It seems that branchless banking economy is slowly overtaking conventional banking system in Pakistan. Yesterday, the State Bank of Pakistan (SBP) urged conventional “brick-and-mortar” banks to focus on innovation and disruptive practices in order to retain their position in the banking industry, following a recent report that the branchless banking system poses a serious future threat to conventional banking.
According to SBP, 35 commercial banks (including 7 to 8 Islamic banks), are currently operating nationwide and many banks have signed partnership agreements with cellular service firms in a bid to offer branchless banking services to their customers, said SBP.
Syed Irfan Ali, Executive Director of SBP, while addressing the 2nd Pakistan Payment Summit said there are approximately 11,000 ATM machines are operating in the country with demand increasing 4-fold in the past few years. He added “the conventional banks need to re-make their future strategy very quickly”, adding that the number of total physical branches in the country will cross 15,000 by the end of this year, but no one knows there relevance will last
“In comparison with them (traditional banks), the number of branchless banking agents have crossed the 400,000 mark. Eight years ago, it seemed to be a miracle to have 50,000 agents in the system.”
SBP has set a target to offer access of banking services to 50% of the adult population by 2020 and the branchless banking system may prove to be the catalyst to accelerate financial inclusion in the country.
“The SBP remains in constant collaboration with Pakistan Telecommunication Authority to support growth in digital payment systems. It also remains in touch with ministries of Commerce, Finance and IT in this regard”, Syed Irfan Ali further added.