ISLAMABAD – Mobile account ownership in Pakistan has witnessed a reasonableincrease and crossed the 39 million mark, which was 15 million at the endof 2015.
This increase has significantly been contributed by branchless/mobilebanking accounts, and account ownership in the country has increased to 22per cent from 13 per cent in 2014.
It is important to highlight that since biometric verification of mobileconnections in 2015, more than 23.5 million new branchless banking accountswere added in the market.
The rapid and widespread adoption of mobile phones and mobile broadbandtechnology with over 62 million mobile broadband subscribers in Pakistanhas not only created a solid base for digital transactions but is alsoresulting in new and innovative business models that deliver financialservices at lower prices and with a broader customer reach.
According to Pakistan Telecommunication Authority (PTA) under the bank-ledmodel, authorized financial institutions, cellular mobile operators andtechnology firms have improved their financial services and necessaryinfrastructure by developing user-friendly and real-time solutions.
These players are capitalizing on the technological advancements to bringdisruption across distribution channels and product lines.
The financial and telecom regulators have also extended continuous supportto the Digital Financial Service (DFS) growth in the country by providingenabling environment through improved policies, laws, and regulationsaccording to changing market dynamics.
The scope of alternate delivery channels and technologies has been expandedto include 3G and 4G spectrum for providing branchless banking services.
The relevant regulations have allowed opening of basic level remotem-wallet accounts to promote usage of financial services among all segmentsof society.
The State Bank of Pakistan (SBP) has issued 11 branchless banking and threePayment Service Providers licenses to various players. PTA and SBP havealready issued the first joint license for interoperability solutions andmore are in the process.
The above mentioned DFS ecosystem has provided a reasonable base for uptakeof digital financial services in the country.
According to Finance Survey 2015, 23 per cent adult population has accessto formal financial institutions compared to only 12 per cent in 2008.
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The report further said despite the above-mentioned improvements over theyears, we are well short of DFS growth potential available through over 153million biometrically verified mobile connections across the country.
In order to tap this potential, our DFS ecosystem needs to evolve to astate where consumers and businesses feel comfortable to leave their fundsin digital form rather than cash.
The first step towards this direction is the delivery of bulk paymentsincluding Government to Person (G2P) and Business to Person (B2P) throughmobile wallet accounts. Payments through these wallet accounts should beacceptable and as easy as paying cash at the merchants’ outlets.
However, consumers do not keep their funds in digital wallets and mostlyuse cash as they do not find utility in keeping their funds digital, due tolack of convenient options to use those funds for day to day transactions.
The government has initiated delivery of Benazir Income Support Programme(BISP) payments through wallet accounts which is the biggest program ofpoverty alleviation in Pakistan.
Many other G2P payments can be channelized through mobile wallets.Secondly, payments across different channels should be ubiquitous andinteroperable for consumers, wherein, anyone can transfer money to anyonethrough any channel.
In this direction, PTA and SBP have initiated joint licensing forinteroperability of digital financial services under the any-to-any model,however, lot more efforts are required to accomplish large scaleinteroperability.
Thirdly, delivery of additional services including savings, insurances,investments and loans through digital wallets can be an enabler to achievelong term financial inclusion targets and sustainability of the digitalfinancial services in the country.
For the overall success, development of consumers’ trust in digitaltechnologies is crucial and realizing critical role of informationtechnology in the banking industry, the financial and telecom regulatorshave been pushing financial and telecom industries to upgrade and transformtheir systems for the digital age.
Various initiatives for the implementation of electronic payment channelsin the country have been taken that include the development of strong legaland regulatory framework such as SBP’s branchless banking regulations 2008(upgraded in 2011 and 2016).
