UBL, SBI join forces to provide branchless banking for poor

KARACHI – The United Bank Limited (UBL) in collaboration with an international advisory firm on Thursday launched a poor-centric branchless banking model in the country that State Bank Governor Shahid Kardar believes is the future of banking industry in a technologically developing Pakistan.
The joint venture called UBL Omni is conceived as an effort to ramp up the electronic services platform in the country’s impoverished and localities neglected by banks and has been financed by the Bill and Melinda Gates Foundation (BAGF) through the grant of $6.9 million to ShoreBank International (SBI). In this regard, a formal signing ceremony was held jointly by the UBL and SBI at a local hotel on Thursday. Governor State Bank of Pakistan Shahid H Kardar was the Chief Guest.
Kardar told those present that branchless banking was the future of the country’s financial sector and was opening great opportunities for the banks to create fresh inroads by bringing the ‘unbanked’ segment of society into the financial system.
He said the central bank was willing to make regulatory framework for branchless banking more flexible to broaden the scope of the financial services in line with its Financial Inclusion Strategy. He said that the SBP had been in the forefront of a new compact regulatory framework for branchless banking with Pakistan one of the few countries where branchless banking took off as a result of the Branchless Banking Regulations issued by the central bank.
However, Kardar said the central bank was open to ideas and suggestions from the private sector to make this framework more conducive in order to expand the financial outreach in the country. “Branchless banking has a huge potential to reach the neglected segment of the population,” he said adding the branchless banking certainly would help people to take advantage of banking facilities at affordable cost.
He went on to say that the country’s financial sector was experiencing a dynamic transition led by proliferating branchless banking solutions and this was only viable solution for the financial inclusion. The SBP chief was of the view that it would be implausible to presume physical establishment of branches as the only way forward in providing financial services to the poor.
He claimed that the existing network of 13,000 branchless banking outlets had already surpassed the total branch network of around 10,000 bank branches in less than two years. Kardar pointed out that the cost of setting up of a conventional banking branch was 76 times higher than using third party agents to bring the poor into the banking networks while usage of mobile phones cuts costs further. He stressed upon commercial banks to focus and devise new branchless banking products as it would not only help them improve their market share but also serve a larger portion of the population living in rural and far-flung areas.
Under the Omni programme, UBL aims to develop an institutional capacity reach over two million clients in the next couple of years. Speaking on the occasion, UBL President Atif R Bokhari said with SBI’s technical assistance and the strength of UBL Omni, his organisation was aiming to support the financial inclusion agenda of the State Bank by facilitating the conversion of large number of non-account holders into regular account holders and to incorporate them within the fold of the documented economy. “UBL continues the tradition of being at the forefront of innovative payment services across the board, nationwide,” the UBL chief added.
In her address, SBI President and CEO Laurie J Spengler said SBI was delighted to be the implementing partner of the project of national importance for Pakistan. She said UBL Omni had the potential of becoming an affordable payment system for millions of financially excluded people of the country. She stressed that Pakistan’s advent in the field of branchless banking was still nascent, but international experience has demonstrated that UBL Omni could become an important and highly replicable endeavor. BAGF Official Jason Lamb told the gathering that access to banking for the poor was a challenge in Pakistan due to the high costs and inconvenience felt by potential users. “Delivering financial services through branchless banking can help the Pakistani people take better advantage of their earnings and build financial security,” the BAGF representative added. The branchless banking regulations were issued by the central bank in 2008 to foster financial inclusion in the country. In turn, in early 2010 the UBL initiated the first branchless banking product in Pakistan aiming to develop a nationwide network of agents and a mobile payment platform to extend financial services to low-income individuals.