Branchless and Mobile Banking in Pakistan and in much of the developing world has a different definition to what it is known as in the developed world. In Pakistan the concept of Branchless Mobile Banking refers to an alternative banking infrastructure, though legally sanctioned and supported by traditional brick and mortal infrastructure.
In a country where 90% of the population is unbanked due to immense bureaucratic red tape and lack of education into western banking forms and procedures the space has been created for this alternate form of banking.
Branchless Banking is a form of banking that straddles the eastern traditional banking methods such as the Hawala System with that of the western form, while depending heavily on technology to maintain transparency and provide the paper trail that the western system dictates.
In Pakistan Branchless Banking first saw the light of day when the mobile carrier Telenor acquired Tameer Bank to launch EasyPaisa. With EasyPaisa’s success the industry started to see traditional banks partnering with the handful of Telco’s in the country to offer their own unique version of Branchless Mobile Banking in the country. This wave in Branchless Banking has been driven by the Telco’s more than the banking sector whom until fairly recently were quite comfortable offering traditional banking services. Given the restrictions by the country’s banking regulation these Telco’s started to seek out partners within the banking circle.
With a population of 180MM, where 90% are unbanked there is a dire need for financial services that meet the needs of ordinary people, while providing a means to document the vastly undocumented economy.
Branchless banking agent’s network in Pakistan grew by 16% in Q2 for FY11 to FY12 reaching 22,512 agents covering the entire length and breadth of the country.
With an average size of branchless banking transaction at PKR 3,855 (USD 38.55) while the average number of daily transactions was 228,855
Bills payment and mobile phone SIM card top-ups remained the dominating activity. 53% share in total number of transactions, followed by fund transfers and deposits with share of 39% and 8% respectively.
While P2P payments remained the most popular mechanism with 74% share in the total funds transfer, mobile branchless banking is penetrating all areas of payments such as utility bills, Government-to-Person (G2P) and Person-to-Person (P2P) payments while scaling up other services relating to deposits and loans.
Core Branchless Bank Services:
- Bill Pay
- Money Transfer (Domestic and International)
- Repay Loans
- Save Money
- Balance Inquiry
- Mini Statement
- Mobile Air Time TopOff
- Branchless Banking Shop/Agent finder
Branchless Bank Operators:
Mobile Phone Market Size:
Typical Branchless Banking Functional Architecture:
Data Source: State Bank of Pakistan 2012 Branchless Banking Report, Mobile and Branchless Banking Operators, ProPakistan Blog & News Website