Branchless banking making inroads

With phenomenal development in telecommunication infrastructure, growth in branchless banking channels has become inevitable.
Realizing the fact that a large portion of the rural population of the country is unbanked, Telenors easypaisa and UBL Omni have been making great strides in facilitating basic banking services through mobile phones and their network of retail agents.
A more important contribution that has unfolded recently is the role of branchless banking as an important channel in facilitating relief efforts, from collecting donations to the distribution of funds.
"The presence of two branchless banking services in Pakistan (EasyPaisa and UBL Omni) may play an important part in the response to the flood in Pakistan," said Chris Bold, a Microfinance Specialist at CGAP, in a recent article Pakistan floods -branchless banking responds.
Significance of branchless banking can be gauged from the fact that the UBL will use its Omni branchless banking network to distribute Rs100,000 each to the 2 million flood-affected families on behalf of the government.
A project of this kind is not new to UBL as it previously distributed cash aid to 400,000 internally displaced families of Malakand and Swat Divisions last year using its branchless banking channel.
Besides, local players can also take cue from the mobile phone-based food voucher pilot project launched in Syria by the World Food Programme to help Iraqi refugee families using mobile phones.
Aid distribution mechanisms of such kind ensure greater transparency, fair distribution, time flexibility, safety as well as speed since aid recipients no longer need to queue outside ration distribution centres.
Similarly, evaluation of Kerio Valley Cash Transfer Pilot Project, which was initiated in Kenya after the post-election violence in 2008, suggests that cash transfer through mobile phones is preferred over food distributions.
A new wave of expansion in branchless banking is expected down the road; once this distribution system expands, more and more banking services can be channeled to far-flung areas at minimal operational cost.