Branchless banking carries out Rs 59 billion transactions till September

KARACHI: The utility of the branchless banking have been increased throughout the country, through different service providers as 16 million transactions of Rs 59 billion were made till September 2011 in Pakistan.

State Bank of Pakistan (SBP) in its publication “Branchless Banking News” said that the average transactions through branchless banking have reached Rs 3,700 per day, whereas number of branchless banking agents increased to 17,448 serving currently more than 357,598 accounts at their different outlets.

The two major branchless banking models have emerged in Pakistan “Easypaisa” by Tameer Microfinance Bank and “Omni’ by United Bank Limited.

The branchless and mobile banking are penetrating at accelerated pace throughout the country with a number of players in the banking and cellular phone operators are entering into the emerging financial sector. In addition to them, there are different banks and mobile operators have introduced their branchless banking services such as First Microfinance Bank’s collaboration with Pakistan Post, and Dubai Islamic Bank pilot project. MCB Bank and Askari Bank are both expected to roll out their pilot test shortly.

Recently Orascom Telecom (Mobilink) has also obtained a license to establish a nation-wide Microfinance Bank namely Waseela MFB to start microfinance operations through a branchless banking platform.

Similarly, NADRA has designed a distribution platform under the brand name “e-Sahulat” to provide online payment and collection facility for the general public as well as for organisations.

Moreover, a few other players are undertaking feasibility, market surveys to assess branchless banking prospects. The early successes of mobile banking in Pakistan are attributable to the collaborative efforts of a wide range of stakeholders, including government, regulatory authorities, development agencies, NADRA, telecom operators, financial institutions, and technology firms.

The mobile phone subscription has seen explosive growth in Pakistan with total subscription now reaches to 110 million across customers in all income segments with growth continues apace.

The fast mobile penetration and its continuing strong growth fuels expectations that transformational branchless banking models would prove a game-changer in improving access to finance in Pakistan.

The branchless banking regulations only allow bank-led model, it encourages multiple approaches for developing partnerships. The partnership models include one-to-one (one bank having joint venture, agency agreement with one telecom, non-bank), one-to-many (one bank with many telcos), and many-to-many (many banks with many telcos).

This is aimed to create space for experimentation as well as to keep prudent supervisory oversight. The government is further encouraging innovation by piloting the use of branchless banking to distribute government payments. The permissible activities under branchless banking are opening account, fund transfer, cash-in and cash-out, bill payments, merchant payments, loan disbursement, repayment etc. These activities may be offered through a variety of channels such as mobile phones, retail agents, ATMs, smart cards, and POS. The resulting convenience and low transaction costs are expected to be critical to greater financial inclusion.

The SBP readily adopted the strategy of expanding microfinance outreach through exploiting the channels of mobile phone sector situated throughout the country. It has focused on providing an enabling environment to market players, persuading them to benefit from new opportunities, and offering them appropriate incentives for market development, with the ultimate objective of broadening and deepening financial inclusion.

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