Banking through digital channels gaining momentum

People made 196.2m transactions worth Rs11.9tr through e-banking in Jan-Mar quarter

KARACHI: Pakistanis are rapidly upgrading their lifestyle as they now prefer financial transactions through electronic channels over conventional modes after the country established infrastructure for the advanced 3G/4G internet.

“Banking through digital channels has been recently gaining increasing popularity in the country,” the State Bank of Pakistan (SBP) said in its third quarterly (January-March 2018) report on Payment System Review on Monday.

There are three working payment systems in the country namely Pakistan Real Time Interbank Settlement Mechanism (Prism), e-banking and paper-based.



For the quarter under review, the report finds that the e-banking system gained considerable momentum compared to the other two systems which moved in opposite direction.

People made 196.2 million financial transactions worth Rs11.9 trillion through e-banking in the quarter compared to 186.9 million transactions of Rs11.7 trillion in the previous quarter.

On the contrary, the number of transactions remained stagnant at 0.4 million in Prism, but the value of transactions dropped to Rs90.1 trillion from Rs93.6 trillion.

The paper-based payment system saw an increase from 117.6 million to 118.1 million in the number of transactions. However, the value of transactions fell from Rs40.3 trillion to Rs38.8 trillion as reported by the central bank.

The sum of three payment systems suggests that the number of financial transactions increased 3.2% to 314.7 million in the Jan-Mar quarter compared to 304.9 million in the previous quarter.



On the contrary, the value of all transactions shrank 3.3% to Rs140.8 trillion compared to Rs145.6 trillion in the previous quarter. Prism is a large value payment system. It enables the transfer and settlement of high-value inter-bank funds and improves overall efficiency.

In addition to Prism, there are various other e-banking channels like Real time Online Branches (RTOBs), ATMs, Points of Sale, internet banking, mobile phone banking, call centres/IVR banking and e-commerce facilitating retail value payments.

“These e-banking channels are the major source of retail e-payment in Pakistan,” it said. “Commercial banks in Pakistan are expanding their infrastructure for supporting e-payment due to SBP’s supportive policies,” the report said.

Under its National Financial Inclusion Strategy (NFIS) launched in 2015, the State Bank of Pakistan targeted to provide 50% of adult population with access to banking channels by 2020.



Mobile banking and/or branchless banking channels are said to be helping the banks at length in increasing access for unbanked people to banking channels since the previous government awarded 3G/4G internet licences to mobile phone companies in 2014.

According to the Pakistan Telecommunication Authority, the number of broadband subscribers stands at 57 million, including 55 million 3G/4G mobile phone internet users, as on April 2018.

Published in The Express Tribune, June 5^th, 2018.

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