The SMS-based Secure Mobile Payments Initiative, launched by the PTA and AKN Messaging Technologies in August, seeks to create a secure platform over which banks and telecoms can collaborate to provide m-banking services through SMS technology.
With such SMS payment initiatives being undertaken, and co-operation between telecoms and banks to integrate efforts for providing finance facilities over the cellular network, m-banking is being touted as the potential solution for microfinance.
Bank penetration in Pakistan is very low and only a fraction of the population holds banks accounts. Calls for putting a stop to informal money lending and increasing microfinance and savings in the rural areas have been sounding over the decades but have gotten more prominent after endeavours such as Tameer Bank and other programs have cropped up. While m-banking may add to the convenience of the urban, bank account holding population, it is more often seen in the light of poverty alleviation in a country such as Pakistan.
M-banking holds a good track record in easing financing problems. Its most documented case study is in African countries, where m-banking services are limited not only to viewing accounts and mini statements but also provide facilities for transfers, bill payments, top-ups and even m-commerce.
The First National Bank in South Africa and M-Pesa in Kenya have both reportedly had significant success with the rural population. A number of characteristics are similar between Africas market and Pakistans: relatively high teledensity, majority of population in rural areas, low bank penetration and dominant existence of informal money lending, to name a few.
However, one thing to keep in mind has been that not all models of m-banking have had overall success; what has worked well in Kenya has shown drastically less success in Tanzania, indicating that great attention must be paid to all demographics and industry trends.
In Pakistan, the government and the SBP have both shown interest in employing branchless banking as an avenue for microfinance. The think tank Consultative Group to Assist the Poor (CGAP) ran a pilot project in Pakistan to test the waters of m-banking in Pakistan.
According to their research, both the government and necessary private sector players, telecoms and banks, are adequately interested in the concept of m-banking in order for it to be successful. Although m-banking initiatives have been launched on and off since 2007, now that the banking giant MCB has launched its branchless banking services, this area may be gaining momentum.
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