Ashraf Mahmood Wathra: The importance of financial inclusion in
Pakistan
Speech by Mr Ashraf Mahmood Wathra, as Acting Governor of the State Bank of Pakistan,
at the Bank Alfalah Mobile Commerce Conference 2014, Karachi, 13 March 2014.
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Assalam-o-Aalaikum and Good Morning
It is my great pleasure to join you at the international Conference & Exhibition on Mobile
Commerce in Pakistan, and share with you some of my thoughts on this important subject. I
must congratulate the organizers and sponsors for their efforts in bringing together the
stakeholders of mobile banking eco-system at one platform.
Being a regulator of banking sector, SBP believes that financial exclusion is hindering our
fellow citizens in availing economic and business opportunities. Today, there are an
estimated 2.5 billion adult people worldwide who do not have access to formal financial
services. According to World Bank's Global Findex Survey, almost 80 percent of those living
within incomes of less than $2 per day are financially excluded.
Pakistan is a country of over 180 million people living in geographically diverse areas. Our
branch network of almost 12,700 is insufficient to serve the millions of unbanked masses.
Banks operating in Pakistan are hosting only 35 million customer accounts including
3.5 million accounts opened by branchless banking providers. Despite phenomenal spread of
banking business in Pakistan, we have a long way to go to achieve digital financial inclusion
in the country.
Given the complexities and challenges of limited financial access in the country, State Bank
of Pakistan has adopted a multi-pronged and long-term strategy to address financial
exclusion through structured policy & regulatory actions, and market-development
interventions. Our program initiatives have been catalysing the market developments and
fostering market ecosystem to especially promote innovative ways of doing banking
business.
As we all know that people around the world increasingly use technology and communication
networks to live, work, socialize and remain informed and entertained through the use of
online services via personal devices like PCs, smartphones and computer tablets. Therefore
online and other-off-branch modes of doing banking transactions have reduced the hassle of
visiting a conventional bank branch to a considerable extent.
Ladies & Gentlemen, Pakistan is amongst the pioneers of mobile/branchless banking in the
developing world. Our branchless banking framework and models have achieved worldwide
recognition and remarkable success in a short span of four and a half years. This could not
have been possible without an effective and enabling regulatory regime, dynamic, innovative
and always eager banking and telecom industry in the country. I would like to share some
numbers that show the level of take-up of branchless banking services in the country. For
example:
• Currently, eight branchless banking deployments are live in the market and four
more are yet to go live this year.
• Up to December 2013, providers' combined network has reached to almost
125,000 agents spread across all over Pakistan.
• Total number of branchless banking transactions has shown continuous growth in
each successive quarter. 54 million transactions worth Rs. 234 billion were
performed during the quarter ended December 2013.
• Currently 3.5 million customers hold branchless banking accounts (also known as
m-wallets) to avail host of services including fund transfer, utility bill payment,
domestic remittance, mobile top ups, loan repayment, and saving account features.
• Branchless banking has played a pivotal role in providing efficient Financially
Inclusive Government to Person (G2P) payments to welfare beneficiaries of Benazir
Income Support Program (BISP), Watan Card and Bayt-ul-mall.
Ladies & Gentlemen, while we have achieved initial success through accumulating a critical
mass of transactions and customers' acquisition in branchless banking, we are by no means
complacent. We are focusing our energies to identify gaps and bring solutions to address
those gaps. SBP is strengthening its regulatory oversight through measures such as regular
diagnostic and inspections, compliance forum, and agent monitoring System.
SBP has also formed the National Branchless Banking Consultative Group which draws
representation from branchless banking industry players including banks, mobile operators,
and technology service providers. This group is actively working on different protocols
including agent code of conduct, agent sharing models, interoperability schemes, consumer
protection framework etc.
Ladies & Gentlemen, it is a matter of great comfort and satisfaction for banking and telecom
companies that their respective regulators i.e. SBP and PTA share the vision and are
working in close collaboration to provide an enabling regulatory environment for development
of mobile / branchless banking services. Keeping in view the importance of interoperability
for promotion of branchless / mobile banking, SBP and PTA are working closely in
developing a regulatory framework for Third Party Service Provider (TPSP). Eventually,
mobile financial services would become interoperable once TPSP regulatory framework is
issued.
Going forward, much is still needed to be done. SBP is keen to work with different
stakeholders of mobile/branchless banking industry eco-system to provide an enabling
environment for the creation of mobile/branchless banking ecosystem in the country.
I trust that the today's deliberations will take stock of the opportunities and challenges offered
Branchless Banking and its related products. I also hope that the forum would come up with
recommendations on how to harness potential of branchless banking for financial inclusion in
Pakistan.
Thank you!