Despite challenging economic circumstances, the country’s branchless banking (BB) sector managed to achieve an impressive growth in transactions during 2022. As per calculations based on the latest data from the State Bank of Pakistan (SBP), the BB transaction volumes increased 22 percent year-on-year to reach 3.04 billion. Transaction value reached Rs12.6 trillion, reflecting 40 percent year-on-year growth. Average BB customer transaction jumped 20 percent year-on-year to nearly Rs 3,300 in value.
Even after accounting for inflation, the growth in transaction value is significantly real-positive during CY22, indicating that the BB sector deepened its presence in the country’s financial system. However, the fact that the number of ‘active’ BB users fell 5 percent year-on-year to settle at 42.5 million at December-end 2022 also shows that the service providers struggled to broaden access. It is one thing to bring customers to a platform, but quite another to ensure that they continue to use the platform for a long time.
It’s not that new users are not being signed up in growing numbers. By December-end 2022, there was a strong 23 percent yearly growth in the total number of accounts to 97 million. However, the share of ‘active’ accounts – previous regulatory definition of ‘active’ accounts was those which either opened in past 180 days or performed at least one transaction in past 180 days – stood at 44 percent in CY22, sharply lower than 57 percent in CY21. Clearly, service providers are struggling to keep users interested.
Despite that, transaction growth momentum may continue, as evident from numbers in the most-recent quarter, Oct-Dec 2022. As per SBP data, 4QCY22 transaction volumes expanded by 31 percent year-on-year to 875 million, whereas the transaction value surged 42 percent year-on-year to Rs3.66 trillion. Both the delivery channels of m-wallets and over-the-counter (OTC) transactions saw strong double-digit growth in that quarter, with customer transaction values of Rs2.73 trillion and Rs295 billion, respectively.
Going forward, at some point there has to be negative impact of hyper-inflation and rising unemployment on BB transaction growth. Some of that impact is likely to be offset by increase in social welfare payments by the government and the growing use of BB channel for disbursement of those benefit transfers. Digital social disbursements are helping to increase the share of females in BB accounts, especially in regions of Khyber Pakhtunkhwa, Sindh and Punjab. Let’s wait and see what 2023 has in store for the BB sector!
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