The use of the internet and mobile banking has become a surprisingly growing trend among bank customers. As many as 5.2 million people started using the internet for bank services with 10.8 million customers adopting mobile banking by the end of the financial year 2020-21.
The increasing use of digital modes of banking channels is encouraging not only for banks and customers, but it is also playing its part in the digitization of Pakistan’s entire economy.
Banks are offering a variety of financial services through Internet Banking, like intrabank and interbank fund transfers, scheduled fund transfers, utility bills payment, mobile airtime top-ups, intrabank credit card payment, and school fee payment, etc.
As of June 2021, 27 banks were offering Internet Banking and there were 5.2 million Internet Banking users registered with these banks. During the FY21, this channel processed 93.4 million transactions amounting to Rs. 5.7 trillion. These transactions showed year-on-year growth of 65.1% and 91.7% by volume and value respectively.
In the total Internet Banking transactions, the share of intrabank fund transfer transactions is 35.0% (32.7 million) and 36.8% (Rs. 2,084.2 billion) in volume and value of transactions respectively, whereas the share of interbank fund transfer transactions in volume and value of transactions is 41.5% (38.8 million) and 43.1% (Rs. 2440.3 billion) respectively.
The utility bills payment contributed 18.1% (16.9 million) in volume and 8.2% (Rs. 464.5 billion) in value of transactions and the residuals share was contributed by other miscellaneous payments including merchant payments, mutual funds payments, Zakat, and charities, etc.
The substantial growth witnessed during the last few years in the Internet Banking channel is quite encouraging. The push received from COVID-19 last year also resulted in remarkable growth in internet banking transactions in FY21.
Mobile Banking transactions or Mobile phone App-based banking services were being offered by 27 banks, including microfinance banks, to 10.8 million registered users as of June 2021. This channel processed 193.4 million transactions worth Rs. 4.9 trillion during FY21 showing a YoY growth of more than double the volume and value of transactions, more precisely, it registered a YoY growth of 133.6% and 178.7% in volume and value of transactions respectively.
Intrabank and interbank fund transfers were the main contributors to the total Mobile Banking transactions. Intrabank fund transfers contributed 20.1% (38.9 million) transactions by volume and 34.6% (Rs. 1,702.8 billion) transactions by value while interbank fund transfers contributed 44.8% (86.6 million) transactions by volume and 51.2% (Rs. 2,516.0 billion) transactions by value.
Utility bills payment had a volume of 31.1% (60.1 million) transactions and 2.2% (Rs. 106.2 billion) transactions by value within overall Mobile Banking volume and value of transactions respectively and insignificant residual share is contributed by miscellaneous payments using Mobile Apps.
The channel depicted a growing trend of transactions. During the FY21, it showed substantial growth as compared to the previous years. It is quite evident that Mobile Banking has been the preferred source of conducting transactions and making payments by the consumers. The channel has observed a more than double increase in terms of both volume and value of transactions during the year under review.
In the last five years, significant progress has been observed in the usage of Internet Banking and Mobile Banking channels showing annual transaction growth of 38.3% and 106.1% respectively.