Into its fifth year, branchless banking (BB) continues to register impressive growth in terms of both sector infrastructure and activity volumes. Meanwhile, the State Banks reporting on the BB sectors performance has entered its sixth quarter, and the latest BB Newsletter (Issue 6) for the period October to December, 2012 also shows many improvements and modifications in data reporting.
Currently, five BB service providers are operating in the sector. Easypaisa and Omni are the well-established ones; Mobicash and TimePey entered into the market late last year; and HBL recently launched its BB services. Five pilots are currently under way, which are expected to go live soon.
During the quarter ended December 2012, SBP report shows a healthy 36 percent quarterly growth in agent network, which reached 41,567 agent locations. This growth is attributed to the commercial launch of Mobicash and TimePey during the quarter. However, that factor also explains why the ratio of active agents shed 174 basis points over previous quarter to stand at 78.9 percent in 4QCY12.
Perhaps, the rapid growth in the BB sector owes itself to the fact that its agent network is dominated by grocery stores and retailers - 65 percent as of December end - followed by mobile shops at 23 percent. This agent mix ensures that BB services are available throughout the day, at locations that are at walking distance from peoples doorsteps.
Encouragingly, the number of BB accounts had reached 2.1 million by December end, which represents a quarterly growth of nearly 20 percent. This growth is fuelled primarily by the 50 percent growth in the Level 0 BB accounts. These accounts are the most basic, simple accounts with low KYC requirements and small transaction limits. Lately, the service providers have started focusing on these accounts.
The sectors deposit base touched the billion rupee mark during the quarter. During 4QCY12, deposits grew by 35 percent to reach Rs1.05 billion as of December end. However, bulk of these deposits are said to be agents own funds for their liquidity management. The deposits from customers may increase when they get good savings rates as well as spending options on mobile accounts.
Easypaisa has taken the lead here by launching its own savings product, effects of which will be visible in the data for CY13. Called "Khushaal Munafa", the product offers Easypaisa mobile account customers a profit of up to nine percent on saving Rs 2,000 or more. Profit will be calculated on a daily basis and transferred to the mobile accounts at the end of each month.
The SBP newsletter highlights yet another quarter of decent growth in both BB transaction volumes and value. Some 35.3 million transactions originated from the BB sector during the period under review, which were worth Rs151.1 billion. That represents quarterly growth of 11 percent and seven percent, respectively.
Increasing volumes led to an increase in the average number of transaction per day, which stood at 392,378 in 4QCY12. Expectedly, on the volume side, bill payments and mobile top-ups constituted 45 percent of transactions, followed by personal funds transfer (34 percent). Bulky, but low-volume agents transfer payments dominate the value pie (42 percent), followed by personal funds transfers (33 percent).
As new pilots come online, the scope and scale of the BB services is expected to expand further. The SBP is expected to continue playing its enabling role to facilitate the service providers in the future. However, as the market expands, the goal of financial inclusion should not be lost sight of, so that more and more people who are currently out of the banking system can be financially mainstreamed.