Branchless banking: SBP governor urges stakeholders to mitigate inherent risks

State Bank of Pakistan (SBP) Governor Yaseen Anwar on Thursday urged the stakeholders of branchless banking to ensure appropriate measures to mitigate inherent risks such as access by unauthorised persons/criminals such as hackers, money launderers and terror financiers.
He was speaking at the 6th International Conference on "Mobile Commerce" at a local hotel here. "This can only be achieved when our technologies are robust and secured, and agents are comprehensively trained and effectively monitored by the banks, he added. The central policy objectives of SBP are to ensure safety, soundness and efficiency of the banking system, and to protect the interest of consumers, he said, adding that since branchless banking is becoming a vital component of the national payment grid, some risks are associated with branchless banking. Therefore, it is prudent for all stakeholders to ensure that appropriate measures are in place to mitigate inherent risks.
In this regard, the importance of a comprehensive agent development framework cannot be ignored, SBP governor said and added that "I am sure that our banks would not simply jump on the bandwagon without sufficient agent development mechanisms including their hiring, on-going training and monitoring."
The SBP seeks to encourage the introduction of innovative instruments for payments, it also needs to ensure that high levels of standards are maintained for safety, security and protection of consumers' interests, he said. He said SBP is working closely with key stakeholders of the mobile and branchless banking industry and already has constituted a national consultative group and its various working groups to develop a common understanding on the challenges and develop a proposal for policy actions.
"The SBP will continue its engagement with the stakeholders to identify and undertake all necessary measures for developing an eco-system that would not only support mobile banking but would also contribute to the wider economy," he added. Governor SBP said developments in branchless banking across the country have been so far marvellous, leaving nobody in doubt about the potential of mobile phone banking to be a game-changer in banking, m-commerce and financial inclusion.
He said developments in m-banking and m-commerce will lead us to connect the unbanked segment of our population to financial services, thus contributing to their empowerment. "Being fully cognisant of the risk factors involved in such unconventional modes of banking, SBP has been proactively monitoring developments and associated risks both at system and entity level in order to take appropriate corrective measures in a timely manner," he added.
He said the number of agent network servicing branchless banking customers has reached 42,000, therefore, the basic financial services can now be accessed in the remotest parts of the country through any of these agents. Numbers of branchless banking transactions are improving significantly and 194 million transactions worth Rs 813 billion and more than 2 million m-wallets have been opened till date, he added.
The infrastructure of payment systems and branch network is also showing an increasing growth trend, he said, adding that the ATMs network has increased to 6,232 whereas branch network has reached 11,600 while 94 percent of our branches are now real time on-line, he said.
'Similarly, the number of plastic cards has increased to 20 million and the number of POS machines has increased to 34,000 units. This is a significant achievement, and this also demonstrates the opportunity to bring the benefits of this infrastructure to millions of the unbanked population," he added. The SBP Governor said branchless banking has also proved to be an effective instrument in channelising the Government to Persons (G2P) payments in trying times like serving Internally Displaced Persons (IDPs), and devastating floods for the last two years.
The Benazir Income Support Programme (BISP) beneficiaries are also being served effectively through the same mechanism, he said, adding that in the coming days, this channel is expected to continue playing an important role towards the promotion of financial inclusion and the management of G2P Programmes such as salaries disbursements, pensions, BISP, Watan Cards, Pakistan Cards and tax collections services, etc. The existing branchless banking deployments can cater to the needs of over 10 million potential beneficiaries of G2P payments in Pakistan, he added.
While acknowledging that branchless banking has gained critical mass in a short period of time, the SBP Governor was of the view that the market has to start shifting transactions from first generational services (person-to-person/bills payments) to second generational services (account-to-account and interbank transfer).
'The players need to expand their product portfolio by offering new products and services for their target market. In my view, this is part of an inevitable evolution which will ensure the long-term sustainable development of the sector, encourage micro savings and help in meeting the demands for inclusive financial services of the target market," he added.
The SBP Governor said four branchless banking models - Easy Paisa, Omni, Mobile Cash and Time Pey - are fully operational while two are running live pilots. He said branchless banking current growth trajectory is expected to get further steeper in years ahead.
He said this mobile conference will help us understand various issues relating to growth of mobile banking systems and products, and m-commerce. "As this conference is meant to create awareness on mobile commerce, we understand that developments in m-banking and m-commerce will lead us to connect the unbanked segment of our population to financial services, thus contributing to their empowerment," he said.