TelecomHype

Mobile banking has undoubtedly taken the lead with the collaborative mobile banking model, where collaboration takes place between the carriers and the banks who can distribute the roles of the value chain amongst themselves. An example of this is ‘easypaisa’ from Telenor Pakistan and Tameer Bank.

The fast changing dynamics will soon take the Mobile banking to new levels. Before coming to the topic, lets take a look at this Stakeholder Impact Diagram from the Mobey Forum.

This figure clearly indicate that they principal stakeholder of the mobile financial services (MFS) is the ‘customer’, with MNOs, banks and merchants playing the key role to provide MFS.

In Pakistani market, so far we have seen mobile bill payments and mobile money transfer (domestic) playing in action and attracting the consumers.

Exploring on more customer demands from MFS I came across a study report from Innovar, a financial service consultancy. The report reveals the following observations as obtained from survey involving more than 7000 consumers to aid MFS developments.

1. Consumers are most likely to use mobile financial services for six categories:
   • purchase of perishables
   • bill payments
   • unmanned vending payments
   • purchases on internet
   • pre-paid top up
   • person-to-person payments (money transfer)
2. Consumers see mobile payments is more suitable for remote payments than face-to-face retail payments
3. Consumers prefer to use credit, as a from of payment method for mobile payments
4. Consumers aged 20-40 appear to be most receptive to the mobile payment services
5. Consumers prefer to use existing handsets for mobile payments
6. Registration processes and user interface need to be simplified in order to encourage greater
   consumer adoption

The observations marked in red are what I see as the potential big things mobile banking in Pakistan could take up. For now, let us analyze the services currently offered – mobile bill payments and mobile money transfer (domestic) by easypaisa. We shall take a look at how are they different from similar traditional services, how are they seen in other developing countries and their growth and reach.

Comparison with traditional services

Lets talk about mobile bill payments first. The traditional way we all know goes through the banks and queues. If a person got to do it personally he/she needs to take sometime out for the task and this has to be done in the banking hours during the day. Whereas with the bill payment solution from easypaisa, he/she does not have to be at a bank in a queue and no special taking out time during the day. Pay wherever on the go at any nearest merchant, franchise or service center. Imagine missing out a payment during the bank hours on the last day before the bill deadline. Do it with easypaisa, it works anytime during the day till the merchants and franchises are open, so late hour bill payments are also possible and chances of missing out the deadline are greatly reduced.

The second mobile financial service offered is the money transfer. Traditionally it is being done through bank drafts, money orders and hundi/hawala systems. All having their pros and cons as listed below.

Whereas the mobile money transfer solution from easypaisa gives a secure branchless money transfer experience. One can avail this even without having a mobile phone. All a person needs is valid CNIC and the transaction takes just a second to be done without any form entries and queues at any nearest merchant, franchise or service center.

MFS in other developing countries

Mobile financial services are in its infancy in Pakistan and the concept is somewhat alien to the consumers as new products are being launched. However the social impact can be analyzed by looking at some of the mobile banking models that have been introduced in the developing world. Also, by understanding how these models have been adopted and practiced.

The uptake of m-banking/m-payments systems has been particularly strong in Philippines, where three million customers use systems offered by mobile operators Smart and Globe and also in Kenya, where nearly two million users registered with Safaricom M-Pesa system within a year of its nationwide rollout. In Pakistan, only within a month of easypaisa money transfer launch, the transactions that have been carried out has already exceeded a number of 50,000 and the mobile bill payment amount exceeding Rs.50 million . Customer feedback has been encouraging and merchants report a hefty walk in number on a daily basis.

Considering the kind of acceptance and reception of these services by the consumer so far, the impact is not extraordinary as yet but successful nonetheless.

MFS -  growth and reach

Needless to say, mobile financial services holds immense promise in Pakistan where banking infrastructure only caters to 12% adults, while 62% of the population uses a mobile phone. MFS will give branchless banking opportunity to the unbanked population of the country. The only limit of its reach is the mobile coverage, which is not the limit in Pakistan as we have coverage in every nook and corner of the country. Moreover, it will help to formalize cash flows that will not only bring new clientele but will also enable customization of services to suit client-specific needs.