Pakistan is a country with a very low percentage of people having access to basic financial services. We are undoubtedly a cash led economy. One of the key objectives of SBP is to work towards financial inclusion of masses and consequently to improve the lifestyle of those who are still outside the realm of financial services.
SBP has defined guidelines for both mobile and branchless banking that are proving instrumental in steering the banks and other stakeholders (customers, financial institutions, telcos, and banking / telecom regulators) in the desired direction. SBP has also advised the banking industry, mobile phone industry and their regulators to remove barriers and develop workable systems, so that the huge unbanked population of the country (in which mobile phone use is spreading rapidly) can benefit.
On average, the cost for carrying out transactions with mobile banking or other forms of branchless banking is 19% cheaper than charges of conventional banks; however the gap can further widen if branchless banks tend to lower their profits. IT systems and increasing acceptance of alternative modes of banking transactions and the country's payment systems infrastructure has revealed a growing trend in recent years.
In Electronic Banking, the number of ATMs in the country has reached 4,750. Of the 10,500 branches nation-wide, nearly 7,000 bank branches today are offering real-time online banking. The number of plastic cards (ie ATM, Debit & Credit Cards) has now reached 13 million in circulation. It has taken over 60 years for the banking industry to get approximately 30 million bank accounts. It took Telcos less than 10 years to reach 90 million customers. Bringing the next 30 million people into the formal economy by opening a bank account can now easily be achieved in the next 5 years.
Currently there is fierce competition between telcos and banks; all are trying to maximise their share of the said opportunity. Resultantly, a number of mobile banking solutions have emerged. All such solutions are unique. Some have been launched by the banks and some by the telcos. Some are an extension of the online internet banking services and some are standalone mobile banking platforms.
In order for an industry to grow at a significant rate, it is essential that the below conditions are met:
1. Attractive market conditions
2. Strong regulatory frameworks
3.Colaboration of Banks & Telcos
4. Market awareness
The actual need of today is a realisation by both banks and telcos that giving a mobile phone banking abilities is only possible if banks and telcos work together. The true spirit of partnership between these two cross-industry players is essential to commercialise the mobile payments revolution. After all, both banks and telcos have their own strengths that need to be coupled to create an acceptance of this concept at a mass scale or else the growth of this industry is not going to be as dramatic as anticipated.
Jawad Qureshi has an overall experience of 12+ years in designing and selling various software & infrastructure solutions. Currently, Jawad heads Avanza Solutions' corporate sales in Pakistan, Afghanistan, Africa, and Bangladesh.
URL: www.avanzasolutions.com
Twitter: AvanzaSolutions
As published in Techronicle, October 2011
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