SBP Orders Branchless Banks To Partner With Third Party Financial Institutions

SBP has made it mandatory for commercial and microfinance banks and telecom operators to partner with a financial institution as Third Party Service Provider (TSPS) in order to enhance their penetration of services and facilitate their customers with more options.

Telecom operators, in collaboration with microfinance banks, are providing branchless banking on the model of one telco-one bank. Their customers with an m-wallet can only transfer money from the account holder of the same service.

The involvement of TSPS as partners will help these branchless banks to setup connectivity in a way that customers will be able to make their transactions from one branchless banking service to another as they do via interbank fund transfer through mobile/internet or ATMs from one bank to another.

There are 10 branchless banking services operating in the country with 21.8 million active accounts out of total 39.2 million accounts.

SBP statement said:

It is mandatory for AFI (s) and Telecom Operator (s) to join with one of the TPSP to facilitate each other in the provision of interoperable Branchless Banking services including AMA Scheme. For this purpose, TPSP(s) shall sign interconnect agreements/SLAs with all the telecom operators and AFIs.

Roles and Benefits of TSPS

The Third Party Service Provider (TPSP) model will offer maximum outreach and connectivity whereby all banks and all mobile network operators shall be able to entertain each other‘s customers.

The objective of this regulation was to create an enabling regulatory environment, bring systemic harmony, introduce standardization and set benchmarks for mobile banking interoperability.

Asaan Mobile Account (AMA) scheme has emerged as one of the important use cases of Third Party Service Provider (TPSP), as such, integration/interconnection of Authorized Financial Institutions (AFIs) and Telecom Operators with TPSP(s) is essential for the successful implementation of AMA Scheme.

The collaboration of banks, telecom operators and TSPS will help achieve National Financial Inclusion Strategy (NFIS) objectives and targets, SBP stated.

The central bank instructed all branchless banking to upgrade their models accordingly in May 2016. However, not a single branchless banking has worked on this model.

The banking regulator, however, made this model mandatory now for every branchless banking service. It should now set a deadline and penalize these operators in case of non-compliance.

  • its TPSP not TSPS and even today branchless banking customers can transact across platforms. AMA will only create interoperability for USSD, rest of the Services are already interoperable. Do some research or at least try and proof read before publishing. Propk is st best copying pasting masala news, whenever they try and do a piece with own “intelligence” this is what comes out.

    • Absolutely. I can do almost every basic banking stuff with my Easypaisa or JazzCash account. I can transfer money to almost every bank in Pakistan…

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