From Cash to Clicks: Assessing Digitalization's Impact on Financial Inclusion at Khushhali Microfinance Bank

Abstract

This study investigates the impact of digitalization on financial inclusion using Khushhali Microfinance Bank (KMBL) as a case study. It assesses how digital tools such as mobile banking, mobile money and digital wallets can improve consumer access, efficiency and financial inclusion in underserved areas of Pakistan. The study also investigates the mediating role of customer usability and performance improvement in supporting account ownership, credit utilization and financial support generation. Method: This study implements a quantitative approach by means of a designed survey tool circulated to 400 respondents, both urban and rural customers of KMBL were approached. Graded random sampling ensures diversity among the population with respect to age, gender, income level and area of residence. Data were analyzed using statistical methods such as regression analysis to evaluate hypotheses and assess the relationship between personal variables (digital drivers), compatibility (users’ product availability, efficiency) and differences (including financial outcomes).  Key findings: 1. Access to customers: Digital technology reduces geographical and financial barriers and has a positive impact on access to financial services (\(\beta = 0.68, p < 0.01 \)). Operational Efficiency: Digitalization improves service, reduces credit periods and increases customer satisfaction (\( \beta = 0.54, p < 0.05\)). Financial outcomes include: Increases in account ownership, active usage and lending are positively associated with digital service adoption (\(R^2 = 0.61 \)). Mediation Effects: User-friendliness and operational efficiency influence the relationship between digitalization and financial inclusion (\(F \)-statistic: 50.87, \( p < 0.01\)). br>Data . Analysis: This study uses statistical data to describe the respondents and analyze service delivery. Regression analysis showed strong explanatory power of the model (\(R^2 = 0.54-0.61\)) and significant beta values for the predicted variables. The hypotheses indicate significant relationship that digital financial services are critically facilitated by digital literacy. Conclusion: by enlightening outreach and operative proficiency, the Digitalization pointedly boosts financial inclusion at KMBL. The conclusions highlighted the requirement for targeted involvements, as well as digital literacy plans, structure developments, and gender-focused initiatives, to maximize the benefits of digital transformation in the microfinance sector.

Key words: KMBL, Microfinance Institutions (MFIS), Financial Inclusion, Digitalization, Digital drivers