Another quarter, another round of growth for mobile wallets. As per the central bank’s latest publication on the Branchless Banking (BB) segment for the Jul-Sep quarter, the number of m-wallets had increased roughly ten percent over previous quarter to reach 43.1 million accounts as of September-end 2018. At this pace, the BB segment may have crossed the milestone of 50 million accounts by now (March 2019).
The Jul-Sep quarter continued the impressive dominance of m-wallets vis-à-vis over-the-counter (OTC) transactions. Overall, customers performed 221 million BB transactions worth Rs616 billion in the quarter. Out of that, m-wallets accounted for 73 percent of volume and 62 percent of value. That is up from September 2017 when m-wallets had 66 percent share in volume and 55 percent share in value.
Beyond those feel-good numbers, however, lies the disappointment of too many inactive accounts in the BB system, despite slight improvement in recent quarters. Only 52 percent of the 43 million+ m-wallets could be called “active” in the Jul-Sep quarter. (The SBP defines an “active” account as one that has either been opened in the past 180 days or performed at least one transaction in the past 180 days).
Even that lax definition has led to just over half of all m-wallets classified as active.
There are perhaps reporting issues as well. In the quarter under review, the “number of active accounts” increased by less than one million, against “number of total accounts” increasing by nearly four million. What explains this peculiar situation where the growth in active accounts is numerically lower than growth in overall accounts? This indicates a far greater level of inactivity in the accounts that were opened in earlier quarters.
What this situation actually means is that millions of users, who were signed up with or without their knowledge, are slipping out of the BB system, after using the platform nominally, or not used at all. The SBP needs to check what is going on with the numbers here.
Are the targets under NFIS leading to a race for numbers such that operators are focusing more on signing up new users and less on why the already-signed-up folks are leaving the platform?
The SBP needs to revise the inactivity-threshold from 180 days to a more reasonable duration of 90 days. The latter makes more sense for digital financial services which people can easily and quickly opt in or opt out from. Only after revising the inactivity-threshold to a reasonable level can we find out for sure what the real scale of mobile wallets is from a “usage” perspective.
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