Branchless Banking (BB) transactions fell by some 3 percent to Rs 726 billion in the July-Sep 2017 quarter, mainly due to decline in over the counter (OTC) transactions. The State Bank of Pakistan (SBP) has made it mandatory for the banks to conduct person-to-person transactions (also called CNIC to CNIC) only through the Biometric Verification System (BVS) devices starting July 2017. Since, the installation of BVS devices is still underway at a number of agent locations, this led to a decline in OTC transactions.
According to SBP's Quarterly Branchless Banking Report, issued on Tuesday, SBP's policy change has exhibited a downfall in overall BB transactions which declined 1.48 percent and 2.69 percent in volume and value respectively during the July-Sep 2017 compared to preceding quarter. A total number of 164.7 million transactions worth Rs 726.4 billion were conducted during the Jul-Sep 2017 quarter as against 167.173 million worth Rs 746.569 billion transactions in April-June 2017.
On the other hand, this also resulted in an increased share of m-wallet transactions in overall customer oriented transactions, which jumped to 66 percent, ie, the highest percentage ever, confirming the fact that m-wallet channel is slowly and steadily gaining momentum vis-à-vis' Over the Counter channel. The m-wallet channel has been grabbing the share of OTC slowly and gradually over the past years. The mobile-wallets transactions, in terms of volume and value remained 104.8 million and Rs 246.4 billion, contributing a share 65.7 percent and 55.4 percent respectively.
The Jul-Sep 2017 quarter witnessed the highest quarterly increase in BB accounts of 5.7 million, exhibiting 21 percent growth. The aggregate number of BB accounts surged to 33 million at the quarter end. The rise in BB accounts is exhibiting a steeper trend since Jun-16 onwards, due to the enabling environment created by the SBP and vibrant role of BB players to facilitate account opening through biometric devices at agent locations as well as the remote mode. The cost reduction in customer verification from NADRA has also provided enough synergy to encourage the banks to attract the customers towards the branchless banking channel.
However, the active accounts remained 47 percent of the total BB accounts. The significant rise in BB accounts on one hand, and limited share of active accounts on the other, exhibits the fact that the BB platform is attracting more and more masses, however still needs to provide value-added service for generation of activity in accounts. Its high time for the industry to offer innovative and tailor-made products for different segments of the society to generate activity in accounts as well as transform.
The agent network grew by 17,397 in number during the quarter under review, bringing the aggregate number of shared agents to 420,107, out of which 181,377 were active agents. The break-up of transactions, showing that the Customer Oriented transactions contributed 97 percent and 63 percent in volume and value of BB transactions respectively, whereas the remaining were agent transactions for liquidity purpose.
The report revealed that a total of Rs 30.6 billion was disbursed on account of social welfare payments through the BB channel during the quarter. These social welfare programs include Benazir Income Support Program (BISP), World Food Program, Internally Displaced Person (IDP) payments, EOBI pensioners and others. Gender wise BB Accounts represent 22 percent female accounts and 78 percent male accounts.
The total number of female accounts at the end of Jul-Sep 2017 remained 7.39 million out of the total 33 million BB accounts, which represents 29 percent growth from the preceding quarter. Sindh encompasses the highest share of females in BB accounts (25 percent), followed by Punjab (23 percent) and Azad Kashmir (21 percent).
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