Dubai Islamic Bank to begin branchless banking by June

Efforts under way to meet SBP’s goal of financial inclusion

KARACHI: Dubai Islamic Bank Pakistan (DIBP), the wholly owned subsidiary of UAE-based first Sharia-compliant financial institution across the world, announced on Thursday that it would kick-start branchless banking by June 2018.

M-wallet services would help the bank accelerate its growth momentum and achieve the State Bank of Pakistan’s (SBP) target of increasing the market share of Islamic banks to 20% by 2020 from the current 14% in the country. Conventional banks enjoy rest of the market share.

Nine conventional banks and financial institutions are already offering branchless banking services in Pakistan in collaboration with mobile phone services firms and technology companies.

“We are hoping to launch our branchless banking platform in June,” Dubai Islamic Bank Pakistan Chief Executive Officer Junaid Ahmed said after signing an agreement with Chinese technology company, Zing Digital Commerce (technology partner of Shanghai F-Road, China), which is deploying the tech-based system at the bank.

The branchless banking platform would enable the bank accountholders to do financial transactions through their mobile phones, including the simple feature phones. This would enable people to pay for their groceries. “It would make transactions paperless,” he added.

“This would largely support economic growth… bring-in [significant amount of] money into the banking system from out of the system at present.”

“With this platform, DIB Pakistan will offer an array of products mainly to the unbanked population and in line with SBP’s strategy for financial inclusion,” he said.

According to the telecom regulator, Pakistan Telecommunication Authority, there are a total of 145 million active mobile phone connections in Pakistan. About 67% of them are using simple feature phones while the rest use smartphones.

According to the SBP, the number of branchless bank accounts stands at 27.32 million as on June 2017 including 13.15 million active accounts (who did at least one financial transaction in the prior 90 days). They did a total of 167.17 million transactions worth Rs746.56 billion during April-June 2017.

Zing Digital Commerce Founder and Chief Executive Officer Ghazanfar Ali Khan said, “We are bringing matured market experience into Pakistan. Pakistan has only 46 banks in total, while we are serving 1,300 banks in China.”

The central bank, commercial banks and other financial institutions all are making efforts to educate people about branchless banking and its benefits in daily life under the SBP National Inclusion Policy 2020, he said.

Published in The Express Tribune, February 9^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.