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Mobile banking

Mobile banking seems to have made very good progress in recent years. Speaking at the 6th International Conference on "Mobile Banking in Pakistan" on 14th March, 2013, Governor, SBP stated that developments in branchless banking across the country so far have been marvellous, leaving nobody in doubt about the potential of mobile phone banking to be a game-changer in banking, m-commerce and financial inclusion. Developments in m-banking and m-commerce, according to him, would lead us to connect the unbanked segments of our population to financial services, thus contributing to their empowerment.

It was also revealed that SBP was fully cognisant of the risk factors in such unconventional modes of banking and, as such, proactively monitoring developments and associated risks both at system and entity level to take appropriate corrective measures in a timely manner.

Talking about the specific benefits of mobile banking, Governor said that branchless banking had proved to be an effective instrument in channelising the Government to Persons (G2P) payments, like serving Internally Displaced Persons (IDPs), and those devastated by floods. The Benazir Income Support Programme (BISP) beneficiaries were also being served effectively through the same mechanism and the system could also be utilised by G2P programmes like Salaries Disbursements, Pensions, Watan Cards and Pakistan Cards. Branchless banking models, including Easy Paisa, Omni, Mobile Cash and Time Pey were already fully operational while two others were running live pilots. The number of agent network servicing branchless banking customers had reached 42,000; 194 million transactions worth Rs 813 billion had been made and 2 million wallets had been opened till date.

We fully agree with the observations of the Governor, SBP that branchless banking has a lot of potential, diverse usage and could prove to be a game-changer for a majority of population in the country because financial inclusion and empowerment could change the lives of people in a number of ways. The revelation that basic financial services could now be accessed in the remotest parts of the country through new devices is indeed encouraging. Needless to say that such an access on a mass scale could contribute to higher savings and investment in rural areas, promote employment at local level, reduce income inequalities and slow down the shift of population to urban areas of the country. The biggest benefit could be in social terms as people would tend to concentrate more on economic activities rather than wasting their energies in unnecessary and unproductive pursuits. It was also good to know that branchless banking had gained a critical mass in a short period of time and its future appeared to be very promising.

This could be due to the convenience of the public at large and reduced expenditures by the financial institutions to reach the people and mobilise higher level of deposit resources through m-banking. However, we would advise the SBP to monitor the mobile banking and m-commerce activities more closely, at least in two areas. Firstly, there is higher risk of fraud and forgeries in branchless banking. As such, the SBP, in co-operation with other financial institutions, needs to devise an appropriate mechanism to check such a possibility to the maximum extent possible. Secondly, it would be preferable if a large part of the funds mobilised through m-banking in remote areas of the country is advanced at the local level for balanced growth of the economy and not diverted to urban areas or bridge the fiscal gap of the country. If this is not done, the rural areas or less developed regions of the country could feel more impoverished.

Copyright Business Recorder, 2013


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