The Pakistani mobile financial services (MFS) market is one of great potential, with more than 100 million mobile phone subscribers and only 26 million people formally banked and maintaining accounts.
In 2010, 88% of the Pakistan population did not have access to financial services. There were only 16 million bank accounts for a population totaling 180million (CGAP, 2010).However, in direct contrast to this, the mobile market enjoys 65% penetration – a figure which is set to grow to 95% by 2013 (PTA, 2011).
In March 2008, the State Bank of Pakistan was one of the first regulators globally to introduce guidelines around branchless banking. The regulations were designed to encourage banks to be more inclusive in their product and service offerings by rolling-out branchless banking services in largely underserved areas with large unbanked populations.
This market environment provided a‘perfect storm’ of factors that presented the potential for the rapid adoption of MFS. Since its introduction, the MFS market in Pakistan has evolved from a couple of trail blazing deployments, to become a global case study for the MFS industry.
The shared platform allows banks to use the same technology to deliver MFS. The use of a single, flexible platform via a Managed Services Provider (MSP) allows banks to focus on delivering the right services by ensuring the platform adheres to the relevant regulations and standards, rather than individual deployments.
Additionally with a SaaS approach, banks can concentrate on their core competencies by leaving the technology hassles to be managed by the service provider.
However the platform is more than just technology. By enabling interoperability and third party integration Pakistan’s single shared platform has been a significant catalyst for mobile financial services uptake. Through collaboration, participants have been able to think big, start small and scale up fast, an execution mantra credited to MCB Bank as the first adopter of these services.
In a little over a year of launching MCB mobile, MCB Bank had processed more than five and a half million customer transactions, with a value of over Rs 10.6 billion.
Catalysed by the success of MCB Banks deployment, using a shared platform approach, the Pakistani MFS market grew rapidly.
Shortly after MCB Mobile was launched, Telenor launched a service called Easypaisa. The service is part of the shared platform and has been similarly successful, seeing rapid subscriber uptake.
A number of key milestones can be identified to track this success:
2010 – MCB Bank was the first bank anywhere in the world to be shortlisted for The GSMA’s Global Mobile Money Transfer Award and to win the MMT Award for the best bank led MFS Programme.
2011 – Fundamo and Access Group won the [email protected] ICT Award 2011 for “Best in Managed Services” for MFS via a shared platform
2012 – Meezan Bank launches the world’s first Sharia compliant MFS service using the Fundamo-Access MFS shared platform
In order forthe MFS market in Pakistan to continue to evolve and be successful, service providers need to meet new business challenges that threaten to stifle market growth.
The key business challenge for the market is how to drive consumer activation. To date many service providers, while registering a large number of users, have struggled to sustain on-going use, with many seeing no more than a 2% activation rate.
Key industry players from MCB Bank, VisaInc, Fundamo and Access Group argue that while new technology has made MFS possible, without the right business model or approach MFS won’t be successful.
The launch of Visa Mobile Prepaid in November 2011 was the first major step towards delivering interoperability to MFS in developing markets, helping to solve the customer acquisition challenge. It enables previously “closed loop” systems, solid financial services networks, to interoperate with the wider financial services ecosystem, connecting billions of unbanked consumers to each other and to the global economy.