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You will not find fancy transaction growth numbers in the SBPs recent branchless banking (BB) newsletter (Oct-Dec 2015). But the BB segment continues to show progress where it perhaps matters the most: m-wallets.
Mobile wallets (or m-wallets) offer the promise to put the BB segment on a sustainable ground. The SBP, specifically, is looking at m-wallets as the key to financial inclusion and an instrument for a shift towards "a cash-lite society". Therefore, growth in both the number of m-wallets and their usage are among the main challenges and goals of the stakeholders. In that backdrop, latest quarterly numbers show promise.
One, the number of m-wallets had increased in the Oct-Dec quarter to 15.32 million, a 16 percent jump over the preceding quarter. Majority of these accounts, about 90 percent, happen to be Level-0 accounts. These accounts can be opened with limited KYC documentation, just requiring a CNIC, thus helping ease low-income people into the mix. The increase owes much to the nearly 54,000 biometric devices installed in the quarter.
Two, while it is no small feat that the BB operators opened more than 10 million new m-wallets in CY15, it is also worth mentioning that didnt cause an increase in account inactivity. During the Jan-Mar quarter, active accounts had slumped to 20 percent of total accounts. But in the Oct-Dec quarter, the "active account" ratio had improved to 41 percent. There is, obviously, room to further increase activity.
Three, in terms of usage, too, the quarter under review showed heart. The newsletter shows that the m-wallet transactions had improved their concentration in the transaction mix. About 34 percent of customer transactions were made via m-wallets in Oct-Dec 2015, up from 31 percent in the previous quarter and 14 percent from the same quarter the previous year. Bulk of the transactions is still being made via over-the-counter (OTC) mode, which remains a popular, convenient and ubiquitous point of entry.
Regardless of amelioration in m-wallet fundamentals, it is good to see the regulator urging the BB service providers to push for more. "There is a dearth of value creation in m-wallets that can stimulate increased usage. This is an area which requires concerted industry focus. By providing seamless options for making digitized transactions via m-wallets, customers may start maintaining deposits in m-wallets and move from cash based towards cash lite transactional experiences," the newsletter team points out.
In the end, there was much to cheer for the segment at the end of CY15, besides the record number of accounts opened. During CY15, some 375 million BB transactions channelled close to Rs2 trillion. The agent network had surged to 3 lac shops by 2015 end, increasing the number of active agents and giving more agents the ability to open BB accounts. The Oct-Dec quarter was the second consecutive quarter with more than 100 million transactions.
While numbers look good overall, service providers must focus on value-addition in their service offering to attract and retain more m-wallet wielding customers. Some service providers are working on that, but an overall push seems lacking. M-wallets need to have a solid value proposition. That can only happen when a host of financial services - in both spending and saving domains - are linked to these accounts.

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