Pakistan’s branchless banking sector has achieved a significant milestone, with transactions surpassing the 1 billion mark in a single quarter for the first time in history.
The State Bank of Pakistan (SBP) has released data indicating that the quarter ended on December 31, 2023, witnessed 1,088.3 million branchless banking transactions, amounting to over Rs5 billion, a year-on-year growth of 12% in volume and 12.5% in value.
Out of these transactions, 22% were for bill payments and mobile top-ups, while an impressive 43% were for fund transfers.
Mobile wallet transfers were the second largest in transaction value, reaching Rs965 billion, followed by transfers from mobile wallets to customers’ banking accounts at Rs756 billion.
The average transaction size during the quarter was Rs4,646, which is higher than the previous year’s average. Moreover, the SBP reported that the average daily transactions increased by 12 percent year-on-year to 12 million, up from 10.8 million the previous year.
In terms of regional distribution, Punjab, the country’s most populated region, accounted for 71 million of the branchless banking transactions.
Sindh ranked second with 23.3 million transactions, followed by Khyber Pakhtunkhwa (KP) with 14.7 million transactions.
The total number of branchless banking accounts reached 114.6 million during the quarter, with males holding over 79.5 million accounts and females holding 35.1 million accounts.
The surge in the use of mobile wallets reflects a growing preference for convenient and accessible financial services, as well as an increasing reliance on digital finance solutions.
However, to sustain this momentum, there is a need to substantially improve the country’s digital infrastructure and ecosystem to support digital solutions, attract institutional investments, and result in industry-wide exponential efficiency and productivity impacts.
Key areas for improvement
Key areas for improvement include,
- Increasing the penetration of smartphones (currently below 60%), laptops, and other digital devices.
- Cheaper, higher-quality, and faster internet with uninterrupted flow could help further increase digital transactions.
- Improvements in digital infrastructure, such as fiber networks, macro cell towers, data centers, and small cell networks, are also crucial.
- Expanding financial rails and offering more payment-receipt/transfer mediums, such as QR codes and scans, at the lowest consumer cost possible will help compete with and discourage the cash economy.
- Default opening of bank accounts for the entire adult population, coupled with incentives to use these accounts for even the smallest financial transactions, will help discourage cash usage and encourage the documentation of the economy.
Key takeaways
- 1,088.3 million branchless banking transactions
- Total transaction amount over Rs5 billion
- Mobile wallet transfers: Rs965 billion
- Mobile wallet to bank account transfers: Rs756 billion
- Average transaction size: Rs4,646 (higher than previous year)
- Average daily transactions increased by 12% year-on-year to 12 million
- Punjab: 71 million transactions
- Sindh: 23.3 million transactions
- Total 114.6 million branchless banking accounts (79.5 million male and 35.1 million female accounts)
