BB segment maintains the growth momentum

Silently but surely, branchless banking (BB) has been making its mark. It would be fair to say that the emerging sector has gradually established its credentials as a convenient alternative to conventional banking, ideally placed to deal a serious KO to the rampant incidence of financial exclusion in the country. The latest numbers on the BB sector, released in the second issue of BB newsletter series by SBP, highlight yet another quarter of double-digit growth. Between October and December 2011, the duopoly of Easypaisa and Omni managed a massive liquidity of Rs79 billion in the system, and showed remarkable QoQ growth of 30 percent in transaction volume and 35 percent in value. The dominant delivery channels have turned out to be the retail agents and mobile accounts. The number of registered BB accounts reached almost one million at December end 2011, though the dormancy incidence is over 40 percent in mobile accounts. Moreover, the number of registered retail agents stood at 22,512, roughly 92 percent of which are presumed to be active. The data reveals that the market is still transactional in nature, as volumes are dominated by utility bill payments and mobile top-ups. However, it was the fund transfers which provided nearly three-fourth of the float on the system during 2DFY12. Person-to-person fund transfers, like domestic remittance, form a major chunk of fund transfer transactions in terms of value. The uptake has improved visibly, as roughly seven million BB transactions are being processed every month, with an average ticket size of Rs 3,885. The agent network has expanded to 86 percent of Pakistans geography, according to the newsletter; however, nearly half of the agent network is concentrated in 10 major urban centres like Karachi, Lahore, Faisalabad, Rawalpindi, Multan and Gujranwala. Over half a billion in deposits were being held in the system as of December 31, 2011. Among the four types of BB accounts (based on transaction limits), the top account, Level three account, provided 81 percent of the deposits, despite being just two percent of total BB accounts. Basic accounts like Level 1 account, contributed just 14 percent to the deposit figure, despite being 92 percent of total BB accounts. With every passing day, it appears that the BB outreach is increasing. According to information provided by Telenor Pakistan, Easypaisa is currently being used by roughly 2.5 million customers every month, and has about 760,000 mobile accounts under its belt. Between its launch in October 2009 and December 2011, Easypaisa has processed 39 million transactions with a value of Rs76 billion. The market is in an early growth phase and the uptake of the BB services may intensify if new players join the duo and offer a complete and competitive suite of financial services. Moreover, a payment ecosystem where the vendors start offering payment solutions like Easypaisa and Omni would be a boon for the sector to achieve critical mass. The trend has already started. According to the SBP newsletter, many interested parties, at various stages of planning and product development, may soon take the plunge. Orascom Telecom, Mobilinks sponsor, is said to commence its operations soon with their subsidiary, Waseela. Moreover, banks like HBL, MCB, Askari Bank and Bank Alfalah are reported to be launching their BB ventures in 2012. One must appreciate the regulatory facilitation, as the SBP has been consistent and keen to see through the evolving sector since its infancy, and seems proactive in its policy dialogue with other sector regulators and the stakeholders.

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Branchless banking transaction (Oct-Dec, 2011)
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                              Volume          Value
                              (Nos.)   Rs (mn)   $ (mn)
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Funds Transfer            7,953,724    56,769    630.54
Deposits & Withdrawals    1,593,117     1,558     17.11
Bill Payments & Top-ups  10,973,564    20,989    232.91
Loan repayments              39,490        87      0.97
Donations                    20,476       0.3     0.003
Others                       16,852         5      0.06
Total                    20,597,223    79,410       882
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Source: SBP Branhcless Banking Newsletter, Issue 2, March 2012