20 Things State Bank Must Do to Boost Financial Inclusion in Pakistan

In my last article, we learnt about missing efforts by the Branchless Banking Services (BBS) providers. I promised to come up with the list of items missing at Govt./Regulator end for the same to bring true Financial Inclusion in Pakistan.

The well-defined process of Financial Inclusion could only be implemented only if the Regulator and Government Authorities start thinking about the items on this list.

Make UBPS Collection Non-Mandatory for All Banks:

SBP, The Banks’ Regulator, makes mandatory UBPS (Utility Bills and Payments Services) collection for all commercial and MFB banks nationwide. Although it’s totally unjustified and loss making proposition but banks are doing it for the sake of regulation. This mandate made sense in 1990 – 2000 when there were no BB (Branchless Banking) regime and only Banks and Post Offices were collecting UBPS. However, when there is a thirty million wide agent network of BBS available across Pakistan, there is no need to keep UBPS mandatory.

The Regulators can suggest charging end users for UBPS collection and every bank can announce its UBPS collection rate. This will actually force end users to either pay UBPS through agents’ shop or to activate their wallet for payments of UBPS.

This little step will not only change the lives of end users but will also enhance Business opportunities for agents across Pakistan.

Announcing Rewards for UBPS Transactions Through Specific Billing Company:

SBP and Government jointly can announce different type of rewards or schemes to push people for paying UBPS online.

For example, there could be a scheme where customer of LESCO will be awarded with 100% refund of paid amount through a lucky draw, or paying through wallet will give let say 5% rebate next month etc.

Mandatory Wallet Opening for All Pensioners:

All pensioners of every department should be mandated to open wallets to get their pensions. Opening bank accounts won’t be easy for them as well as for banks to manage; wallet opening is always an easy and ongoing profitable task for BB players.

Pensioners can be offered different kinds of campaigns on opening wallets and getting pension disbursed.

Mandatory Wallet Opening for Employees of SOHO Companies:

Almost 10 million registered SME companies are working across Pakistan and 5 times this number must be working without getting properly registered. Every type of salary account should be mandatory on wallet, and special incentives should be announced for these companies while they are getting their employees’ wallets opened.

Mandatory Wallet Opening for Stipends:

Government, semi Government and private institutions are extending stipends for students across Pakistan. There should be a mandatory clause to deliver these stipends through Wallets. Minor accounts are already allowed in BB regulations, so SBP should drive this from the front and all other type of stipend disbursement should be discouraged across the board.

Cash Back on Digital Transactions:

When we talk about changing customers behaviors, obviously it is an uphill task to get this done. If someone is doing it voluntarily, they should be awarded with praise and reward. Every transaction made on digital channel should have something as cash backs i.e. monthly transactions made through Debit Cards of mobile wallets will give end user 0.50% cash back.

Now, this amount can be managed through creating a strategic fund like USF where every bank has to contribute minimum 5% of their bottom-line every year plus external funding and special funding by the Federal Government to drive this campaign aggressively.

Special Tax Credit on Digital Transactions:

If someone is doing more than 70% of his/her spending through digital means, they should be getting some kind of tax credit at the year end. This could make digital transactions happen rapidly and will massively change the behavior of end users.

Reducing Annual Charges of Wallets, Cards, and other Digital Services:

BB wallets annual charges and other digital service charges should be on lower side so that people don’t think Annual Payments are a burden.

Announcing Mandatory Saving Accounts for Wallet with Higher Returns:

BB wallets are being opened as current accounts, The Regulator should announce mandatory saving accounts for end users to attract customers in flow and people should be keeping money into wallets to get higher returns.

Taxes Collection Through Wallet ONLY (vehicle, property, etc):

Taxes collection should be routed through mobile wallets, and gradually this should become mandatory as the only method to do so. This will obviously increase the reasons to have a Mobile Wallet across the board.

Investing in Digital Financial Services:

There should be an awareness campaign for Financial Inclusion and people should be addressed through electronic media aggressively to build knowledge, importance and benefits and having a mobile wallet as mentioned here.

Digitization of National Savings:

National savings is a cash cow and widely spread institution of Govt. of Pakistan. Both prize bonds and savings are being handled non-digitally. Account holders should be getting their profits in their wallets on monthly basis and they should be given debit cards to utilize those funds.

Instead of reinventing the wheel, Govt. can decide to distribute all National Savings accounts wallet conversions/opening in all BB players across the board.

Digitization of State Life Insurance Corporation:

Sarkari’ insurance company is a large scale entity providing huge services across Pakistan through 1920 mechanism. There should be a move to digitize this ‘Gini’ and all insurance holders should be given wallets to pay their annual premiums as well as monitor their policy financials like real time data.

Forcefully Driving and Leading Pak-Pay Proposition:

Pak-Pay was a beautiful setup but due to uncertain reasons major banks are not opting in for the services neither are they trying to integrate their systems with the idea. If the Regulator takes this aggressively and drives to make it live by Q-II 2017, this will altogether change the dynamics of card industry in Pakistan and will really add value in terms of card usage on PSO.

Allowing Launch of Digital Prize Bonds to BB Players:

BB players should be allowed to issue digital prize bonds; this will make people happier to keep bigger savings in wallets and purchasing digital prize bonds for the sake of lucky draw prizes.

Making One Ended OTC Transactions Mandatory with Wallet:

Currently BIGGEST enemy of wallets penetration and usage is OPEN ENDED OTC. There should be restriction of one end wallet to have OTC transaction done. Either sender or receiver should be on wallet to get the transaction done.

Making POS and ATM Deployments Mandatory for All Commercial Banks at a Certain Ratio of Card Issuance Business:

Banks should be mandated to invest in ATM and POS machines based on a specific ration of card issuance. There are so many entities without ATM deployments and POS deployments aligned with their cards issuance numbers. Every FI should be allowed to have acquiring leg either at their own or through integrated model with some bigger acquirer and this should be invested on annual basis for new POS and ATM deployments.

Introducing and Promoting Third Party ATM/POS Networks:

Third party owned ATM and POS machines should be introduced and encouraged by the Regulator. This could be obviously a joint venture with some FI. This will revolutionized the ATM and POS network sketch across the board.

Regulations and SOPs for Online Businesses with Guaranty of Refund/Claims within closely monitored TATs:

In Pakistan there’s a bigger need of getting Online shopping experience smoother and reliable. People hesitate to shop online because of wrong delivery, over promising, fake items, delayed claims etc. There should be a policy to make them responsible by providing services to the vendor in terms of holding a security amount or bank guarantee or something else to make sure smoother and accurate deliveries. This will obviously change the behavior across Pakistan.

Quarterly Conference on BB Players on Value Addition in Products and Services:

The Regulator should have a quarterly conference on BB players and selected banks should be awarded with Value Added Awards. This will boost team morale as well as the speed of innovation and value addition at bank’s end.

Writer has over 15 years of experience in Telecom, FMCG and Digital/Retail Banking industries

  • I have been paying utility bills online since 2002 when I opened my first (student) bank account in UBL.

  • “Mandatory Wallet Opening for All Pensioners” guarantee you not many pensioners can even check their cell balance or recharge their cell phone with cards. you expect them to manage their livelihood?

  • This post should have been titled “20 Things State Bank Must Do to Help Mobile Money Providers” because these ideas will not result in Financial Inclusion in the short-run.

    Half of the ideas would have a severe impact on customers and the other half look completely unsustainable ideas!

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