Branchless Banking (BB) transactions fell by 5 percent to Rs 354 billion in the first quarter of this calendar year (CY15) mainly due to massive decrease in the value of (Government to Person) G2P payments, loan disbursements and mobile top-ups. According to State Bank of Pakistan (SBP), despite decrease in the transactions, branchless banking deposits climbed to Rs 6.8 billion at the end of March 2015, showing a steady increase of 3.3 percent. However, the account activity ratio experienced a sharp decline, falling from 43 percent to 20 percent.
In terms of accounts, branchless banking industry witnessed a widespread growth as with an increase of 39 percent growth, mobile accounts climbed to 7.5 million in January-March of CY15 over the previous quarter (October-December 2014). This massive growth in accounts was mainly contributed by the biometric infrastructure for the second consecutive quarter; which attributed to 45 percent of the total newly opened accounts.
The SBP said that the government of Pakistan enforced SIM verification of all mobile subscribers through biometric verification system which led to a massive installation of biometric devices on retailer level. This infrastructure is now serving as a front-end tool for the customers to open their m-wallets through BB agents. Overall, the volume of branchless banking transactions grew to 72.5 million with a slight increase of 1 percent from last quarter, whereas the value of transactions fell by 5 percent to Rs 354 billion, due to a 75 percent, 98 percent and 47 percent decrease in the value of G2P payments, loan disbursements and mobile-top-ups, respectively. "The customer-oriented transactions, whether through m-wallets or Over the Counter (OTC), contributed 94 percent in volume and 65 percent in value of the total BB transactions; while the remaining were agent-based transactions for liquidity purposes," the SBP reported.
Over the Counter transactions continued to dominate customer-oriented transactions. Against their share of 86 percent in volume and 88 percent in value during the preceding quarter, OTC contributed to 88 percent and 82 percent, respectively in first quarter of CY15.
The value of m-wallet transactions experienced a 34 percent growth, scaling up from previous Rs 25.5 billion to Rs 34.2 billion in first quarter of CY15 primarily due to a 49 percent and 116 percent increase in funds transfers and cash deposited in m-wallets, respectively. However, their volume witnessed a decline of 18.5 percent, falling from 9.7 million to 7.9 million in this quarter. The average size of transactions decreased to Rs 4,883, from Rs 5,181 in the previous quarter; which continues to endorse the fact that the low income socio-economic class is using the branchless banking as a primary channel to satisfy its domestic remittance needs.
The number of agents rose to 229,645 in January-March 2015 up from 204,073 in October-December 2014, demonstrating a sizeable increase of 12 percent. Likewise, the ratio of active-to-total agents also demonstrated encouraging performance by scaling up 2 percent, resting at 80 percent from the prior quarter's 78 percent.
According to SBP, whilst the BB players are striving hard to penetrate into the unbanked geographic segments, by increasing their BB customers and strengthening the agent network; it is also critical for them to diversify their product mix and cross-sell products to boost the usage of accounts, since opening of accounts without usage shall not serve the national strategic objective of financial inclusion.