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Rise of mobile banking

BR Research
18 Apr, 2022

Statistics from late last year show that banking customers in Pakistan were transacting more (in value terms) via the ‘mobile banking’ channel than they were withdrawing through ATMs or making transfers or payments using the ‘Internet banking’ channel. That’s one of the main highlights of the latest ‘Payment Systems Review’ released last Friday by the State Bank of Pakistan for the Oct-Dec quarter in 2021.

Latest data show the continuation of significant yearly and quarterly growth across all the major alternate delivery channels (ADCs) in the banking sector – mainly the ATMs, point-of-sale (POS) machines, Internet banking and mobile banking. But it is the mobile channel banking that stands out in a pack of high-performing digital banking channels. The Internet banking is at number two in terms of growth, the POS platform at number three, whereas ATMs stand last but transactions are growing in healthy terms.

As per SBP data, mobile banking users performed 94 million transactions worth Rs2.92 trillion in Oct-Dec 2021, leading to yearly growth of 114 percent in volume and 162 percent in value. Average transaction size in the quarter stood at Rs31,134, which is an increase of 23 percent year-on-year. This suggests that folks are using it for higher-value transactions. Transaction size in this quarter averaged Rs71,734 (up 23% YoY) for Internet banking, Rs13,658 (up 3% YoY) for ATM and Rs5,672 for POS (up 14% YoY).

On a per annum basis, calculations based on SBP data show that mobile banking transactions in entire CY21 reached 286 million, with a total value of Rs7.97 trillion. This resulted in year-on-year growth of 120 percent in volume and 156 percent in value terms. Average transaction size during last year grew 17 percent year-on-year to reach Rs 27,883. There were 11.9 million mobile banking users at the end of December 2021, a growth of 27 percent over December 2020, an increase of roughly 3 million users.


Over in the Internet banking space, CY21 transaction volume grew 61 percent year-on-year to reach 116 million and transaction value increased 89 percent to Rs7.6 trillion. The POS transaction volumes during CY21 increased 53 percent year-on-year to reach 109 million and value grew 50 percent year-on-year to reach Rs559 billion. Whereas ATM transaction volumes were up by 21 percent year-on-year to reach 649 million and value grew 25 percent year-on-year to reach Rs8.79 trillion.

The growth in mobile banking could be further increased if more banks started to offer this service. As of December 2021, while 35 banks offered ATM services, only 27 provided mobile banking platforms (whereas 28 banks offered Internet banking and only 9 banks were doing POS). While the pandemic has accelerated users’ migration to digital channels such as mobile banking, the need is to financially include tens of millions of unbanked Pakistanis so that cash-based and informal economy can be reduced.
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