Branchless banking accounts increase 39.2%

Number rises to 7.5m; value of transactions falls though

KARACHI: Courtesy a government intervention, the branchless banking (BB) industry witnessed a ‘widespread’ increase of 39.2% in the number of BB accounts during the first three months of 2015.

According to the Branchless Banking Bulletin released by the State Bank of Pakistan (SBP) on Thursday, the number of BB accounts rose to 7.5 million, a growth of almost 40% over the preceding quarter of Oct-Dec.

The massive growth in the number of accounts was mainly on back of the recently-introduced biometric infrastructure for the second consecutive quarter, which contributed 45% of the total newly-opened (Level Zero) accounts. Level Zero accounts are basic mobile-wallet accounts with low know-your-customer (KYC) requirements and low transaction limits.

The government enforced SIM verification of all mobile subscribers through a biometric verification system, which led to a massive installation of biometric devices at the retailer level. This infrastructure is now serving as a front-end tool for the customers to open their mobile-wallets through BB agents.

The volume of transactions in Jan-Mar, however, grew only 1% over the preceding quarter to 72.5 million. The fall in the value of transactions was sharper (-4.8%) to Rs354 billion in Jan-Mar due to massive declines in the value of government-to-person payments (-75%), loan disbursements (-98%) and mobile top-ups (-47%).

A BB transaction can be categorised as either a customer-oriented transaction or an agent-oriented transaction meant for liquidity management. The customer-oriented transactions can further be divided into either over-the-counter (OTC) transactions or mobile-wallet transactions.

According to the latest statistics, the customer-oriented transactions - both OTC and through mobile-wallets - contributed 94% volume-wise and 65% value-wise in the total BB transactions during the three-month period.

It should be noted that OTC transactions, which many customers find simpler in nature, continued to dominate customer-oriented transactions in Jan-Mar. Against their share of 86% in volume and 88% in value during the preceding quarter, the OTC segment represented shares of 88% (volume-wise) and 82% (value-wise) in the Jan-Mar quarter.

The value of m-wallet transactions experienced 34% growth by scaling up from Rs25.5 billion in Oct-Dec to Rs34.2 billion in Jan-Mar. The jump was mainly on the back of 49.3% and 116% increases in funds transfers and cash deposited in m-wallets, respectively.

However, their volume witnessed a decline of 18.5%, as it fell from 9.7 million in the preceding quarter to 7.9 million in Jan-Mar. The average size of transactions decreased to Rs4,883 in Jan-Mar from Rs5,181 in the preceding quarter.

In its commentary accompanying the latest BB data, the SBP urged BB players to diversify their product mix and cross-sell products to boost the usage of accounts. “Opening accounts without usage will not serve the national strategic objective of financial inclusion,” the SBP said.

Published in The Express Tribune, September 18^th, 2015.

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