STAFF REPOR ISB: The Branchless Banking is rapidly gaining ground in Pakistan with the overall turnover during the Jan-March period of the financial year 2011-12 remained high registering over 25 million transactions worth Rs. 85 billion capital through branchless banking thus posting about 23 per cent increase, reports State Bank of Pakistan in its quarterly statistics.
It said that the number of registered m-wallets reached 1.03 million by March 2012 showing 53 per cent active m-wallets. In addition, 5,573 debit cards have also been provided to mobile account holders, indicating efforts to create value proposition in m-wallets.
The growth in m-wallets is set to increase in the coming months as the largest brand of the country is said to have engaged in process of technology up-gradation for account opening.
Presently, Easypaisa and Omni are progressively exploring avenues to increase the attractiveness of m-wallets to the customers and offering them new services such as purchasing air-tickets, receiving salaries/pensions, utilizing ATM through debit cards, and internet banking. Moreover, few other banks are also likely to start their branchless banking operations in near future.
The mobile banking regulation was first introduced in Pakistan in April 2008 when the First MicroFinance Bank (FMB) was allowed to run its mobile banking through Pakistan Post. Though it disbursed $29 million loans during the last three years, yet the lack of electronic registration system negatively impacted the service thus halting its further growth. Similarly, Mobilink, having 32 million SIM cards, did make two unsuccessful attempts at launching a branchless banking service - first with Pakistan Post and the second with Citibank, however, it also could make through.
While on the other hand, Dubai Islamic Bank Pakistan Ltd, which was awarded mobile banking license in 2010, has a plan to operate low-cost channels for 50,000 existing customers in schools, business districts, residential areas, and shopping malls.
And now a variety of business models is emerging that involves a wide range of players. The State Bank of Pakistan has issued branchless banking licenses while more licenses are in process as the mobile banking is gradually on the rise.
According to banking experts, though the mobile banking share in the countrys money transactions is on the rise, yet these promising experiments may fail or languish at a small scale unless providers take initiatives to build customer confidence, invest in the agent networks to ensure a consistent, reliable and uniform customer experience of all agents.
They also said that the service providers will have to take stringent steps to bring to zero level the money fraud and abuse as it could undermine the confidence of customers and regulators and set back the sector in the country.
Bills payment remained the dominating activity of mobile banking with 42 per cent share in total transaction volume, followed by person to person fund transfers and airtime top-ups with share of 32 per cent and 10 per cent respectively. Branchless Banking service providers are trying to increase their linkages with microfinance institutions as loan repayments of Rs.312 million were collected through BB agents during the quarter under review.
Pakistan has a great market potential and early customer adoption and use rate suggest that customers value and are willing to pay for mobile banking. However, at the same time the challenge that may haunt the mobile banking need a stringent and effective rules and regulations for this sectors sustainability rather rapid growth in the country.