-platform investment tracking.
However, safeguards must be put in place. Privacy frameworks should guarantee that users know how their data is used. Data quality standards should ensure accuracy and consistency, as customer trust must remain central—without it, personalization becomes intrusive, not empowering.
Regulators have a pivotal role in ensuring that open banking continues to promote innovation, competition, and personalization in digital banking while safeguarding against risks. By setting clear standards for data security, privacy, competition, consumer protection, and transparency, regulators can help create an environment where customers feel confident using open banking services, and financial institutions can innovate responsibly. These measures will help to create a balanced, fair, and secure open banking ecosystem.
The Road Ahead
Personalized digital banking is not about adding flashy features. It’s about relevance—understanding each user’s financial goals, cultural context, and lifestyle. For Mashreq Bank, and indeed for the broader financial industry in Pakistan, the mandate is clear: move beyond generic services. Whether it’s a student saving up for an online course, a freelancer optimizing dollar inflows, or a working mother tracking household expenses, our goal must be to make banking feel personal – because the future belongs to those who don’t just serve customers but understand them.
This article is written by Shamsulhaq Niaz, who serves as the Chief Digital Officer and Head of Payments at Mashreq Bank.
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