As mobile banking grows, Zong, Askari Bank join the race

Mobilink, Telenor, UBL have already entered mobile financial services market

KARACHI: In another strong sign that branchless banking is gaining momentum in Pakistan, Zong and Askari Bank – the latest entrant to join this bandwagon – have partnered to launch a complete branchless banking solution.

The State Bank of Pakistan (SBP), according to sources in Zong, issued branchless banking licence to Zong and Askari Bank last Friday after auditing their pilot project, launched in May this year.

This is the second branchless banking license issued by the SBP this month – the central bank had awarded a mobile financial services licence to Mobilink’s sister concern Waseela Bank.

The product, according to Zong officials, will soon be launched commercially. The branchless banking portfolio includes services like mobile account, money transfers, utility bill payment among others, Zong said in a press statement. Additionally, Zong is going to offer services like salary disbursement, it added.

This will be first of its kind collaboration where a telecom operator and a commercial bank will provide branchless banking services under a relationship where none of the parties has any shares or controlling interest in each other, – the revenue will be shared between the partners.

“Branchless banking is only the beginning of a new banking revolution in the country, we are launching our new branchless banking services to foster financial inclusion of the unbanked population in Pakistan,” Usman Ishaq, executive director (commercial) at Zong said while responding to an email by The Express Tribune.

The project, according to Ishaq, is targeted for the unbanked population of the country, who have no means of availing banking or financial services.

It merits mentioning that only 22% of the country’s population owns a bank account; by contrast, more than 60% Pakistanis have access to mobile phones – the unbanked segment of Pakistan, therefore, provides an opportunity for expansion of branchless banking.

Branchless banking regulation was introduced in Pakistan in April 2008; the central bank has, since then, taken a constructive regulatory approach to encourage investment in this sector – the SBP had issued four branchless banking licences between 2008 and 2011 and the branchless banking just clicked in the country.

Telenor Pakistan, through its subsidiary, Tameer Microfinance Bank launched easypaisa in October 2009 – they processed 23 million transactions amounting to Rs43 billion ($500 million) till the end of July, 2011.

In April 2010, United Bank (UBL) entered sector by launching UBL Omni. It got numerous contracts to disburse payments for public sector organisations and government schemes such as the Benazir Income Support Programme, flood relief programme and the United Nations World Food Programmme.

First MicroFinance Bank and Dubai Islamic Bank Pakistan were among the pilot or small-scale launches – the former had partnered with Post Office in 2008 for loan disbursements.

The fast growing branchless banking sector of the country even got attention from international researchers.

In an October 2011 report – Branchless Banking in Pakistan: A Laboratory for Innovation – Consultative Group to Assist the Poorest (CGAP) mentioned Pakistan as one of the fastest growing markets for branchless banking in the world.

In its report, the CGAP had mentioned Waseela Bank, Askari Bank, Bank Alfalah and MCB Bank as anticipated players to enter the market during next 12 months. While the first two have already got licences, the others are yet to announce their entry in this growing market segment, if they still intend to that is.

Published in The Express Tribune, November 20th, 2012.


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Riaz Haq | 8 years ago | Reply

In a country like Pakistan where only 22% of the population owns bank accounts and more than 62% owns mobile phones, mobile banking is proving to be the fastest way to promote financial inclusion considered by experts to be essential to lift people out of poverty. Benefits include easy access for rural customers to banking services through agents in villages without bank branches, better documentation of the economy, enlarging of the tax-base and efficiency of economic transactions.

Haroon Rashid | 8 years ago | Reply

Mr Usman Ishaq compliment to cater/think of the unbanked Pakistan. Zong/China Mobile is the world's largest mobile company is expected to contribute technology, governance to the unbanked Pakistan with high hopes, and excellent opportunity for China to capitalise the experience, and market access with millions of unbanked will draw most. Pakistans unbanked sector had bad sufferings. Major is the prepaid cards in the telecom sector. Few years back CallMate which was licensed a Long Distance International telecom., operator, listed at the Karachi stock exchange, and a public listed company from SECP cheated billions of rupees in prepaid phone card customers in Pakistan and abroad with the prepaid card and ran away. Naive CallMate brand prepaid card customers were defrauded. The telecom., and financial regulations under law didn't rescue the prepaid buyers. It is hoped with the joint effort of the telecom., regulatory authority, and the SBP this will be a very good morning for people to sleep well with Zong being with the SBP. Secondly the privacy, security of transactions, payments, transfers should be protected. NFC payment is important subject to the security, privacy will be a model for the FBR for tax recovery on micro payments, purchases.

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