For all its shortcomings, the e-banking ecosystem in Pakistan has taken major leaps over the last couple of years in part thanks to Covid-19. Since March 31, 2020, internet and mobile banking users have increased from 3.81 million and 8.19m to reach 7.83m and 11.98m respectively as of the third quarter of 2021-22 (Q3FY22). In terms of transactions, the growth curve has been even steeper.
The value of internet and mobile banking transactions surged from Rs748.1 billion and Rs467.5bn at the end of Mar 31, 2020, to Rs2.91 trillion and Rs3.09tr respectively as of the previous quarter. Similarly, their volumes grew from 14.1m and 21.2m to 38.3m and 101.5m respectively over the same period.
However, all this digitisation has been largely concentrated in consumer banking. On the corporate and business side, the processes are still very much traditional and cash (or cheques) is cash. This is despite the segment being much bigger thanks to the higher turnover and bulk payments.
While exact numbers on their scale aren’t available, paper-based and real-time online banking (RTOB) transactions can serve as a good proxy for the segment’s flow of money. The former recorded a value of Rs46.4tr and volume of 96.m in Q3FY22 — meaning the average transaction was worth almost Rs481,000. Meanwhile, the latter saw a throughput of Rs26.8tr with volume at 52.3m and an average of around Rs512,000.
While e-banking has grown leaps and bounds to trillions of rupees, businesses continue to use traditional methods of payment in the absence of appropriate options
Yet, for all this massive scale, the segment is severely under-served in terms of online offerings. Only two banks — Alfalah and Allied Bank Limited — currently have a mobile app for businesses though many others offer internet banking. But the experience is far from digital. For example, if you happen to have a company account with one of the leading banks, the web portal’s dashboard is literally a blank page. It doesn’t even show the existing balance and in order to check that, you will have to generate a statement for a specific period. And that can sometimes take hours, according to a source who uses the product.
“The web portal only runs on Internet Explorer (IE), which is not supported by Windows 11 so in order to access it, I have to first open Edge and then turn on the IE mode. From a user interface/user experience point of view, it’s a travesty with no consistency between button placements, for example, and it takes hours to just figure out how to check the balance,” he adds.
Sufian Asif of Dustiyaab Tech, an early-stage startup, shared a similar experience with another prominent bank. “Although their customer service is commendable, the online banking features for private limited company accounts are limited to just one thing: view the balance,” he said.
Principally, it should be the bankers asking this question but what do businesses, especially smaller ones, even want from their banks? Not a lot, honestly. “For starters, there should be easier access for e-banking, be it via mobile app or web version,” says Hammad Khan, CEO of Alpha Venture, a digital agency based out of Karachi.
“The payroll management system should also be smarter as it’s very time-consuming right now. Similarly, the approval mechanism is super basic currently and needs more layers. Like I might want to give read-only access to my accountant without making him part of the approval system. This could be done via leveraging WhatsApp possibly where a lot of business decisions actually take place in the end, especially in smaller companies,” he adds.
“There is a lot of room for improvement in the transaction management system as well, like better labelling and faceted search,” Mr Khan continues. He also highlights the need for integrations with other third-party software, which are widely used especially in the technology sector. “Let’s say you could sync the banking transactions with Quickbooks or your customer relationship management tool. That record-keeping can make your life 100x easier.”
The issue is not only with just online banking products but even card-based ones. For example, only Bank Alfalah and Standard Chartered currently offer corporate credit cards, meaning no player has entered this line in years. And even the existing options are basically makeshift arrangements, according to people who used them.
One founder two years back shared with Dawn how their company’s corporate credit card was linked to his personal online banking account while getting it issued took three months, multiple forms, a guarantee on stamp paper, and a lien.
For cards, bankers attribute the lack of products to a minuscule market but the same doesn’t apply to digital products. The growth in consumer mobile and internet banking has already given a good glimpse of online’s potential, and the only thing holding back a similar trajectory for business segments is banks’ own laziness.
Published in Dawn, The Business and Finance Weekly, July 18th, 2022