The State Bank of Pakistan (SBP) has adopted a multi-pronged and long-term strategy to address financial exclusion through structured policy and regulatory actions besides market-development interventions.
While addressing the 7th International Mobile Commerce Conference organised by Total Communication here on Thursday, Ashraf Mahmood Wathra acting governor SBP said branchless banking is supporting SBP's financial inclusion programme to expend the financial services network towards the millions of unbanked masses as we feel that our bank's branch network of almost 12,700 is insufficient enough to serve them.
"Despite phenomenal spread of banking business in Pakistan, we have a long way to achieve digital financial inclusion in the country," he added. The SBP has also formed the national branchless banking consultative group, which draws representation from branchless banking industry players including banks, mobile operators, and technology service providers, he said and added that "this group is actively working on different protocols including agent code of conduct, agent sharing models, interoperability schemes and consumer protection framework, etc."
Being a regulator of banking sector, the SBP believes that financial exclusion is hindering our fellow citizens in availing economic and business opportunities, governor said. The SBP's programme initiatives have been catalysing the market developments and fostering market ecosystem to especially promote innovative ways of doing banking business, he mentioned.
Online and other off-branch modes of doing banking transactions have reduced the hassle of visiting a conventional bank branch to a considerable extent, he added. Pakistan is amongst the pioneers of mobile/branchless banking in the developing world and its branchless banking framework and models have achieved world-wide recognition and remarkable success in a short span of four and a half years, he added. This could not have been possible without an effective and enabling regulatory regime, dynamic, innovative and always eager banking and telecom industry in the country, he added.
Total number of branchless banking transactions has shown continuous growth in each successive quarter and some 54 million transactions worth Rs 234 billion were performed during the quarter ended December 2013, Wathra said.
He said branchless banking has played a pivotal role in providing efficient Financially Inclusive Government to Person (G2P) payments to welfare beneficiaries of Benazir Income Support Programme (BISP), Watan Card and Bait-ul-Maall. "We have achieved initial success through accumulating a critical mass of transactions and customers' acquisition in branchless banking and we are focusing our energies to identify gaps and bring solutions to address those gaps. SBP is strengthening its regulatory oversight through measures such as regular diagnostic and inspections, compliance forum, and agent monitoring system," he added.
Wathra said it is a matter of great comfort and satisfaction for banking and telecom companies that their respective regulators, ie, SBP and PTA share the vision and are working in close collaboration to provide an enabling regulatory environment for development of mobile/branchless banking services.
Keeping in view the importance of interoperability for promotion of branchless/mobile banking, SBP and PTA are working closely in developing a regulatory framework for Third Party Service Provider (TPSP). Eventually, mobile financial services would become interoperable once TPSP regulatory framework is issued, he added. Talking about the branchless banking industry, he said that presently, some eight branchless banking players are successfully operating in the market and achieving new level of growth.
However, still a large number of masses in the country particularly in rural areas are unbanked due to unawareness and limited bank branches network. Therefore the SBP is encouraging the branchless banking and in addition to these eight players, four banks are in process to launch branchless banking in the country, he added.
He said that arrival of new players in the market will enhance the competition among the service provides and customers will have more choices for financial services. Currently, out of total 35 million bank accountholders in Pakistan, some 3.5 million customers are holding branchless banking accounts, which are also known as M-wallets. There are about 125,000 agents of branchless banking operating in the country, he said.
He said that being a regulator, the SBP is facilitating the players and will continue its support for a better business environment to enable banks to further enhance their efforts towards branchless banking.
"Going forward, much is still needed to be done. The SBP is keen to work with different stakeholders of mobile/branchless banking industry eco-system to provide an enabling environment for the creation of mobile/branchless banking ecosystem in the country," Wathra said. He said I also congratulate the organisers and sponsors for their efforts in bringing together the stakeholders of mobile banking eco-system at one platform.