Branchless banking accounts reach 10.8 million

KARACHI: The number of branchless banking accounts rose by 44.4 percent to 10.8 million during the second quarter of 2015, compared with 7.5 million in the previous quarter of January-March, according to the Branchless Banking (BB) Newsletter released by the State Bank of Pakistan on Tuesday.    

The sharp growth in the number of accounts was mainly on the back of introducing biometric technology and SIM verification in account opening. During April-June 2015 quarter, around 47,902 biometric devices were installed for real-time account opening at agent locations. A total of 1.3 million accounts were opened during the quarter through the biometric verification system.

This increase also resulted from massive opening of level zero accounts, which now constitute 87 percent of the total BB accounts. These accounts are basic mobile-wallet accounts with low know-your-customer requirements and small transaction limit.   

The SBP also said the people have started considering branchless banking as a key tool for satisfying their basic financial needs. Moreover, encouraging trend in account opening depicts that the footprint of inclusive financial services is getting stronger in bringing the previously excluded socio-economic segments into the financial realm through an easy account opening process.

The active-to-total account ratio climbed to 34 percent from 20 percent in the previous quarter, which may be attributed to the release of two Benazir Income Support Programme (BISP) tranches and rise in fund transfers between m-wallets and mobile top-ups.

The branchless banking has also proved to be an effective instrument in channelizing the government-to-person payments in salary disbursements, pension, and tax collection services.

The volume of transactions in April-June 2015 showed an increase of 37 percent over the preceding quarter to 99.5 million. While, the transactions in value stood at Rs505.9 billion, a growth of 43 percent during the second quarter.

According to the newsletter, the customer oriented transactions in overall BB transactions remained 94 percent in volume and 61 percent in value; the rest being agent transactions for liquidity purposes. M-wallet transactions showed encouraging signals by gaining a share of 29.9 percent (in volume) and 29.4 percent (in value) in the customer oriented transactions, as compared to 11.6 percent and 17.1 percent in the previous quarter respectively.

The average number of transactions per day scaled to 1.1 million, whereas the average size of transaction was Rs5,083. The total BB deposits increased to Rs8.553 billion from Rs6.890 billion in the previous quarter; however the average deposit in BB accounts fell from Rs914 in the previous quarter to Rs786 in the quarter under review.

The BB channel facilitated government-to-person payments of Rs36 billion made to 4.2 million beneficiaries as compared to Rs4.5 billion payments to 3.2 million beneficiaries in the previous quarter. This rise in G2P was mainly due to the release of previous quarter’s BISP tranche during the quarter under review.

The number of agents rose to 251,865 from 229,645, showing 9.7 percent growth over the previous quarter.

However, the active agents declined to 77 percent of total agents as compared to 80 percent in the previous quarter. The BB players should take steps to reinvigorate the inactive agents through agent development techniques such as guidance, trainings, and due facilitation.

The customer oriented transactions were the major component of the total BB transactions which rose to 94.3 million in volume and Rs308.4 billion in value on account of transactions of cash deposit and withdrawal, fund transfers and mobile top-ups.   

The value of m-wallet transactions experienced a hefty growth of 165 percent, climbing to Rs90.7 billion from previous quarter’s Rs34.2 billion. The number of m-wallet transactions also increased manifolds, ending up at 28.1 million from the previous quarter’s 7.9 million. Cash deposit and withdrawals topped the chart in number of transactions, doubling to 10 million from the previous quarter’s 5 million, followed by government-to-government and funds transfers through m-wallets.

However, merchant payments still remain an ignored segment with a meagre contribution of 0.11 percent; both in numbers and value. The SBP advised BB players to focus on this important area, which can add more value in m-wallet usage.