The central bank is weighing various options for preparing a five-year strategic roadmap to modernize and expand payment systems in the country where branchless banking is fast growing.
“A proposal is under consideration at SBP for the preparation of Payment Systems Strategic Road Map for the next Five Years,” Governor State Bank of Pakistan (SBP) Yaseen Anwar Wednesday told a workshop in his opening remarks.
The “Future of Branchless Banking, Payment Systems and Financial Inclusion” was jointly organized by the SBP, Pakistan Telecommunication Authority (PTA) and Consultative Group to Assist the Poor (CGAP) of the World Bank here at a local hotel.
Stressing the urgent need for modernizing and expanding the payment system infrastructure segments, Anwar urged the banks and mobile network operators (MNOs) to promote branchless banking for the benefit of the country’s unbanked and underserved people.
“If the banks and mobile network operators want to succeed, they have to assign a strategic priority to branchless banking,” the SBP Governor said.
He said the boards and chief executives of banks and MNOs must have ownership of branchless banking which would help to bring commitment, attention, and support from every level of the organizations to this innovative, exciting and challenging service.
Anwar said SBP had taken several policy and developmental initiatives to promote financial inclusion in the country. “Today, our regulatory environment for microfinance and branchless banking is considered one of the best globally,” he said.
“As a result of SBP regulations on branchless banking, we have seen emergence of four mobile banking deployments which are not only advancing new frontiers for financial inclusion but also pushing the expansion in the payment ecosystem of the country,” said Anwar.
These providers, he said, were investing heavily in hiring, training and branding their agents, thus contributing to the development of a new layer of distribution network for serving largely unbanked market.
The SBP Governor said mobile phone subscribers were almost 120 million, while the bank accounts stand at 32 million whereas the number of borrowers was only 5.7 million. This, he said, indicated that there exists a large “financially-excluded” market.
“Bringing this un-served market into the formal financial system is our key objective as we believe that this would enrich the socio-economic development of our country,” he said.
He pointed out that the brick and mortar retail network of the entire financial industry of Pakistan stood at around 11,000 outlets after 65 years while the branchless banking retail agents’ network had grown beyond 32,000 agents in a short span of three years.
With almost 1.8 million mobile banking accounts, the branchless banking customers conducted almost 32 million transactions worth Rs 140 billion during the quarter ending September 2012, he said, adding the average size of each transaction is Rs 4,065 which shows that technology was helping ‘financial access’ of the unbanked population of the country.
Anwar said 90% of total bank branches were currently processing real time online banking services across the country. “One million internet banking users, 1.8 million mobile phone banking users, and more than 10 million call center users are enjoying virtual banking,” said the governor.
He emphasized upon the mobile network operators to come up with creative marketing strategies and financial literacy schemes that provide basic learning and educative experience to their customers.
The SBP Governor observed that a robust payment infrastructure is critical for the long-term development of mobile phone banking. “Banks and MNOs have to develop partnerships to expand the agent network, leverage communication bearer channels, develop client acquisition strategies, and build a robust risk management framework,” he said.
Anwar said the last five years’ average shows that 36% of the transactions were routed through electronic channels depicting a 23% average yearly growth as compared to 2% average growth in paper based transactions.
Although, these statistics show an increasing trend, which is still insignificant for a country of 180 million inhabitants with a high currency in circulation of Rs 1.9 trillion, he said, adding that this high currency in circulation is due to the fact that majority of our population is disconnected from the banking system, and is heavily reliant on cash-based transactions.
