AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

Pakistan’s branchless banking (BB) landscape seems to be expanding by the day. Latest SBP newsletter on this converged telco-banking segment, which only started out commercially in 2009, suggests continued momentum in the latest period data from the Apr-Jun quarter this year. There are three specific highlights from the document that are worth mentioning here.
First, the BB transaction value had reached Rs326 billion in Apr-Jun, a solid growth of 17 percent over preceding quarter. That wraps up FY14 with Rs1,063 billion – nearly $11 billion per annum – of liquidity flowing through the system. Quarterly transactions seemed to flat-line at 71 million, but that was helpful in increasing average transaction size by about 13 percent to Rs4,581 for the quarter.
Second, BB deposits underwent a solid 27 percent quarterly growth to settle at Rs6.2 billion in the quarter. That perhaps marks growing trust in the system. Granted, agents hold the bulk of such deposits for their liquidity management, but this impressive growth signals an anticipation of business growth.
Third but perhaps the most important data feature was the robust 11 percent quarterly growth seen in BB accounts, or mobile wallets. These accounts had reached 4.23 million as of June end. It seems that even the new BB providers are now convinced that m-wallets hold the future for profitable business continuity.
But this growth needs to be kept in the proper context. Sector infrastructure has been expanding in a circle, it seems, and not outwards. More than 140,000 active BB agents were performing BB transactions as of June end. But due to one-agent-multiple-provider phenomenon that is seen in most of the BB franchise space, unique agents are expected to be much lower than this. Providers need to extend their footprint beyond lucrative corridors such as Karachi, Lahore and Multan into more second- and third-tier cities and towns.
Then a singular focus on m-wallet registrations, which was previously lacking, will not be enough. It should be complemented with incentives for users to put money in their wallets for saving and/or spending purposes. Otherwise, inactive accounts’ ratio will only grow. In the Apr-Jun quarter, m-wallet transactions held a 14 percent share in transaction volume but only 8 percent share in value – that’s a serious mismatch.
To address that, incentives for m-wallet could include offering attractive saving rates, bringing in m-shopping platforms, and levying very low or zero transaction charges. A few players are encouragingly moving in that direction but more must do so.
It needs to be pointed out that BB agents’ own bulky transactions cast a long shadow in the system, so the transaction mix is not entirely customer-driven. For instance, BB agents’ in-house transactions were 4 percent of total volume but a whopping 42 percent of the value (about Rs138 billion) in Apr-Jun. Their share in deposits is also outsized.
Over-the-counter transactions – which is the mainstay of BB volumes with 80 percent share through transactions like fund transfer, bill payments, mobile top-ups, social transfer receipts – had only 50 percent value share. That’s a more realistic picture of the segment, besides the m-wallet snapshot.
However, the agents’ big halo may not remain a big worry for long. Right now, the BB segment is in its growth phase and new players are banking heavily on higher OTC volumes to generate business through agents. As the agent footprint expands and BB providers start differentiating from plain-vanilla fund transfers, more customers could be served more financial products in more areas. Besides, the providers are also keen to reduce their reliance on agent-based model through increased activity on m-wallets.

Comments

Comments are closed.