State Bank of Pakistan, in its Branch-less Banking newsletter, recently assessed the important variables needed to understand the growth of the Branch-less Banking sector in the 3rd quarter from Jul-Sept 2013. Branch-less Banking accounts increased by 12% largely from low-level transactions, it was observed.
‘Half the world is unbanked’ – research conducted by Financial Access Initiative 5 years ago splattered the truth about the world’s money, and its supply, in those very words. If it is hard to track down how the money is changing hands inside the economy, how then, can one know the magnanimity of the same? It was with this idea that informal banking channels – those that no longer require the inclusion of a branch are imbibed into the economic system; thus, encouraging the flow of economic activity, thereby, leading to a creation of jobs, and, in so doing, enabling the tracking down of the economy a whole lot easier.
Ever since the research came out, different financial initiatives have been employed, globally, to include the entire populace. As mentioned by Irfan Wahab, CIO of Telenor, pioneer in this field with its Easypaisa initiative, in an interview with IDG in Pakistan, shared how only 15% of the populace has access to the formal banking channels. It was with this knowledge that the company embarked upon a venture into the direction of Branchless Banking.
According to a recent issue published of State Bank Pakistan’s Branchless Banking Newsletter, the medium has grown by 16% in the 3rd quarter of 2013. This escalation owes itself to the contribution made by the new players of this industry viz Zong with Time Pey; Warid in partnerships with Bank Alfalah and HBL; Ufone with UPaisa – not to exclude Telenor from the equation: the pioneer of Branchless Banking.
The growth of the third quarter 2013 is reflected in the high volume of low-level transactions averaging about Rs.4,315 from the ‘unbanked’ population in paying domestic remittances, social welfare payments such as Benazir Income Support Programme (BISP), Watan Card etc., pension payments, and utility bill payments.
Growth has soared high in this area of banking, and this can be seen reflected in the rise in the number of agents. The different transactions running down this sector of the economy include: over the counter (OTC) and m-wallet transactions. OTC transactions – as was seen – were as many as 41.87 million, valued at Rs.116.8 billion. This is about a 12% leap in volume from the previous quarter, and 24% increase in value, of the same. Juxtaposed to this, there was a mild, albeit, important jump of about 2% in the share of m-wallets.
By the end of 2013, the World Bank in a workshop with SBP testified to the best practices initiated by State Bank with regards Branchless Banking. It applauded its efforts in maint
maintaining a liaison with the country’s financial core objectives – those being – financial stability, financial integrity and consumer protection.
This would help quantify the transactions taking place in the economy, especially those that go hidden – crucial to anybody in understanding the overall health of the economy.