A cashless or a less-cash economy?

Conference panellists discuss branchless banking and cashless transactions.

Farooq Baloch April 19, 2012

KARACHI: Citing recent global growth trends, panellists of the Euronet E-banking 2012 on Wednesday expressed the need for more branchless banking and discussed the possibility of a cashless economy.

Discussion panellists – comprised mostly of bankers – and the audience expressed different views about the future of branchless banking. Within the panel, the bankers were optimistic of growth in electronic transactions and hoped that it may eventually provide the basis for a cashless economy; others, however, argued that consumers don’t trust electronic banking for being risky and unsafe, and thus hesitate in adopting a new technology.

“Most outlets don’t accept plastic cards and deal in cash only, which is why people prefer carrying cash,” said one panellist, while talking about factors hindering growth in e-banking. “About 60% of e-banking transactions are ATM based,” he added.

“More than 38% of the total money supply is circulated as loose cash,” said another panellist; adding that, unlike western countries, cash transactions will never disappear from Pakistan’s economy. He, however, conceded that industry can go towards a less-cash system by reducing cash-based transactions.

To the contrary, representatives of the banking sector were optimistic about the future of electronic transactions.

“When ATMs were introduced, people took a while to adopt the technology,” said one banker. “ATM transactions have grown phenomenally in the past decade. Similarly, people will take a while to adapt to e-banking and mobile banking,” he said. “They only need to build some confidence in this new technology.”

What made the session highly interactive was the fact that not only did panellists indulge in a healthy debate amongst themselves, but the audience, too, chipped in to express their views on branchless banking.

“Bank brochures are mostly in English, while 60% of the population – the potential targets of branchless banking – can’t even read those brochures,” pointed out one participant, while addressing the discussion panel. He went on to add that a majority of transactions are small amount transactions, which don’t require e-banking. “A labourer, for example, may not have a bank account and will not accept a cheque.” he said; “Cash, therefore, will never go out from this system.”

The discussion was concluded with a question: ‘should we go for a cashless economy, or concentrate on reducing cash-based transactions for the time being?’

Earlier in the conference, speakers highlighted the importance of e-banking in the economy. “The rapid progress of e-banking is a sign that Pakistan is fast accepting globalisation,” said Government of Sindh Secretary IT Muhammad Sualeh Ahmed Faruqui. “This advancement in the IT sector should be utilised to facilitate the common people of the nation.” Faruqui, who was also the guest of honour, said the IT sector should interact with the government on a frequent basis to help improve the public sector.

Published in The Express Tribune, April 19th, 2012.


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