LATEST data released by the State Bank shows that branchless banking is growing at a gathering pace, with the volume and number of transactions both increasing at a healthy clip. For the last period under review, the quarter ending December 2016, the volume of transactions through branchless banking has increased 21 per cent from last year, while the number of transactions has risen by 31pc. This is a good development and shows that the platform for digital payments is striking roots. Not only that, some growth is also being seen in far-flung areas of the country that are currently underserved by conventional banks, showing higher penetration. All these are very positive developments and the Financial Inclusion Strategy developed by the State Bank, which aims to bring 50pc of the country’s adult population into branchless banking by 2020, appears to be bearing fruit.

There is a need to ramp up the speed though. At the current rate of increase, the ambitious targets set by the State Bank might be missed. Branchless banking holds immense promise for the economy and the more it moves towards the mainstream, the better the quality of the information it generates about the small transactions that are the bedrock of the country’s economy. Greater effort to promote branchless banking will not come about simply through exhortations from the central bank. Top managements of commercial banks and telecoms need to show more enthusiasm for it, and be more sensitive to the enormous commercial promise of the enterprise. The government can be encouraged to play a more aggressive role in pushing the idea by moving more and more government dealings with the citizenry onto branchless platforms. Eventually corporate Pakistan also needs to be gently nudged in the same direction, by encouraging it to use branchless platforms to make small-ticket payments to vendors or labour through it. Financial inclusion deserves wider ownership, and creating more incentives to broaden the base of participation in it should be a priority. 

Published in Dawn, April 23rd, 2017