The more the merrier seems to be the mantra in branchless banking. The entry of new players is revving up the sectors momentum. According to the latest SBP newsletter, BB transactions had grown 16 percent in volume and 13 percent in value during the Jan-Mar quarter.
Thanks to the rollout of new service providers (Mobicash and TimePey); the BB agent network had grown 56 percent to reach 64,716 by March end. That helped increase average transaction per day to 457,000 in 3QFY13, from 392,433 in 2QFY13.
Encouragingly, the share of customer transactions is improving in an agent-dominated system. During Jan-Mar quarter, the BB sector channeled 41.1 million transactions worth Rs171 billion. Out of that, customers performed nearly 40 million transactions summing up to Rs98.2 billion. Due to double-digit growth, the average size of the transaction also improved to Rs4150 during the quarter.
However, the over-the-counter transactions continue to dominate the transaction mix, as shown in the illustration, due to the high number of domestic remittance transfers following that mode. However, the mobile wallets-which are, indisputably, future drivers of mobile financial services-have also shown promising growth of 14 percent during the quarter, reaching 2.4 million by March end.
That the growth in m-wallets is coming primarily from Level Zero BB accounts-accounts which have limited KYC requirements and low transaction limits- could be an indication that the service is permeating through to the lower income groups. Level Zero accounts grew by 33 percent in the quarter, closing at 1.28 million on March 31.
But, there are two serious issues in the current m-wallets usage.
First, fund transfers originating from m-wallets are very low: just two percent of value and one percent of volume of total customers transactions. Clearly, the number of individuals, who are comfortable with mobile money means, needs to be increased. Secondly, the number of inactive accounts has continued to increase in recent quarters, with 55 percent inactive accounts reported by the SBP in Jan-Mar 2013.
As more players join in-currently five pilots are underway-the BB sector is expected to remain on the path of accelerated growth. OTC transactions will drive this growth, but the BB service providers need to enhance m-wallet usage in order to best leverage the platform. That can be done through financial products that are offered in an ecosystem that gives users incentives to not only save on their mobile phones, but also spend their mobile money on shopping and making purchases.
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