Telenor stresses affordable process of registering mobile accounts

Heavy investment required to equip registration agents is a key hurdle.

KARACHI: The number of mobile accounts still remains relatively low in the country despite great strides that branchless banking has made in recent years.

According to a survey quoted by the central bank in its latest branchless banking newsletter, while 5% Pakistani households have a mobile money user, only 0.3% of households have registered mobile money accounts.

This stark difference shows that branchless banking is still based largely on an over-the-counter (OTC) model – transactions  from one CNIC to another CNIC that do not involve mobile wallet – as opposed to more sophisticated channels that entail greater know-your-customer (KYC) requirements.

Industry officials say that in addition to the need for creating awareness of branchless banking, stakeholders must work jointly to increase the number of mobile accounts while gradually moving away from the OTC business model.



“Other than improving branchless banking products, we need to have more registration agents for mobile accounts. We must find a more affordable process of registration by working with the National Database and Registration Authority (NADRA) and the State Bank of Pakistan (SBP),” said Roar Bjaerum, Vice President of Financial Services at Telenor Pakistan, while speaking to The Express Tribune in a recent interview.

“In many countries, there are less KYC requirements, where you can open (mobile) account with a simple feature phone,” said Bjaerum, who represents the branchless banking arm of Telenor Pakistan that has been operating in the country in partnership with Tameer Microfinance Bank since 2009.

Branchless banking accounts increased 14% to 2.4 million during January-March 2013, the latest quarter for which official data is available. Notably, growth was slower compared with the increase of 20% reported in the preceding quarter.

Quite expectedly, major contribution to the latest quarter’s growth came from the basic mobile wallet accounts – those with low KYC requirements and low transaction limits.

While the total number of agents authorised to facilitate OTC transactions all over the country was 64,761 at the end of March, Bjaerum says the number of agents capable of registering mobile accounts is in the range of 10,000-15,000 across all platforms.

Telenor-affiliated agents number about 28,000 while the number of its agents capable of registering a mobile account is in the range of 3,000-4,000, he says.

“There is a big difference between the number of agents capable of doing the OTC business and those who can register a mobile account. As long as you have that wide difference, people will continue to associate mobile money with the OTC model,” he noted.

The heavy investment that is required to equip an agent to undertake the registration process is one of the many hindrances that the branchless banking industry has been facing of late.

For example, along with one’s CNIC, a mobile account registration agent is required under the law to take pictures of the prospective customer along with a photograph of his or her signature and send it to NADRA for verification. This means every agent authorised to register mobile accounts must have a smartphone with all the required applications – a condition that increases the cost of equipment involved to $100-$150.

“You won’t need an expensive phone if you take away the picture. In that case, it’ll be done with any phone with a smartphone application on it. Your equipment cost will then come down to less than $50,” Bjaerum says.

Quite understandably, branchless banking operators have to think twice before investing in the equipment of mobile account registration agents, given the fact that about 35% of them work for two or more service providers.

Training the registration agents in KYC requirements, helping them with cash management on a daily basis and arranging for them expensive phones cost a substantial amount of money. “But who will have an incentive to invest if the services of such agents are utilised by four other companies at the same time?” Bjaerum asked.

Published in The Express Tribune, October 8^th, 2013.

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