A very interesting article and which is true as well.. So, I thought why dont share with the people of mutual interest with it.

Pakistan is becoming one of the countries with tremendous growth in the development of branchless and mobile banking is witnessed despite of the fact it is still on the way of its maturity stage.

The branchless and mobile-banking are penetrating at accelerated pace throughout the country with number of players in the banking and cellular phone operators are entering into the emerging financial sector.

Customers are increasingly utilizing the advanced transaction services for money transfer, utility payments, bank accounts and home remittances through different companies led by banks or mobile operators.

The overall transactions through branchless banking have reached Rs 3,700 per day. There are 17,448 branchless banking agents serving currently more than 357,598 accounts at their different outlets.

According to the State Bank of Pakistan (SBP) statistics, Around 16 million branchless banking transactions, worth of Rs. 59 billion, have been conducted only in July-September period in Pakistan.

The two major branchless banking models have emerged in Pakistan “Easypaisa” by

Tameer Microfinance Bank and “Omni’ by United Bank Limited and marked a success story with a span of just two years, the combined daily transaction volume of the two services already averages over 175 thousand, with an average size of Rs 3,700.

In addition to them, there are different banks and mobile operators have introduced their branchless banking services such as First Microfinance Bank‟s collaboration with Pakistan Post, and Dubai Islamic Bank pilot project. MCB Bank and Askari Bank are both expected to roll out their pilot test shortly.

Recently Orascom Telecom (Mobilink) has also obtained a license to establish a nation-wide Microfinance Bank namely Waseela MFB to start microfinance operations through a branchless banking platform.

Similarly, NADRA has designed a distribution platform under the brand name “e-Sahulat” to provide online payment and collection facility for the general public as well as for organizations.

Moreover, a few other players are undertaking feasibility / market surveys to assess branchless banking prospects.

The early successes of mobile banking in Pakistan are attributable to the collaborative efforts of a wide range of stakeholders, including government, regulatory authorities, development agencies, NADRA, telecom operators, financial institutions, and technology firms.

The mobile phone subscription has seen explosive growth in Pakistan with total subscription now reaches to 110 million across customers in all income segments with growth continues apace.

The fast mobile penetration and its continuing strong growth fuels expectations that transformational branchless banking models would prove a game-changer in improving access to finance in Pakistan.

The branchless banking regulations only allow bank-led model, it encourages multiple approaches for developing partnerships. The partnership models include one-to-one (one bank having joint venture/agency agreement with one teleco/non-bank), one-to-many (one bank with many telcos), and many-to-many (many banks with many telcos).

This is aimed to create space for experimentation as well as to keep prudent supervisory oversight.  The government is further encouraging innovation by piloting the use of branchless banking to distribute government payments.

The permissible activities under branchless banking are opening account, fund transfer, cash-in and cash-out, bill payments, merchant payments, loan disbursement/repayment etc. These activities may be offered through a variety of channels such as mobile phones, retail agents, ATMs, smart cards, and POS. The resulting convenience and low transaction costs are expected to be critical to greater financial inclusion.

In a recent CGAP brief, Pakistan has been showed as one of the fastest developing market for branchless banking in the world. Pakistan has been declared as laboratory of innovation for branchless banking with a variety of business models are emerging that involves a wide range of players, including mobile network operators (MNOs), technology companies, and even a courier business.

The World Economic Forum’ global report on Mobile Financial Services gave extensive coverage of Pakistan, praising the country for its fast developing branchless banking.

The branchless banking institutional environment, which includes elements of regulatory proportionality and consumer protection, scores within the top quintile of the country sample included in this study.

The mobile financial services to unbanked population will further develop its end-user environment. The individuals appear less literate are being empowered to adopt these services, the study said.

It is heartening to note that the emerging branchless banking models have experienced impressive initial growth. However, these models are still in an early phase experimentation, requiring understanding of critical issues and taking measures to expand retail networks and leverage technologies.

Once these models reach to a degree of maturity, the inter-operability will come in to facilitate customers to send money to anyone with account at any bank, and do cash-in and cash-out with agent of any bank.

The SBP readily adopted the strategy of expanding microfinance outreach through exploiting the channels of mobile phone sector situated throughout the country.  It has focused on providing an enabling environment to market players, persuading them to benefit from new opportunities, and offering them appropriate incentives for market development, with the ultimate objective of broadening and deepening financial inclusion.

According to a recent study conducted by Telenor Group and Boston Consulting Group, the wider access to mobile financial services in Pakistan could lead to the creation of 1 million new jobs by 2020. An estimated US$2 billion could be added annually to government revenues, helping raise Pakistan’s GDP growth by 3% by creating increased access to credit, hence prompting new business creation, and by formal remittances and increased savings.

Mobile financial services can facilitate public services by providing e-government options and help reduce costs of financial transactions.”

According to the study, the percentage of Pakistan’s adult population using mobile financial services could go up from the current 2% to 35% by 2020.

The existing and anticipated businesses and outlines the key challenges and opportunities that are likely to shape the market over the next 12 months.