A pivotal moment happened earlier this year. And it took place in the branchless banking (BB) segment. As per the latest BB newsletter released by the State Bank of Pakistan, during the Jan-Mar quarter, more BB transactions were performed over mobile phones, than over-the-counter (OTC) transactions at agent kiosks. This is important because m-wallets are expected to rapidly financially-mainstream tens of millions of folks who don’t have bank accounts but who do have cellular phones.

During the quarter, customer transactions in the BB channel came in at roughly 136 million, or nearly 1.5 million per day. Within that volume, m-wallets had a 57 percent slice, beating the OTC’s 43 percent cut. The overall value transacted by customers stood at Rs351 billion, in which m-wallets had an improved share of 47 percent.

M-wallets are being used for a variety of purposes. Roughly half the quarterly volumes went the way of mobile top-ups. About a quarter of the transactions were for placing cash into and withdrawing cash from m-wallets. Nearly 15 percent of the transactions were made for funds transfer to other mobile wallets. Some 4 percent of the transactions were made to pay utility bills. Another 4 percent of the transactions poured government money in m-wallets on account of pension and welfare payments.

A number of factors seem to support the shift towards m-wallet. One is the continued growth in BB accounts. BB service providers added almost four million new accounts in the Jan-Mar quarter, taking total number of m-wallets to 23.68 million at the end of March 2017. That’s a robust, 19 percent growth over the preceding quarter. In the nine-player market, three players – Telenor, Mobilink, and UBL – dominate almost the whole pie.

Second, number of active accounts has been increasing; naturally as more new accounts come in. The active accounts tally increased by some 1.5 million account (or 15 percent) over Dec-end level to stand at 11.3 million at Mar-end. That’s good. But this is not enough, for only 48 percent of total m-wallets were reported as ‘active’ in the Jan-Mar quarter. Major players have to up their game in this regard.

And third is perhaps waning influence of agent network. During the quarter, number of agents had grown to 368,738 agent locations. Yet, only 58 percent of them were classified as ‘active’. For agents, OTC transactions are a more remunerative business than when customers take matters in their own hand via m-wallets. It could be that agents are starting to make peace with m-wallets as customer awareness grows.

The going looks good so far. With those numbers, m-wallets have reached a population density of 12 percent. But that is still a fraction of the mobile tele-density, which is over 70 percent. So clearly, a lot more needs to be done. Activity ratio of m-wallets needs to improve. The 22 percent share of females in these accounts also needs to go up. So must the BB footprint in backward areas and peripheral regions.