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Branchless banking, financial inclusion and digitization to drive banking industry

The banking industry in Pakistan is growing leaps and bounds in almost all aspects. Presently, there are 45 banks with a network of 15,549 branches spread all across Pakistan hosting some 53.11 million accounts. Out of 45, eleven banks are defined as microfinance banks. Number of ATMs has also risen which is a good sign. The banking industry is offering a wide range of products and services which cater to almost all segments of the population.

However, the latest figures reveal that a lot needs to be done as only 26 percent of the total population is in the fold of financial inclusion. State Bank of Pakistan (SBP) is contributing much in this domain by launching new policies, programs, relaxations and regulations. But it is not the sole responsibility of SBP alone rather all 45 banks must come forward to take part in these ventures of national cause which will have far-reaching consequences on the soundness of financial health of both the people as well as our national economy.

For the last many years, SBP in collaboration with the government is striving for financial inclusion of the disadvantaged segments of the population and other vital sectors. It has assigned high priority status and has emphasized utmost importance to neglected sectors such as agriculture credit, microfinance, SMEs and low cost housing etc. Besides, it has also focused on green banking practices in line with global standards, to address the worldwide phenomenon of environmental degradation and threat to ecology.

As regards microfinance loans, the performance of MFBs is not up to the mark as they need to reach out to the rural population more effectively. The MFBs should come out of their comfort zones and provide access of their offerings to those who need them the most in order to alleviate poverty. The picture of SME is also not much different. There is a decline of 8.5 percent in the quantum of loans on a year-on-year basis. So much needs to be done in this sector as well and banks need to change their perspective on SME lending.


One of the most impressive development and disruption in the banking sector is the emergence of branchless banking. By the end of 2018, branchless banking accounts increased by 4 million to 47.2 million of which 37.5 million comprised of males and 9.6 million were females. Although the gender based inequality needs to be addressed, growth of branchless banking accounts is an optimistic sign and their scope should be expanded to remote and isolated regions of Khyber Pakhtunkhwa (KPK), Balochistan, Gilgit-Baltistan (GB) and Azad Jammu and Kashmir (AJK). It is also worth mentioning that almost half of the banks are offering 24×7 internet banking solutions to 3.1 million customers.

There is no doubt that our banking industry is vibrant and responsive to frequent IT disruptions but it needs constant push to be more focused to deliver the best optimum performance in order to come out with more innovative products and services and strive for financial inclusion of the bottom of the pyramid segments which would undoubtedly go a long way in improving our key economic indicators. The only way to promote further progress is through increased financial inclusion, digitization and branchless banking.

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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