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Blending banking with technology

Published on 14th Jan, Edition 03, 2013


Over the last one decade banks have been working hard to enhance their outreach, by increasing number of branches but more importantly through deployment of technology. The convergence of telephony and information technology has helped in developing ‘technology highway’. Now an account holder can complete a banking transaction irrespective of time, his location and even his/her primary bank.

Initially there was some resistance against use of ‘plastic money’ as people didn’t have faith in the system but over the years a lot has changed. Growing use of ATMs and real time online banking now encourage people to complete their banking transactions without even entering the ‘bricks and mortar’ branch. The journey that started with using ATMs went to internet banking and now to mobile phones. The new name of the game is that now thousands of the agents selling cards and ‘easy load’ have virtually become ‘banking facilitators’. This concept was introduced by Telenor joining hand with a micro finance bank. Now even the ‘big five’ are using this. Almost all the cellular companies have joined hands with a financial bank, Askari being the latest entrant.

Interestingly Pakistan Telecommunication Authority (PTA) has a vision of bringing banking services to 120 million mobile subscribers. In this endeavor, lately Zong and Askari Bank have teamed up to share the piece of the pie of one of the fastest growing markets for mobile and branchless banking by launching Timepey. This joint initiative aims at facilitating close to 80% Pakistanis who do not have bank accounts. It will allow its users to pay utility bills, transfer money to specified recipients anywhere in the country, deposit and withdraw cash and carry out account transfers.

Zong is the third telecom operator to offer mobile banking services in Pakistan. Earlier Mobilink had launched its branchless banking solution Mobicash and Telenor’s Easypaisa has been around for a while. Timpey, is first of its kind collaboration where a telecom operator and a commercial bank will provide branchless banking services under a relationship where none of the parties have any share or controlling interest in each other. Users do not have to be Zong customers or even be mobile phone subscribers. According to details, the service offers complete flexibility to anyone who wishes to avail essential financial services without the need to open a bank account.

With the help of domestic and foreign investment, the telecommunication infrastructure in Pakistan has improved dramatically; making telecommunication emerge as one of the fastest growing sectors of the economy. Talking about the importance branchless banking, Zong CEO Fan Yunjun had said that branchless banking had successfully accelerated financial inclusion and changed the financial landscape in many developing countries. “Mobile phones are compensating for inadequate infrastructure, slow postal services, and the limited coverage of banking systems in these countries.


Branchless Banking (BB) has attained the confidence of general public as the leading contender to help mainstream financial services in a largely unbanked Pakistani market. The latest State Bank of Pakistan newsletter on the BB sectors performance shows healthy growth in both the sector infrastructure and activity volumes during July-September quarter of 2012. The newsletter highlights a 7% quarterly growth in agent network that had reached 31,637 at September end.

The BB agent network is dominated by grocery stores and retailers (73%), remotely followed by mobile shops (13%) and franchises (one percent). The larger agent footprint among small grocery stores and retailers across communities and localities has helped fuel the BB momentum. During the quarter, average transaction per agent reached 994, up 3% as compared to April-June 2012 quarter.

The number of BB accounts – or mobile wallets – had reached 1.81 million by September-end, a hefty growth of 25.44% over the June-end tally. This growth is fuelled primarily by the 84.2% growth in the Level ‘0’ BB accounts (the most basic, simple account with low know your customer (KYC) requirements and small transaction limits, mainly because of focus of service providers on this group.

Increasing user trust in the system is obvious in that the deposits grew by 11% over previous quarter to reach Rs839 million as of September-end. However, this figure is very low as it averages to less than Rs500 per account. Moreover, bulk of this is said to be agents own funds for their liquidity management. Deposits are expected to increase manifold once service providers start offering attractive savings rate on deposits and also make available more spending options for m-wallets.

The double-digit growth in both the transaction volume and value continued in 3QCY12, albeit at a relatively decelerated pace compared to earlier quarters. SBP figures show that more than 31 million transactions originated from the BB system in the period under review, which channeled funds worth Rs139 billion. The average transaction size had increased to Rs4,420 during the quarter, which indicates increasing float in the system. Simple services like bill payments and mobile top-up continue to prevail in the transaction volumes, while funds transfers have characteristically driven the value chart.

Competition is good for the sector, and the two early entrants, Easypaisa and Omni, are expected to benefit from the new arrivals. The proverbial pie is too big for just one or two service providers to fully cater. Moreover, awareness, a major challenge, is only going to increase as new entrants aggressively market their brands. A diverse, more comprehensive suite of financial services is expected to be rolled out in the future as competitors attempt to differentiate themselves.


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