If it is all about the numbers, well, the numbers look great. Mobile wallets, as per the latest statistics on the branchless banking (BB) sector issued by the State Bank of Pakistan (SBP), had reached 37.3 million as of December-end 2017. That’s almost double the level seen in December 2016 (see illustration). This is good news, for m-wallets can serve as a convenient entry-point into the formal financial systems for the tens of millions of un-banked individuals in the country.
But as numbers go, they hide something inconvenient here. Out of the 37 million+ accounts, there were 18 million m-wallets that were classified as “inactive” – over 48 percent of the total accounts. The SBP defines inactive accounts as those which are opened in the last 180 days or have performed at least one transaction in the previous 180 days. One wonders how much will be left of the “active accounts” if the time period is restricted to a more realistic 90 days.
Still, it is a positive development that active accounts had reached 19.3 million as of December 2017, up from 9.8 million a year ago. In another positive development, active accounts are helping drive a trend that was first seen in the Jul-Sep 2017 BB numbers. M-wallets are giving the over-the-counter (OTC) transactions a serious run for their money.
During the Oct-Dec 2017 quarter, customer-oriented BB transactions totaled 170 million in volume and Rs493 billion in value, as per the SBP newsletter. Out of that pie, m-wallets had a 71 percent share in transaction volume and 65 percent share in value – driven by solid growth in wallet-based funds transfer, mobile top-ups, utility bill payments and pension payments.
Thankfully, OTC transactions taking a back seat is not hurting growth in BB volumes. During Oct-Dec 2017 period, customers’ BB transactions had grown 33 percent by volume and 32 percent by value, over same period the previous year. This is despite decline in OTC transactions in volume and value terms by almost a quarter of what the respective numbers were during Oct-Dec 2016. That’s because the m-wallets have doubled their transaction volume and value in the period under review.
It doesn’t look like OTC will bounce back. Much of its decline is due to the regulatory requirement since July 2017 where an individual has to undergo biometric verification system (BVS) screening before transferring funds. As of December 2017, less than a third of the 400,000+ agent location had BVS machines with them. The need is to improve BVS concentration in the agent network, for it will help improve penetration of mobile accounts as well.
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