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Digital innovation changing consumer preferences

Mobile devices (smartphones and tablets) have clearly been the main driving force behind the country’s recent surge in internet users, which has almost doubled from 2016. Taking note of mobile’s influence over the Pakistani population, a lot of mobile-wallet options have popped up during the past few years. These services offer anything from online transactions to quick and easy transfers using NFC to online bill payments and much more.

Mobile finance apps are becoming ubiquitous across the world. Mobile banking is of huge importance, for example, in Africa, where smartphone penetration is high and growing exponentially, a generation of “unbanked” African citizens is finally able to digitalize their assets and gain exposure to financial products and services. Globally, the majority of people now have mobile technology to hand 24/7, making it an exceptionally powerful medium for sending money. From mobile wallet apps, to QR codes, to WhatsApp messages and SnapCash, it has never been easier to send small amounts to money to friends and family. Studies have even concluded that sending and receiving mobile money can have an empowering effect, inspiring social harmony and bringing disparate families and communities closer together. In China, however, apps like Tencent-owned WeChat are used by literally billions of people to micro-manage many different aspects of their lives — including their finances. From insurance, to credit, to micro-loans, mobile is often the preferred option. Ant Financial is another Chinese micro-finance provider whose tentacles reach across the whole of Asia and into Africa and the Middle East.

Traditionally, payment instruments in Pakistan are issued by banks without participation of non-banking entities. New technological innovations are now enabling non-banking sector to deliver innovative and efficient payment services to consumers at much lower cost. E-money globally is widely used for making retail payments in an economy and has played a crucial role in digitizing different types of payments in various countries. Electronic Money Institutions (EMIs) are entities that offer innovative, user-friendly and cost-effective low value digital payment prepaid instruments like wallets, prepaid cards, and contactless payment instruments including wearables. Globally, these innovative payment instruments have been instrumental in promoting cashless payments like merchant checkouts, e-commerce, transportation and toll payments etc. The financial services market is undergoing a lot of changes. Customers always have appetite for more and are well knowledgeable, looking for convenience and ease when it comes to financial services, particularly via internet and mobile phones making innovation and transformation two most powerful forces that are reshaping the banking industry. Customer expectations, technological capabilities, regulatory requirements, demographics and economics are some of the challenges that banks need to overcome in order to sharpen their tools for entering into the new era.

 

Modern powerful tendencies are reshaping the banking industry. Social media and evolution of mobile technologies force retail banking industry to evaluate. These changes have to touch every aspect of the industry – product development, marketing, service and management. In the age of fast growing influence of technology and innovation, banks need consistent evaluations for retail branch networks and payment systems. Cost effectiveness and customer-centric strategies become more and more important within developing global banking networks. In light of global digitalization, cyber security and fighting hack attacks become one of the general priorities. Changes in regulations and social activities also push banks to create new schemes for customer service and long-term product development strategies.

4G also had a significant impact on mobile phone banking transactions. The State Bank of Pakistan (SBP) reported that these transactions had crossed the Rs 410 billion mark, translating to a growth of 195%. According to the SBP, there are approximately 3.4 million registered users of mobile phone banking apps, with the bulk of the transactions falling under intra- and inter-bank funds transfer. However, usage seriously needs to move beyond the funds transfer category to the mobile commerce and retail sectors, especially with the enabling widespread access of 4G.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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