Online banking gains momentum
By the end of Jan-Mar 2021 quarter, the banking industry had deployed 16,175 ATMs in the country, exhibiting an increase of 134 ATMs in the quarter. PHOTO: FILE
A silent digital payment revolution is on its way in Pakistan as the number of mobile and internet banking users and e-commerce transactions showed a strong growth trend in the quarter ended March 31, 2021.
Surprisingly, the number of financial transactions in cash and other forms of paper-based transactions (in terms of volume), as well as the number of physical bank branches, recorded a downtick during the quarter under review, confirming the online payment system is gaining traction and will change the banking landscape in the country, according to Pakistan’s central bank on Monday.
“Commercial banks in Pakistan are expanding their digital infrastructure for supporting electronic payments, which are complemented by State Bank of Pakistan’s (SBP) enabling policies,” the central bank said in its Quarterly Payment System Review (QPSR) for the third quarter (Jan-Mar) of current fiscal year 2020-21.
The number of internet and mobile banking users has increased considerably over the last few quarters. Internet banking users increased by 10% to 4.98 million in the quarter under review compared to the previous quarter and grew 30% when compared with the same quarter of last year.
Similarly, mobile banking users increased by 5% on a quarter-on-quarter basis to 9.86 million and grew 20% compared with the same quarter of previous year.
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E-commerce merchants have also been on the rise for the last few quarters. The e-commerce merchants increased by 5% to 2,523 in the Jan-Mar 2021 quarter compared to the previous quarter while they grew a staggering 62% against the same quarter of last year.
“The numbers can lead us to believe that the consumers are realising the benefits that digital payment channels have in our daily lives. This complements the increase in the trust of the consumers in the usage of digital channels,” the SBP said.
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There are 16,223 bank branches reported by banks/ microfinance banks (MFBs), out of which 107 are overseas branches. All branches, except for 35, are providing online banking services to their customers.
“We have observed a decline in the number of branches, showing that the industry is slowly realising the benefits of digital payment infrastructure that the digital channels bring to the overall consumer experience and its impact on the bottom line,” the central bank said.
The number of financial transactions through e-banking (including mobile, internet and e-commerce) increased 4% to 309.5 million in the quarter under review compared to 296.7 million in the previous quarter ended December 2020.
The value of e-banking transactions rose 5% to Rs22.48 trillion in the Jan-Mar 2021 quarter compared to Rs21.47 trillion in the previous quarter.
Other e-banking modes of payments include Real-Time Online Branches (RTOBs), ATM (automated teller machines), POS (point of sales) and call centres. “ATMs processed a majority of the chunk with 49% transactions (volume in e-banking).”
The merchants processed approximately 5.6 million transactions valuing at Rs15.3 billion during the quarter under review. The number of paper-based financial transactions dropped 4% to 100.2 million in the Jan-Mar 2021 quarter compared to 104.8 million in the previous quarter.
However, the value of paper currency-based transactions inched up 1% to Rs37.7 trillion in the Jan-Mar quarter compared to Rs37.2 trillion in the previous quarter ended December 31, 2020.
Despite the availability of other banking facilities on ATMs, the machines still are mostly used for cash withdrawal in the country. “In total, the cash withdrawal through ATMs has the highest share of 96% by volume (among other ATM services like paying utility bills and fund transfer through the machines).”
As of the end of the quarter, the industry had deployed 16,175 ATMs in the country, exhibiting an increase of 134 ATMs. This means, on average, the banking industry deployed approximately 1.5 ATMs per day.
During the quarter under review, the industry deployed more than 4,000 POS machines, which reached an all-time high of 67,099.
According to the latest quarterly payment report, the total number of bank accounts increased to 62 million with population size of the country standing at 211.93 million.
The value of currency in circulation stood at Rs6.86 trillion on March 31, 2021.
As of March 31, 2021, the total number of payment cards issued in Pakistan increased to 44.5 million, up from 44.2 million in the previous quarter. Almost 64% of these cards are debit cards, 4% credit cards, 17% social welfare cards and 15% ATM-only cards, according to the report.
The entire banking sector recorded a growth of 2% in the number of all types of financial transactions to 410.8 million, while the value of such transactions surged 10% to Rs169.51 trillion in the quarter under review compared to the previous quarter.
Published in The Express Tribune, June 29th, 2021.
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