Amir_Pakistani_Delegate

Branchless Banking in Pakistan!

Muhammad Amir Malik
Pakistan has seen the greatest surge of Branchless Banking in market since the relevant regulations were issued in March 2008. A phenomenon that provides a distributed channel strategy based system to bestow the subscriber with financial services without relying on the Bank branches has revolutionized the way people perform the transactions and also shift the philosophy of banking to a new paradigm. Pakistan is one of the fastest developing markets for branchless banking in the world. Clear regulations and a regulator that is willing to both listen to the private sector and provide incentives for innovation have promoted a dynamic branchless banking sector of the era.
A variety of business models is emerging that involves a wide range of players, including mobile network operators, technology companies, and even a courier business. The government is further encouraging innovation through its regulators by piloting the use of branchless banking to distribute government payments. Taken together, these factors make Pakistan a Center of Innovations in the field of ICT. ICT being the key role player that not only boost the ideas and innovation but bequeath the realization of these ideas through the integration of telecommunications, computers and middleware has also performed its cardinal role in the booming of Branchless Banking in Pakistan.
Mobile phone subscription has seen explosive growth so far in Pakistan. Total subscription now reaches to 109 million across customers in all income segments, and growth continues apace. In contrast, banking accounts are owned by approximately 25 million customers, largely belonging to high income segments. The fast mobile penetration and its continuing strong growth fuels expectations that said transformational branchless banking models would prove a new dimension in improving access to finance in Pakistan. A large segment of the population of Pakistan that lives in rural and remote areas is deprived of banking services. An important implication of this exclusion is that this large populace has been overwhelmingly reliant on cash based transactions, thus causing myriad obvious negative impacts on documentation of the economy, the tax base and the efficiency of economic transactions. Branchless Banking is the prominent solution to take all these exclusions under the Umbrella of financial services. To foster greater financial inclusion by encouraging financial institutions to take advantage of the efficient and robust payment systems infrastructure to offer new transactional instruments such as cards, ATMs, PoS, and internet banking. The relatively recent phenomenon of mobile phone banking, however, has now started changing these dynamics phenomenally. A key advantage of mobile phone banking over conventional banking is the opportunity of doing banking, anywhere, anytime with a low cost mobile handset.
Although Branchless Banking Regulations only allow bank led model, it also encourages multiple approaches for developing partnerships. The partnership models include one-to-one, one-to-many, and many-to-many. This is aimed to create space for experimentation as well as to keep prudent supervisory oversight. The permissible activities under branchless banking are opening BB account, fund transfer, cash in and cash out, bill payments, merchant payments, loan disbursement and repayments. 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.
Branchless Banking has seen a mushroomed growth and in this quarter of the fiscal year total number of active accounts have 51.23% growth rate while the active Branchless Banking Agents have the growth rate of 10.23% and deposits through this facility has 28.03% growth rate. The growth rate has prominently proved the promising potential of marketing in Branchless Banking.
Funds Transferred through Branchless Banking is getting exponential hype in the current Quarter with person to person fund transfer meets USD 210.493 million while account to account transfer approaches USD 185.788 million. Person to Account and vice a versa are in the early bloom with USD 3.002 and USD 7.458 million respectively.
Branchless Banking is the ICT based realization of the banking innovations which provides not only new options of transactions but also the relief of accessibility in every walk of life. Utility Bills payment, the major challenging and time consuming activity in the old fashioned payment styles, has observed a sensation of paradigm shift occurring due to Branchless Banking. In this Quarter, payments have exceeded USD 120 million and still have a promising potential. In the same swing, Merchant Payments have approached USD 102.297 millions and Mobile top ups have nearly USD 1 million share in this Quarter.
Telenor Easypaisa, an entity that seemingly promises empowerment and convenience to the masses in carrying out financial transactions whether they live in the urban area or rural communities of Pakistan and whether they are banked or unbanked is getting attention of the general public due to its convenience and outlet environment that allow the user to openly transfer the amount to any region in Pakistan. With 255+ Franchises, 23 Sales and Service Centers, more than 150,000 Retail Outlets and all Tameer Bank Branches Telenor being the second largest mobile operator is facilitating its customers with an initial and eminent financial services in Pakistan. Telenor Started with Utility bills payment and recently launched Mobile Wallet. Due to the said facility its subs will be able to open their Mobile Wallet accounts using which they can do different transactions using their mobile phone Bill Payments, Money Transfer and other emerging financial services as well. Easypaisa concept a promising future with new job creation, revenue generation, wide range of coverage and convergence of all modern financial services to its subscriber.
Orascom Telecom a sister company of Mobilink has obtained nationwide license to establish Microfinance Bank to start offering branchless mobile banking services in Pakistan under the brand name of Waseela. Mobilink will start with money transfer services with branchless accounts. However, down the line Mobilink plans to offer more sophisticated mobile banking services that may include saving accounts, merchant accounts, life insurances, virtual online wallets and so on. Telecom operators find it highly lucrative to offer financial services, especially in a country like Pakistan where less than 10 percent of population maintains bank accounts. With humongous sales and support network, particularly stretched in rural and far flung areas of the country, telecom operators are best placed to offer branchless remittance and saving services to consumers with limited income.
Ufone has introduced funds transfer facility in collaboration with Habib Bank Ltd. Fund Transfer and Inter Bank Funds Transfer, an idea of sending money to other accounts of 17 partner member banks of 1LINK, is a revolutionary product and a major milestone achieved for the UPayments portfolio. This service enables UPayments active subscribers to transfer funds from their Ufone handsets using their own HBL account to millions of other HBL accounts or any other member bank accounts listed with 1LINK network across the country.
Nokia Finland with collaboration of MCB Limited has announced that they have signed an agreement for provision of financial services to millions of mobile phone users. In this model Nokia will develop a mobile banking application that can be loaded on all Nokia handsets and that will be preloaded on new models. Moreover, MCB is also exploring options to use Nokia stores as agent locations.
Google has launched Google Wallet, an Android app that turns your Smartphone into a mobile payment system. The company announced the service in May and partnered with Citi, MasterCard, First Data, and Sprint to make it possible for you to tap, pay, and save using your phone with Near Field Communication.  At first, Google Wallet will only support Citi MasterCard and a Google Prepaid Card, which you’ll be able to fund with another payment card. This means you’ll be able to tap your phone to pay wherever MasterCard PayPass is accepted. Google Wallet will also sync your Google Offers, which you’ll be able to redeem via NFC at participating SingleTap merchants, or by showing the barcode as you check out.  The mobile app will be able to store your credit cards, offers, loyalty cards, and gift cards, without the bulk or additional weight. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Google hopes the app will one day store things like boarding passes, tickets, ID, and keys.
The use of mobile phones to deliver basic financial services to the financially excluded poor represents an unprecedented opportunity. With mobile phones now in the hands of billions including those at even the lowest income levels, the world is poised to bring unprecedented numbers into the formal economy. The mobile phone’s ability to serve as a universal banking platform can provide stability in the lives of those with very limited means while unlocking new efficiencies in underserved segments of developing economies. It is heartening to note that the emerging branchless banking models have experienced impressive initial growth. However, these models are still in early phase experimentation, requiring understanding of critical issues and taking measures to expand retail networks and leverage technologies. Once these models reach to a degree of maturity, the inter-operability will come in to facilitate customers to send money to anyone with account at any bank, and do cash-in and cash-out with agent of any bank. Getting to this ultimate stage will be both exciting and challenging.

Pakistan has seen the greatest surge of Branchless Banking in market since the relevant regulations were issued in March 2008. A phenomenon that provides a distributed channel strategy based system to bestow the subscriber with financial services without relying on the Bank branches has revolutionized the way people perform the transactions and also shift the philosophy of banking to a new paradigm. Pakistan is one of the fastest developing markets for branchless banking in the world. Clear regulations and a regulator that is willing to both listen to the private sector and provide incentives for innovation have promoted a dynamic branchless banking sector of the era. A variety of business models is emerging that involves a wide range of players, including mobile network operators, technology companies, and even a courier business. The government is further encouraging innovation through its regulators by piloting the use of branchless banking to distribute government payments. Taken together, these factors make Pakistan a Center of Innovations in the field of ICT. ICT being the key role player that not only boost the ideas and innovation but bequeath the realization of these ideas through the integration of telecommunications, computers and middleware has also performed its cardinal role in the booming of Branchless Banking in Pakistan. Mobile phone subscription has seen explosive growth so far in Pakistan. Total subscription now reaches to 109 million across customers in all income segments, and growth continues apace. In contrast, banking accounts are owned by approximately 25 million customers, largely belonging to high income segments. The fast mobile penetration and its continuing strong growth fuels expectations that said transformational branchless banking models would prove a new dimension in improving access to finance in Pakistan. A large segment of the population of Pakistan that lives in rural and remote areas is deprived of banking services. An important implication of this exclusion is that this large populace has been overwhelmingly reliant on cash based transactions, thus causing myriad obvious negative impacts on documentation of the economy, the tax base and the efficiency of economic transactions. Branchless Banking is the prominent solution to take all these exclusions under the Umbrella of financial services. To foster greater financial inclusion by encouraging financial institutions to take advantage of the efficient and robust payment systems infrastructure to offer new transactional instruments such as cards, ATMs, PoS, and internet banking. The relatively recent phenomenon of mobile phone banking, however, has now started changing these dynamics phenomenally. A key advantage of mobile phone banking over conventional banking is the opportunity of doing banking, anywhere, anytime with a low cost mobile handset.  Although Branchless Banking Regulations only allow bank led model, it also encourages multiple approaches for developing partnerships. The partnership models include one-to-one, one-to-many, and many-to-many. This is aimed to create space for experimentation as well as to keep prudent supervisory oversight. The permissible activities under branchless banking are opening BB account, fund transfer, cash in and cash out, bill payments, merchant payments, loan disbursement and repayments. 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. Branchless Banking has seen a mushroomed growth and in this quarter of the fiscal year total number of active accounts have 51.23% growth rate while the active Branchless Banking Agents have the growth rate of 10.23% and deposits through this facility has 28.03% growth rate. The growth rate has prominently proved the promising potential of marketing in Branchless Banking. Funds Transferred through Branchless Banking is getting exponential hype in the current Quarter with person to person fund transfer meets USD 210.493 million while account to account transfer approaches USD 185.788 million. Person to Account and vice a versa are in the early bloom with USD 3.002 and USD 7.458 million respectively.Branchless Banking is the ICT based realization of the banking innovations which provides not only new options of transactions but also the relief of accessibility in every walk of life. Utility Bills payment, the major challenging and time consuming activity in the old fashioned payment styles, has observed a sensation of paradigm shift occurring due to Branchless Banking. In this Quarter, payments have exceeded USD 120 million and still have a promising potential. In the same swing, Merchant Payments have approached USD 102.297 millions and Mobile top ups have nearly USD 1 million share in this Quarter. Telenor Easypaisa, an entity that seemingly promises empowerment and convenience to the masses in carrying out financial transactions whether they live in the urban area or rural communities of Pakistan and whether they are banked or unbanked is getting attention of the general public due to its convenience and outlet environment that allow the user to openly transfer the amount to any region in Pakistan. With 255+ Franchises, 23 Sales and Service Centers, more than 150,000 Retail Outlets and all Tameer Bank Branches Telenor being the second largest mobile operator is facilitating its customers with an initial and eminent financial services in Pakistan. Telenor Started with Utility bills payment and recently launched Mobile Wallet. Due to the said facility its subs will be able to open their Mobile Wallet accounts using which they can do different transactions using their mobile phone Bill Payments, Money Transfer and other emerging financial services as well. Easypaisa concept a promising future with new job creation, revenue generation, wide range of coverage and convergence of all modern financial services to its subscriber. Orascom Telecom a sister company of Mobilink has obtained nationwide license to establish Microfinance Bank to start offering branchless mobile banking services in Pakistan under the brand name of Waseela. Mobilink will start with money transfer services with branchless accounts. However, down the line Mobilink plans to offer more sophisticated mobile banking services that may include saving accounts, merchant accounts, life insurances, virtual online wallets and so on. Telecom operators find it highly lucrative to offer financial services, especially in a country like Pakistan where less than 10 percent of population maintains bank accounts. With humongous sales and support network, particularly stretched in rural and far flung areas of the country, telecom operators are best placed to offer branchless remittance and saving services to consumers with limited income. Ufone has introduced funds transfer facility in collaboration with Habib Bank Ltd. Fund Transfer and Inter Bank Funds Transfer, an idea of sending money to other accounts of 17 partner member banks of 1LINK, is a revolutionary product and a major milestone achieved for the UPayments portfolio. This service enables UPayments active subscribers to transfer funds from their Ufone handsets using their own HBL account to millions of other HBL accounts or any other member bank accounts listed with 1LINK network across the country. Nokia Finland with collaboration of MCB Limited has announced that they have signed an agreement for provision of financial services to millions of mobile phone users. In this model Nokia will develop a mobile banking application that can be loaded on all Nokia handsets and that will be preloaded on new models. Moreover, MCB is also exploring options to use Nokia stores as agent locations. Google has launched Google Wallet, an Android app that turns your Smartphone into a mobile payment system. The company announced the service in May and partnered with Citi, MasterCard, First Data, and Sprint to make it possible for you to tap, pay, and save using your phone with Near Field Communication.  At first, Google Wallet will only support Citi MasterCard and a Google Prepaid Card, which you’ll be able to fund with another payment card. This means you’ll be able to tap your phone to pay wherever MasterCard PayPass is accepted. Google Wallet will also sync your Google Offers, which you’ll be able to redeem via NFC at participating SingleTap merchants, or by showing the barcode as you check out.  The mobile app will be able to store your credit cards, offers, loyalty cards, and gift cards, without the bulk or additional weight. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Google hopes the app will one day store things like boarding passes, tickets, ID, and keys.  The use of mobile phones to deliver basic financial services to the financially excluded poor represents an unprecedented opportunity. With mobile phones now in the hands of billions including those at even the lowest income levels, the world is poised to bring unprecedented numbers into the formal economy. The mobile phone’s ability to serve as a universal banking platform can provide stability in the lives of those with very limited means while unlocking new efficiencies in underserved segments of developing economies. It is heartening to note that the emerging branchless banking models have experienced impressive initial growth. However, these models are still in early phase experimentation, requiring understanding of critical issues and taking measures to expand retail networks and leverage technologies. Once these models reach to a degree of maturity, the inter-operability will come in to facilitate customers to send money to anyone with account at any bank, and do cash-in and cash-out with agent of any bank. Getting to this ultimate stage will be both exciting and challenging.