Pakistan Telecommunication Authority - WORKING DRAFT Printed … · 2017-11-01 · Pakistan accounts for 5.2% of the world’s unbanked adults • Over 50 countries have set national

WORKING DRAFTLast Modified 18.01.2010 22:58:32 Pakistan Standard TimePrinted 17/01/2010 13:56:09 Arabian Standard Time

Digital Financial Inclusion

21st July, 2016

Tariq SultanMember (Finance)Pakistan Telecommunication Authority

Tariq SultanMember (Finance)Pakistan Telecommunication Authority

ITU-PTA International Training Program 201620-22nd July, 2016

Islamabad, PAKISTAN

Why is Digital Financial Inclusion a Priority?

If you want to improve the quality of life of thepoor, give them a financial identity.

Why is Digital Financial Inclusion a Priority?

If you want to improve the quality of life of thepoor, give them a financial identity.

2

Objectives

Targeting the poorand low income

Promoting EnablingRegulation & Consumer

Protection

FinancialStabilityFinancialStability

PovertyReduction

PovertyReduction

Targeting the poorand low income

Facilitate and encourageeconomic activity;

Promote Local EconomicDevelopment

Promoting EnablingRegulation & Consumer

Protection

FinancialStability

EconomicGrowth

EconomicGrowth

PovertyReduction

3

Global Perspective: Why FI is important?

Access to financial services enables consumption smoothing, riskmanagement, investment in education, health, enterprises:

• Kenya: 38-56% increase in productive investment and 37% higherpersonal expenditures due to access to a basic savings account

• M-PESA users experienced no reduction in household consumptionduring economic shocks, compared to a 7-10% reduction for non M-PESA users

• Higher diet diversity and daily food expenditures for women /households with mobile money / basic savings accounts was alsoobserved.

Access to financial services enables consumption smoothing, riskmanagement, investment in education, health, enterprises:

• Kenya: 38-56% increase in productive investment and 37% higherpersonal expenditures due to access to a basic savings account

• M-PESA users experienced no reduction in household consumptionduring economic shocks, compared to a 7-10% reduction for non M-PESA users

• Higher diet diversity and daily food expenditures for women /households with mobile money / basic savings accounts was alsoobserved.

Source: World Bank

Universal Financial Access

• Ensuring that everyone has access to a transaction or deposit account is acritical stepping stone for achieving broader universal financial inclusion

• 25 countries account for 73% of world’s unbanked adults▫ Pakistan accounts for 5.2% of the world’s unbanked adults

• Over 50 countries have set national commitments and targets for financialaccess / inclusion▫ Pakistan adopted a National Financial Inclusion Strategy in 2015, which sets out the national vision and

roadmap to accelerate financial inclusion

• Ensuring that everyone has access to a transaction or deposit account is acritical stepping stone for achieving broader universal financial inclusion

• 25 countries account for 73% of world’s unbanked adults▫ Pakistan accounts for 5.2% of the world’s unbanked adults

• Over 50 countries have set national commitments and targets for financialaccess / inclusion▫ Pakistan adopted a National Financial Inclusion Strategy in 2015, which sets out the national vision and

roadmap to accelerate financial inclusion

Source: World Bank 5

25 Focus Countries: 73% of the world’s unbanked

IndiaIndia20.6%20.6%

(of the world’s unbanked)(of the world’s unbanked)

PakistanPakistan5.2%5.2%

BrazilBrazil2.4%2.4%

BangladeshBangladesh3.7%3.7%

NigeriaNigeria2.7%2.7%

MexicoMexico2.6%2.6%

EgyptEgypt2.4%2.4%

M: Mozambique 0.4%; K: Kenya 0.3%; Z: Zambia 0.2%; R: Rwanda 0.2%0% - 25% 26% - 50% 51% - 100%% Access:

ChinaChina11.6%11.6%

IndoIndo--nesianesia5.6%5.6%

VietViet--namnam2.4%2.4%

EthiopiaEthiopia2.1%2.1%

PhilippinesPhilippines2.2%2.2%

DRCDRC1.5%1.5%

MyanmarMyanmar1.5%1.5%

TurkeyTurkey1.2%1.2%

ColombiaColombia1.1%1.1%

TanzaniaTanzania0.8%0.8%

South AfricaSouth Africa0.5%0.5%

PeruPeru0.8%0.8%

MoroccoMorocco0.7%0.7%

YemenYemen0.7%0.7%

MM

KKZZ

RR

Source: World Bank 6

National Financial Inclusion Strategy(NFIS)

National Financial Inclusion Strategy(NFIS)

Financial Inclusion (FI) Strategy can accelerate progresstowards Financial Inclusion

Increase in account ownership is larger in countries with strategies:

• Average annual growth was 10.4% in countries with strategy• Average annual growth of 7.6% in countries without strategy

32%

42%

27%30%35%40%45%

|

22%27%

0%5%

10%15%20%25%30%

Countries launched FI strategy after 2007 Countries did not launch the FI Strategy

2011 FI Account 2014 FI account

Source: World BankNote: FI Account = Percentage of Adults (age 15+) with a Bank Account

Vision for Financial Inclusion in Pakistan

Individuals and firms can access and usea range of quality payments, savings, credit and insurance services

which meet their needs with dignity and fairness

Quality

Individuals andfirms

Access

UseRange ofservices

Need-based

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National Targets for Financial Inclusion

Access:• Convenient access points to connect those who are

excluded• Digital Transactional Accounts, with scale and viability

through digitization of payments, transactions• Increase percentage of adults living within 5 kilometers of

an access point by 2020.• Widespread acceptance of networks and interoperability2020 Vision:

50% of adults withtransaction account

Long term:

Universalfinancial access

Use, Range of Services:• Diverse Product Ecosystem• Increased SME lending as % of total lending• Capacity and incentives to offer diverse range of

tailored financial services with adequate oversight• Consumer awareness and literacy to be able to select

and use appropriate financial services

Currently:

16% of adultshave bank accounts;this No. was 12% in2008 survey (over30% increase).

2020 Vision:

50% of adults withtransaction account

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NFIS Focus Areas

The NFIS was developed in 2015 through an extensive consultative process, gap analysis, andprioritization of areas of focus, :

1. Digital Transactional Accounts – digitization; more access points to achieve scale / viability

2. SME Finance – enabling policy and legal environment for product diversification

3. Agricultural Finance – enabling legal framework, and capacity of FIs and farmers

4. Islamic Finance – capacity building and policy / regulations to further diversify sector and products

5. Housing Finance – housing policy; property registration reforms; market development

6. Payments Systems – digitization; payments infrastructure; interoperability; remittances

7. Secured Transactions – legal framework and market / credit infrastructure

8. Insurance – supervision and capacity of sector for outreach and market development

9. Pensions – expand pensions to more workers and digitize payments

10. Consumer Protection and Financial Literacy – widespread awareness, investor education andstandards

The NFIS was developed in 2015 through an extensive consultative process, gap analysis, andprioritization of areas of focus, :

1. Digital Transactional Accounts – digitization; more access points to achieve scale / viability

2. SME Finance – enabling policy and legal environment for product diversification

3. Agricultural Finance – enabling legal framework, and capacity of FIs and farmers

4. Islamic Finance – capacity building and policy / regulations to further diversify sector and products

5. Housing Finance – housing policy; property registration reforms; market development

6. Payments Systems – digitization; payments infrastructure; interoperability; remittances

7. Secured Transactions – legal framework and market / credit infrastructure

8. Insurance – supervision and capacity of sector for outreach and market development

9. Pensions – expand pensions to more workers and digitize payments

10. Consumer Protection and Financial Literacy – widespread awareness, investor education andstandards

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Strategic Framework for NFIS - 2015

ENABLER 4: Public & Private Sector Commitment and CoordinationENABLER 4: Public & Private Sector Commitment and Coordination

ENABLER 1: Financial / Payments / ICT InfrastructureENABLER 1: Financial / Payments / ICT Infrastructure

ENABLER 3: Enabling Legal and Regulatory EnvironmentENABLER 3: Enabling Legal and Regulatory Environment

DRIVER 3: FINANCIAL SERVICEPROVIDERS• Providers develop systems,

knowledge, products to servenew market segmentsprofitably and safely



DRIVER 2: ACCESS POINTS• Expand and Diversify Access

Points


Points

DRIVER 1: DIGITAL TRANSACTIONACCOUNTS• Expand Access to Digital

Transaction Accounts (DTAs)• Drive Scale and Viability -

digitize payments



digitize payments

ENABLER 2: Supervisory & Judicial CapacityENABLER 2: Supervisory & Judicial Capacity

DRIVER 4: FINANCIAL CAPABILITY• Raise Financial Awareness &

Capability (Consumers,SMEs)






Points



digitize payments



Target: 50% adults (61.4 million people) should have digital transaction accounts including mobilewallet accounts by 2020.(Total No. of adults as on June 2015 were 122.8 million).

Promote access to financial services in rural and underserved areas.

ICT and broadband is identified among the main pillars which will enable such proliferation.

ENABLER 4: Public & Private Sector Commitment and CoordinationENABLER 4: Public & Private Sector Commitment and Coordination

ENABLER 1: Financial / Payments / ICT InfrastructureENABLER 1: Financial / Payments / ICT Infrastructure

ENABLER 3: Enabling Legal and Regulatory EnvironmentENABLER 3: Enabling Legal and Regulatory Environment






Points


Points



digitize payments



digitize payments

ENABLER 2: Supervisory & Judicial CapacityENABLER 2: Supervisory & Judicial Capacity





ENABLER 4: Public & Private Sector Commitment and Coordination

ENABLER 1: Financial / Payments / ICT Infrastructure

ENABLER 3: Enabling Legal and Regulatory Environment





digitize payments

ENABLER 2: Supervisory & Judicial Capacity

NFIS Coordination Structure

National Financial Inclusion Council

National Financial Inclusion Steering Committee

Finance Secretary, Governor, SBPChairman, SECP, Chairman, PTA, Chairman, FBR, Secretaries, Provincial

Finance Departments, Chief Commissioner Islamabad Capital Territory (ICT),co-opted Members with the approval of Chairman

Ministryof Finance

(Chair)Finance Minister

National Financial Inclusion Steering Committee

Technical Committees / Consultative Working Groups(Technical level representatives from both public and private sector, led by NFIS mainstakeholders as mentioned above)

Senior technical level representatives from MoF,SBP, PTA, SECP, FBR, SMEDA, and other private

and public sector institutions

SBP(Chair)Governor

PBA: Pakistan Banking Association; SMEDA: Small and Medium Enterprise Development Authority

PTA’s Active Role in the Implementation of NFIS

Chairman PTA is member of the Council

Member (Finance), PTA is member of the Steering Committee

DG (CA), PTA is member of the Technical Committee and sub-committees

Sub Committee 1 – Payment System InfrastructureSub Committee 2 – Digital Financial Services

National Financial Inclusion Council - TORs

Provides overall leadership to ensure implementation, through coordination and monitoring.

Terms of Reference:

1. Adopt and launch Pakistan’s National Financial Inclusion Strategy

2. Notify the National Financial Inclusion Steering Committee, monitor its performance, and provideguidance on an ongoing basis

3. Guide and lead the coordination for major NFIS legislative and policy reforms

4. Ensure that budgetary allocations provide sufficient resources for implementation

5. Monitor and evaluate the implementation of the NFIS, including (i) tracking the progress of reformactions, and (ii) monitoring indicators and results achieved

6. Meet bi-annually, or as deemed necessary, to take stock of the progress on the NFIS and makenecessary course corrections.

7. Other necessary functions to achieve its purpose.

Provides overall leadership to ensure implementation, through coordination and monitoring.

Terms of Reference:

1. Adopt and launch Pakistan’s National Financial Inclusion Strategy

2. Notify the National Financial Inclusion Steering Committee, monitor its performance, and provideguidance on an ongoing basis

3. Guide and lead the coordination for major NFIS legislative and policy reforms

4. Ensure that budgetary allocations provide sufficient resources for implementation

5. Monitor and evaluate the implementation of the NFIS, including (i) tracking the progress of reformactions, and (ii) monitoring indicators and results achieved

6. Meet bi-annually, or as deemed necessary, to take stock of the progress on the NFIS and makenecessary course corrections.

7. Other necessary functions to achieve its purpose.

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NFIS Steering Committee - TORs1. Lead intra-government, inter-institutional and public-private coordination

2. Notification and oversight of Technical Committees with clear mandates, responsibilities,milestones, and resources

3. Ensure that a functional NFIS Secretariat is in place and has sufficient capacity for monitoring andevaluation, reporting and administrative support

4. Approve work-plans submitted by Technical Committees, with support from the Secretariat

5. Identify, communicate, and work towards acquiring sufficient resources from various funding sources(government budgets, donors, international institutions, private sector etc.)

6. Meet on quarterly basis, or more frequently where deemed necessary, to monitor progress andprovide guidance

7. Report to National Financial Inclusion Council on implementation, progress and results through regularperiodic reports

8. Disseminate and perform policy advocacy for visibility of NFIS

9. Perform other duties as directed by the National Financial Inclusion Council

1. Lead intra-government, inter-institutional and public-private coordination

2. Notification and oversight of Technical Committees with clear mandates, responsibilities,milestones, and resources

3. Ensure that a functional NFIS Secretariat is in place and has sufficient capacity for monitoring andevaluation, reporting and administrative support

4. Approve work-plans submitted by Technical Committees, with support from the Secretariat

5. Identify, communicate, and work towards acquiring sufficient resources from various funding sources(government budgets, donors, international institutions, private sector etc.)

6. Meet on quarterly basis, or more frequently where deemed necessary, to monitor progress andprovide guidance

7. Report to National Financial Inclusion Council on implementation, progress and results through regularperiodic reports

8. Disseminate and perform policy advocacy for visibility of NFIS

9. Perform other duties as directed by the National Financial Inclusion Council

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NFIS Technical Committees - TORs1. Formed in each thematic area (e.g. Payments and DTAs, SME Finance, Agriculture Finance,

Housing Finance, Islamic Finance, Insurance, Pensions, Gender, Financial Literacy and ConsumerProtection etc)

2. Propose detailed implementation work plans, including assignment of responsibilities, timelines,milestones, and resource requirements to the Steering Committee

3. Resolve technical issues and propose solutions to the Steering Committee in order to achievespecific NFIS objectives

4. Consult with other industry players or stakeholders to get buy-in on proposed actions, solutions andplans

5. Provide information on progress in implementation and related targets to the Secretariat on aquarterly basis, or as needed

6. Propose changes and course corrections to agreed Action Plans or targets, as required

1. Formed in each thematic area (e.g. Payments and DTAs, SME Finance, Agriculture Finance,Housing Finance, Islamic Finance, Insurance, Pensions, Gender, Financial Literacy and ConsumerProtection etc)

2. Propose detailed implementation work plans, including assignment of responsibilities, timelines,milestones, and resource requirements to the Steering Committee

3. Resolve technical issues and propose solutions to the Steering Committee in order to achievespecific NFIS objectives

4. Consult with other industry players or stakeholders to get buy-in on proposed actions, solutions andplans

5. Provide information on progress in implementation and related targets to the Secretariat on aquarterly basis, or as needed

6. Propose changes and course corrections to agreed Action Plans or targets, as required

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Technical Committees1. Digital Financial Services and Payment Systems2. Microfinance, Agriculture Finance, SME Finance and Housing

Finance3. Insurance4. Pension5. Financial Literacy and Consumer Protection6. Islamic Finance

160+ Members18 Working Groups.

1. Digital Financial Services and Payment Systems2. Microfinance, Agriculture Finance, SME Finance and Housing

Finance3. Insurance4. Pension5. Financial Literacy and Consumer Protection6. Islamic Finance

160+ Members18 Working Groups.

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Action Plans1. Promote Digital Transaction Account – June 20172. Lower NADRA’s Verification and Validation Cost – Dec.

20163. Foster Innovations to Develop Client Centric Products

and Services – June 2017.4. Expand ATM NW (June 2017) and Connect Pakistan Post

to National Payment System (June 2019).5. Adoption of Automated Land Record – June 2017

1. Promote Digital Transaction Account – June 20172. Lower NADRA’s Verification and Validation Cost – Dec.

20163. Foster Innovations to Develop Client Centric Products

and Services – June 2017.4. Expand ATM NW (June 2017) and Connect Pakistan Post

to National Payment System (June 2019).5. Adoption of Automated Land Record – June 2017

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Action Plans6. Digitizing Microfinance by Linking MF Industry with DigitalPlatform – Mar 2017.7. Creation of Electronic Collateral Registry – June 20178. Develop Credit Scoring Model for Micro and SmallEnterprises – Dec 2019.9. Develop Shariah Framework for Banking and NonBanking Microfinance Institutions – June 201810. Develop Program for Women Entrepreneurship – June2017.

6. Digitizing Microfinance by Linking MF Industry with DigitalPlatform – Mar 2017.7. Creation of Electronic Collateral Registry – June 20178. Develop Credit Scoring Model for Micro and SmallEnterprises – Dec 2019.9. Develop Shariah Framework for Banking and NonBanking Microfinance Institutions – June 201810. Develop Program for Women Entrepreneurship – June2017.

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NFIS Action Plan – Example AreaDigital Transactional Accounts (DTAs)

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NFIS Secretariat - TORsHoused in SBP, led at senior level (minimum Director level), with sufficient capacity in terms of expertsand analysts. Complemented by external experts.

1. Perform Monitoring & Evaluation functions to support the Steering Committee and the NationalFinancial Inclusion Council

2. Conduct data aggregation on work plans and target indicators, consolidating inputs from TechnicalCommittees, and other entities as required.

3. Reporting to the Steering Committee, on a periodic basis, and as required

4. Provide research, technical and administrative support to Technical Committees

Housed in SBP, led at senior level (minimum Director level), with sufficient capacity in terms of expertsand analysts. Complemented by external experts.

1. Perform Monitoring & Evaluation functions to support the Steering Committee and the NationalFinancial Inclusion Council

2. Conduct data aggregation on work plans and target indicators, consolidating inputs from TechnicalCommittees, and other entities as required.

3. Reporting to the Steering Committee, on a periodic basis, and as required

4. Provide research, technical and administrative support to Technical Committees

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Potential of Digital Financial InclusionPotential of Digital Financial Inclusion

• Pro-poor pricing model , providing lowest cost financial services in thecountry

• Largest network of customer touch points - institution owned• Legacy Brand with high trust value among the masses

Strategic Initiative: Pakistan Post Digital Financial Services

3.5 MCustomers

1.3 M Pension Customers 12,000 + touchpoints

2M annual Trx

• Pro-poor pricing model , providing lowest cost financial services in thecountry

• Largest network of customer touch points - institution owned• Legacy Brand with high trust value among the masses

Strategic Initiative: EOBI – Pension Payment Digitization

500,000+ Registered Pensioners PKR1.9 Billion Disbursement

• EOBI currently serve 360,000 pension earners• The current payment system of EOBI lacks efficiency and transparency• Limited cash out points for pensioners creating hurdles• Bank Alfalah already won distribution bid for EOBI

EOBI: Employees Old Age Benefits Institute

Rationale• USC is in the process of getting an

ERP system on board to deploy adigital payment mechanism

• Deploying mPOS terminals based on aprovider agnostic model

Strategic Initiative: Utility Stores Corporation’s retailpayment system

Project Outcomes• Increased efficiency and reduced cash

management cost• Gain useful insights about consumer

and merchant behavior.• Opportunity for Government to

implement direct benefit transferschemes for social protection

5,800 Touch points PKR 82 B Revenue (2013-14)53 M customers / Year

Rationale• USC is in the process of getting an

ERP system on board to deploy adigital payment mechanism

• Deploying mPOS terminals based on aprovider agnostic model

Project Outcomes• Increased efficiency and reduced cash

management cost• Gain useful insights about consumer

and merchant behavior.• Opportunity for Government to

implement direct benefit transferschemes for social protection

Rationale• Support largest Government Payment

handler in the country• NBP has already formulated a

department with well staffed team todigitize its government payments

• Opportunity to bank 20 millionunbanked walk-in customers

Strategic Initiative: National Bank of Pakistan –Payments Digitization

PKR5 Trillion Govt Trx / Yr 20 M Walk-in Customers 1400+ touch points

Rationale• Support largest Government Payment

handler in the country• NBP has already formulated a

department with well staffed team todigitize its government payments

• Opportunity to bank 20 millionunbanked walk-in customers

The Opportunity / Potential

134 million biometricallyverified SIMs (providesuniquely authenticated

database for m-services)

30 million mobilebroadband subscribers

Network of 90,000unique m-bankingagents’ locations

285,000 m-bankingagents

11,000 ATMs

Switches (1-LINK,MNET),

(only 1-Link is linked tomobile payments)

ProgressiveTelecom and

FinancialRegulators

The Opportunity / Potential of Mobile Banking inPakistan

Less costlysmartphones; Q mobileJ5500 Rs.2,800 ($27),

G Five Shark-IRs.3,250 ($31)

24 million daily hitson the websites of

olx, rozee andpakwheels

50,000 Points ofSale

Nearly 15 million m-wallet accounts 67,624 SECP

registeredcompanies

Nearly 2 millionmerchants / shops

Well establishedNADRA database

28

Policy and Regulatory Environment forMobile Banking

Policy and Regulatory Environment forMobile Banking

29

To unleash the potential of Mobile Banking, Regulators must…

Recognize the need for technology and new players in the financial sector togrow mobile baking.

Create an open and level playing field that allows both banks and non-bankproviders to offer the service.

Allow for a diversity of payment methods and broadness of scope for fundstransfer and storage.

30

Recognize the need for technology and new players in the financial sector togrow mobile baking.

Create an open and level playing field that allows both banks and non-bankproviders to offer the service.

Allow for a diversity of payment methods and broadness of scope for fundstransfer and storage.

A supportive role for telecommunications policy andregulation for mobile banking

Allow the financial sector regulator to take the lead but remain collaborative.

Provide clarity on the lead regulator & dispel industry confusion that can harm industrygrowth.

Adopt a ‘Mobile for Development’ outlook:

▪ Be an advocate for operators’ role in Mobile Money and creating digital societies▪ Support the building of a broader ecosystem that leverages Mobile Money to offer socio-

economic benefits

Support simplification and harmonization of KYC processes for mobile money and SIMregistration

Contribute to the expertise for development of appropriate technology and securitystandards

Support lower transaction costs including taxes.

31

Allow the financial sector regulator to take the lead but remain collaborative.

Provide clarity on the lead regulator & dispel industry confusion that can harm industrygrowth.

Adopt a ‘Mobile for Development’ outlook:

▪ Be an advocate for operators’ role in Mobile Money and creating digital societies▪ Support the building of a broader ecosystem that leverages Mobile Money to offer socio-

economic benefits

Support simplification and harmonization of KYC processes for mobile money and SIMregistration

Contribute to the expertise for development of appropriate technology and securitystandards

Support lower transaction costs including taxes.

Regulatory Framework for Mobile Banking in Pakistan

SBP’s Branchless Banking Regulations, 2008 (updated 2011)

MoIT Policy Directive, May 2008

SBP’s Rules for Payment System Operators (PSOs) and Payment System Providers(PSPs) issued in Oct 2014 for e-payment gateways.

PTA’s Regulations for Technical Implementation of Mobile Banking, 2016SBP’s Regulations for Mobile Banking Interoperability, 2016

32

Applicable on mobile operators, TPSPs and financial institutions thatoffer m-banking services

Provides detailed mechanism for technical implementation of one-to-one and any-to-any model of m-banking

Existing models (one to one) will continue with their arrangementswithout the requirement of separate license

All TPSPs are required to acquire a class license from PTA andauthorization by SBP

All TPSPs and operators have to enter into SLAs with SBP authorizedFinancial Institutions.

Salient Features of PTA & SBP Joint Regulations

Applicable on mobile operators, TPSPs and financial institutions thatoffer m-banking services

Provides detailed mechanism for technical implementation of one-to-one and any-to-any model of m-banking

Existing models (one to one) will continue with their arrangementswithout the requirement of separate license

All TPSPs are required to acquire a class license from PTA andauthorization by SBP

All TPSPs and operators have to enter into SLAs with SBP authorizedFinancial Institutions.

33

A joint PTA and SBP committee to resolve the disputes between theparties, and to protect consumers’ interest.

Operators and TPSPs shall put in place an effective andcomprehensive consumer protection mechanism against risks offraud, loss of privacy, delays in service provisioning etc. to theconsumers.

Quarterly Review of Regulations and SOPs

Salient Features of PTA & SBP Joint Regulations

A joint PTA and SBP committee to resolve the disputes between theparties, and to protect consumers’ interest.

Operators and TPSPs shall put in place an effective andcomprehensive consumer protection mechanism against risks offraud, loss of privacy, delays in service provisioning etc. to theconsumers.

Quarterly Review of Regulations and SOPs

34

Development of Mobile Banking Industryin Pakistan

Development of Mobile Banking Industryin Pakistan

35

Telenor

TameerMicrofinance

Bank Ltd.

CM Pak

Askari BankLtd.

Mobilink

WaseelaMicrofinance

Bank Ltd.

Ufone

U-Microfinance

Bank Ltd.

Warid

Bank AlfalahLtd.

Competitive M-banking Market

Mobile operator - bank partnerships

Easy Paisa(Oct 2009)

Time pey(On time)

(Nov 2012)

Jazz cash(Dec 2012)

U-Paisa(Jul 2013)

Mobile Paisa(Dec 2013)

4 Stand Alone Banks

UBL Omni HBL Express MCB Lite Meezan Bank(Apr 2010) (Apr 2013) (Dec 2013) (Mar 2016)

Number of m-banking agents and m-walletaccounts

Total mobile banking accounts (m-wallets) inPakistan are approx. 15.5 million (34% of the 45million commercial bank accounts)

Almost 375 million annual m-bankingtransactions were made with a volume of overRs.1,920 billion (approx. $19 billion). Upto 10xmore is possible by 2020.

There are more than 285,000 m-banking agentswhich are more than 23 times the total number ofbank branches in Pakistan.

Mobile Banking Scenario in Pakistan

8.0

10.0

12.0

14.0

16.0

150,000

200,000

250,000

300,000

Source: State Bank of Pakistan

There are more than 285,000 m-banking agentswhich are more than 23 times the total number ofbank branches in Pakistan.

More than 86% of m-banking transactions arecarried out over the counter (OTC) throughagents.

The account to account transfers are very few.Only 39% of the m-banking accounts are active

0.0

2.0

4.0

6.0

8.0

0

50,000

100,000

150,000

Number of m-wallet accounts (in million) (RHS)No. of agents

M-banking Deposits and Transactions

YearDeposits in m-banking

accountsNo. of m-banking

transactionsAmount transacted through

m-banking accounts

Rs. in million Growth (%) In million Growth (%) Rs. in million Growth (%)As at year end (as of 31st

Dec.) For the year (i.e. Jan. to Dec.)As at year end (as of 31st

Dec.) For the year (i.e. Jan. to Dec.)

2011 946 59.0 209,120

2012 3,186 237% 120.9 105% 492,282 135%

2013 8,740 174% 191.9 59% 802,496 63%

2014 23,450 168% 278.4 45% 1,352,517 69%

2015 - - 375.0 35% 1,920,000 42%Figures for the year 2015 are provisionalSource: State Bank of Pakistan

Tameer Microfinance Bank Ltd. Owned by Telenor

Outreach as of 31st Dec. 2015:

Nationwide Easypaisa Agents: 96,060Total Depositors: 5 MillionBranchless Banking Depositors: 3.3 MillionTotal Deposits: Rs.15.6 BillionTotal Transaction Volume: 3.4 TrillionTotal Active Borrowers: 287,825

Outreach as of 31st Dec. 2015:

Nationwide Easypaisa Agents: 96,060Total Depositors: 5 MillionBranchless Banking Depositors: 3.3 MillionTotal Deposits: Rs.15.6 BillionTotal Transaction Volume: 3.4 TrillionTotal Active Borrowers: 287,825

39

International Recognition

Telenor’s Easy Paisa won People’s Choice Awardin Wall Street Journal’s Financial InclusionChallenge – 2015

Telenor’s Easy Paisa was nominated for the BestMobile Money Award in GSMA Global MobileAward 2014

Telenor’s Easy Paisa was nominated for the BestMobile Money Award in GSMA Global MobileAward 2014

According to the Consultative Group to Assist thePoor (CGAP), Pakistan is one of the fastestdeveloping market for branchless banking in theworld and provides an enabling environment forinnovative m-banking models (CGAP 2011).

40

• Low usage of m-wallet accountsActive to total m-wallet accounts ratio is only 39%

• Mobile Money users are unable to use their electronic money in their dailylives in the same way they use cash – to buy their essential daily items

• Expensive mobile money transactions (mostly through OTC)

• Lack of merchant acceptance

• High taxes (16% sales tax and 15% WHT on the earnings of agents). Govt.has also imposed additional WHT on the transaction amount of non-filer.

• Low Interoperability in payments: No acceptance of m-wallet accounts on the20,000 POS machines deployed in the market by Banks

Challenges to Mobile Banking Industry in Pakistan

• Low usage of m-wallet accountsActive to total m-wallet accounts ratio is only 39%

• Mobile Money users are unable to use their electronic money in their dailylives in the same way they use cash – to buy their essential daily items

• Expensive mobile money transactions (mostly through OTC)

• Lack of merchant acceptance

• High taxes (16% sales tax and 15% WHT on the earnings of agents). Govt.has also imposed additional WHT on the transaction amount of non-filer.

• Low Interoperability in payments: No acceptance of m-wallet accounts on the20,000 POS machines deployed in the market by Banks 41

• Reduce the cost of mobile money transactions including taxes, both foragents as well as consumers.

• Awareness campaigns

• Industry collaboration

• Low KYC requirements for merchants

• Interoperability is required beyond Account to Account (A2A) i.e. ability forcustomers to transfer money between different mobile money schemes aswell as the ability to transfer money between accounts at mobile moneyschemes and accounts at banks.

Required Actions

• Reduce the cost of mobile money transactions including taxes, both foragents as well as consumers.

• Awareness campaigns

• Industry collaboration

• Low KYC requirements for merchants

• Interoperability is required beyond Account to Account (A2A) i.e. ability forcustomers to transfer money between different mobile money schemes aswell as the ability to transfer money between accounts at mobile moneyschemes and accounts at banks.

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Government has a continuing role to play by shifting more of their operationsonto digital platforms

An increase in government distributions can increase trust in digital financialservices.

Higher volumes could reduce the cost of payments for merchants.

Shift from USSD channel to the development of mobile apps

Required Actions

Government has a continuing role to play by shifting more of their operationsonto digital platforms

An increase in government distributions can increase trust in digital financialservices.

Higher volumes could reduce the cost of payments for merchants.

Shift from USSD channel to the development of mobile apps

Mobile phone apps are now the second most common accesschannel after USSD.

Comparing bank access to smartphone adoption, by country (2015 vs. 2020)

Country with at least oneprovider offering an app

Country with at least one provider processing morethan 15% of

Country where no providerscurrently offer an app

Source: GSMA

Products and services to meet the unaddressed needs of the masses.

Examples: Micro Life and Health Insurance, Micro Pension, Micro EducationSavings Plans, etc.

Milvik: Accidental Life Insurance Plan:

Premium: Re.1 per day

Coverage: Rs.150,000

Pension:

Saving Re.1 per day

Pension: Rs.6,000 per month.

Required Actions

Products and services to meet the unaddressed needs of the masses.

Examples: Micro Life and Health Insurance, Micro Pension, Micro EducationSavings Plans, etc.

Milvik: Accidental Life Insurance Plan:

Premium: Re.1 per day

Coverage: Rs.150,000

Pension:

Saving Re.1 per day

Pension: Rs.6,000 per month.

Thank you.

[email protected]

46

Thank you.

[email protected]

Documents

Pakistan Telecommunication Authority - WORKING DRAFT Printed … · 2017-11-01 · Pakistan accounts for 5.2% of the world’s unbanked adults • Over 50 countries have set national