This post is written by Khurram Sikander, SBI Resident Advisor for UBL Omni in Pakistan.
During the last couple of months, the SBI Pakistan team has had the opportunity of meeting various stakeholders in the branchless banking arena in Pakistan. A lot of interesting conversations took place about the roadmap of the industry and how new players entering the market would shape the path of financial inclusion for the 90% unbanked population. From our experience of working with different initiatives in Pakistan and analyzing the State Bank of Pakistan’s branchless banking quarterly reports, we have observed that over the counter (OTC) transactions remain the most popular service used by customers. OTC domestic remittances and bill payments form a major chunk of the branchless banking business and are a source of consistent revenue for agents, as well as service providers.
The State Bank data as of December 2011 shows that 80% of the transactions are being conducted OTC. Agents favor OTC over account-based transactions since they view the former as sustainable revenue on top of their core business.
In the present environment, branchless banking service providers have been discovering that when a walk-in customer requests to pay a bill or transfer money, the agent chooses the platform that provides them the best commission. This theme has resonated in numerous agent surveys we have conducted over the last 18 months. The revenue earned through walk-in customers may provide existing service providers a false sense of security that the agent network can be sustained around OTC payments. As new service providers start offering OTC services through organically built agent networks or start cannibalizing agents, institutions will realize that the agents are as loyal to the brand as the next best incentive. Continue reading