Pakistan is witnessing the beginning of a new retail banking revolution whereby a large segment of the population, previously unbanked, has started entering into a new realm of financial services.
Branchless banking in Pakistan witnessed another quarter with impressive growth on all fronts, the most prominent being the remarkable growth in number of Branchless Banking (BB) accounts and transactions.
By the end of December 2011, more than 929,000 customers have been registered as m-wallet users. The volume and value of transactions have increased by 30% and 35% respectively during the quarter. Moreover, 3,110 new agents were added in the ambit of branchless banking to provide branchless banking services, thus expanding the total network to 22,512 agents .
The growth is entirely attributable to two branchless banking models ‗Easypaisa‘ by Tameer MFB and ‗UBL Omni‘ by United Bank Limited.
This early uptake of branchless banking has clearly stimulated the market players. Mobile Banking is the new market segment for both banks and MNOs; and many of them are now preparing to enter into this exciting market in a big way. The year 2012 is expected to see a sizable expansion in the supply side of the market. As competition further unfolds, new dynamics will drive innovative approaches for clients acquisition, effective distribution strategies, price-reduction and quality of service.
Transactions Through Branchless Banking Gaining Momentum
Total number of transactions processed during the quarter was 20.6 million. Bills payment & top-up remained the dominating activity with 53% share in total numbers, followed by fund transfer and deposits with share of 39% and 8% respectively.
However, in value terms fund transfers have dominated with 71% share, followed by bill payments with 26% share. The Person to Person (P2P)‘ payments remained the most popular mechanism with 74% share in the total fund transfer, followed by ‗Account-to-Person (A2P)‘ transfer with share of 21%. ‗Account-to-Account (A2A)‘ transfer is just 4% of total fund transfer.
High usage of agents-assisted payment services even at this infancy stage indicates the strong demand by the clients who traditionally have used informal channels (transporters, relatives, friends etc.) to transfer money. However, high concentration in P2P transactions suggests that a viable value-proposition for mobile account is yet to take place. Presently, this is a core issue which will be further analyzed in the next sections.
Agents – Continue Expanding their Footprint During the quarter, another 3,110 agents joined the fast growing network of branchless banking raising the total number of agents to 22,512 out of which 92% are active.
The agents‗ network now covers the entire length and breadth of the country having foot print in 86% of the total districts. However, the network has a high concentration of 43% in 10 districts. Understandably, better infrastructure and strong Fast Moving Consumer Goods (FMCG) market explain this high concentration; however, new strategies are needed to penetrate into rural and remote areas where the demand for financial services lies most.
A restraining force at the early stage of branchless banking is the nearly total reliance of the two BB models on agents for cash-in and cash-out services. Since the agents have to bring in their own liquidity to offer cash-in/cash-out services to customers, liquidity management poses challenges to agent‘s business case. The paradox is that if banks incentivize agents on cash-in/cash-out transaction, it adversely affects the proposition for clients and vice versa. Moreover, agents development is a critical success factor and it takes more time than just agents’ acquisition.
This is evident from the fact that only 34% of agents have been authorized by their banks/super-agents to open account. This also explains the limitations in the opening of mobile accounts.
Encouragingly, alternative mechanisms also exist to supplement agents‘ network. These mechanisms include ATMs and PoS. which are more convenient and cost effective. The challenge, however, is how to bring in these mechanisms into the mobile-payment ecosystem.
Table 1: No. of BB Accounts and Agents
(as of 31st December 2011) |
|||
|
Active |
Non-Active |
Total |
No. of M-Wallets | 500,453 | 428,731 | 929,184 |
No. of Agents | 20,717 | 1,795 | 22,512 |
S.No. |
District |
No. of Agents |
|
1 | Karachi | 2,725 | |
2 |
Lahore |
1,540 |
|
3 | Faisalabad | 1,055 | |
4 |
Rawalpindi |
766 |
|
5 | Multan | 687 | |
6 |
Gujranwala |
685 |
|
7 | Sargodha | 583 | |
8 |
Toba Tek Singh |
566 |
|
9 | Rahim Yar Khan | 519 | |
10 |
Bahawalpur |
500 |
|
Total | 9,625 | ||
% with total Agents |
43% |
||
Indicators |
Sep-11 |
Dec-11 |
QuarterlyGrowth |
Total No. of BB Agents | 19,402 | 22,512 | 16% |
Total No. of active BB accounts | 357,598 | 500,453 | 40% |
Total BB Deposits as of Date (Rs. in Million ) | 187 | 503 | 169% |
No. of Transactions During the Quarter (No. in million) | 15.87 | 20.60 | 30% |
Value of Transactions During the quarter (Rs. in Million) | 58,710 | 79,410 | 35% |
Average Size of Transaction Rs. | 3,700 | 3,855 | 4% |
Average No. of Transaction Per day | 176,296 | 228,855 | 30% |
During the Quarter Oct. – Dec. 2011 |
|||
Product/Service |
Volume of Transactions (Nos.) |
Value Transacted |
|
Rs. in million |
USD* in million |
||
Fund Transfers | |||
Account-to-Account Fund transfers | 301,492 | 21,592 | 240 |
Person-to-Person Fund Transfers | 5,912,117 | 22,843 | 254 |
Account-to-Person Fund transfers | 1,693,730 | 12,196 | 135 |
Person-to-Account Fund Transfers | 46,385 | 138 | 1.54 |
Deposit | |||
Cash-in (Deposit) | 1,561,348 | 1,458 | 16 |
Cash-out (Withdrawal) | 31,769 | 100 | 1.11 |
Bill Payments & Top-Ups | |||
Utility Bills Payments | 8,855,677 | 10,886 | 121 |
Merchant Payments | 411,942 | 10,021 | 111 |
Mobile Top-ups | 1,705,945 | 82 | 0.91 |
Loan | |||
Loan Disbursement | – | – | – |
Loan Repayment | 39,490 | 87 | 0.97 |
Others | |||
Donations | 20,476 | 0.30 | 0.003 |
Others | 16,852 | 5.24 | 0.06 |
Total |
20,597,223 |
79,410 |
881.74 |
*USD 1 = Rs. 90 (as of 31st December 2011) |
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