Mobile Banking in Pakistan


mobile-bankingWith a thriving market of 131 million, Pakistan ranks 5th in the arena ofAsia’s mobile phone users. Initially, considered a luxury affordable for a few, owning a mobile phone has now become a necessity. From the CEO of a multinational firm to the fruit vendor at the weekly bachat bazaar, the mobile phone has made its place in everyone’s life. It is one of the few technologies which have penetrated the urban as well as the rural markets. This huge base of mobile phone users presents an opportunity of tapping customers who are present at locations, previously considered inaccessible.

There has been a significant rise in tele marketing which is particularly visible in the financial sector. Banks have in-house call centers which not only operate the IVR (hotline) but are also engaged in making calls and generating leads for credit cards, personal loans and auto loans. In some banks, this function has even been out sourced to call center companies which help in soliciting business for banks.

To further optimize this channel, banks are also using mobile phone technology to provide value added services to their customers. Some of the features now available to customers include transaction alerts, balance alerts, mobile phone voucher top-ups etc. Currently, the two key players that have made considerable in roads into this arena are Easy Paisa and MCB Mobile. The list below summarizes the key services offered by them (Source of data as of September 2010):

Services Easy   paisa MCB mobile banking
Money   transfer To easy paisa mobile a/c   (s), CNIC To all bank a/c(s)
Cash   deposit Accepted by easy paisa   shops Accepted by MCB
Cash   withdrawal Available on easy paisa   shops ATM, MCB branches
Balance   inquiry Available Available
Utility   bills Available + Charges Available
Other   bills Available Available
Mini   Statements Available + Charges Available
Schedule   Payments Available Available
Pin   Management Available Available
Mobile   Recharge For Telenor customers For all mobile companies
Transaction   Limits Transaction   Limits apply on Sending/Receiving. No Limits
Transaction   Charges Transaction   Charges + 16% FED is applicable on banking services charges No Charges


The State Bank of Pakistan (SBP) issued the Mobile Banking guidelines in 2008. This formed the basis of the Branchless Banking (BB) models operating in Pakistan.

One-to-One Model

This model works as a Joint Venture between a bank and a mobile network services company (Telco). The bank offers mobile phone banking services to the customers of the specific Telco. Although this model may seem to limit the out reach but is economically viable as the bank and the Telco share the expense. Easy Paisa is currently working on this model, being a collaboration of Tameer Bank and Telenor.

One-to-Many Model

As the name suggests, this model allows a bank to offer mobile phone banking services to its customers irrespective of the Telco that they are using. This enables the bank to provide mobile banking services to all its customers and increases its potential customer base. In this model, the onus of the services rest on the bank and it has to bear a larger chunk of the cost. Currently, MCB Mobile is operating on this model.

Many-to-Many Model

This model is perhaps the most beneficial for the customers. Here, a number of banks and Telcos come together to offer services to all bankable customers. This model offers the maximum connectivity and hence maximum outreach but requires a central transaction processing system (like 1-link). The implementation of this model would require an integration of the financial sector and the Telcos, as they would operate on the lines of ATMs where the ATM card can be used on the ATM machine of any bank.

Advantages of Mobile Banking:

A number of factors make mobile banking a positive venture for banks. According to a research conducted by Consultative Group to Assist the Poor BB is 19% cheaper than the charges of conventional banks, therefore the average cost of carrying out a transaction is considerably reduced and eventually this benefit may be passed on to the customers. Other benefits of BB include:

  • Quick Turnaround Time:

Since transactions conducted via mobile phone services are electronically routed, the speed of the transaction is faster. For people who are fed up of standing in long queues outside bank branches can simply make their transaction via their mobile phone. Since the bank and Telco databases are digitally synchronized the posting time of the transaction is reduced. Also, confirmation messages prompt as soon as the transaction is carried out especially in cases where Credit/Debit card has been swiped or the cash withdrawn from the ATM. Currently, almost all the banks are providing the mobile alert feature to their customers.

  • Paperless Transactions:

A key area of concern for banks is the amount of physical documentation. This may be in form of deposit slips, pay order forms, ATM receipts, cheques, etc. Not too long ago, every time a cheque had to be written to withdraw money from a bank account. The advent of ATM cards and ATM machines changed this trend. Internet banking had a similar impact by allowing customers to access their bank statements online. No longer was the frequency of bank statements annual or semi-annual rather they can be accessed weekly or daily. The constant shift is towards decreasing the dependence on paper. Mobile banking allows utility bills payments, funds transfer and a host of other services via the mobile phone handset.

  • Cost Saving:

The most important factor that makes mobile banking viable is the cost benefit that it provides.  If customers start using their mobile phones to conduct their financial transactions, it will cause less customer traffic at branches. People will not be queuing in branches to pay their bills or wire money to another account instead they will be using all the bank services from the comfort of their homes. Less branch traffic would mean less customer service attendants to be hired. Once wired onto mobile banking, banks can even remove branches from their network and save on infrastructural costs.

These are only some of the key benefits identified by bankers currently engaged in developing and promoting mobile banking. The active participation of banks in this sector has shown a positive picture. As of May 2011, 17,448 BB agents have made over 15 million transactions. However, to get to the optimum level ample development is still required. Not only is it the technical knowledge but also intuitions into the market dynamics of this mammoth industry. It is definitely the next big thing to watch out for. Who knows, down the road ATM machines and credit cards may as well be replaced by some little application embedded in your mobile phone.


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