Digital banking continues to transform Pakistan’s financial landscape: SBP

September 28, 2023 (MLN): Mobile and internet banking transactions have witnessed an annual growth of 57% by volume and 81% by value, primarily due to increased consumer preference for digital channels to fulfill their financial needs, according to the Annual Payment Systems Review for the fiscal year 2022-23 released by the State Bank of Pakistan (SBP).

According to the review, digital transactions continued their growth trajectory owing to the increased consumers’ preference for digital channels of mobile and internet banking for meeting their financial needs.

E-banking transactions through Banks and Microfinance Banks (MFBs) grew by 29% while value increased by 21% during the year.

A similar growth pattern was also observed in Branchless Banking (BBs) transactions with the number of transactions increasing by 28% and value by 45% during FY23.

The review also highlighted that the number of e-banking users increased significantly. The year saw an increase of 15% in internet banking users, 30% in mobile banking users, and 42% in BB mobile app users.

Electronic Money Institutions (EMIs) also contributed meaningfully to the inclusion of digital banking users by opening more than 2 million e-wallets since their inception.

The e-banking is attracting more customers due to its efficient and instant payment solutions, and its transactions are growing at a steady pace over the years.

In contrast, paper-based transactions have declined by more than 4% during FY23 and cumulatively around 20% in the last five years. However, the value of paper-based transactions increased by 20% in FY23.

The Central Bank also highlighted that the Real-Time Gross Settlement (RTGS) system of Pakistan and Raast - Pakistan’s Instant Payment System, owned and operated by SBP, facilitate financial institutions and banking customers in processing and settling transactions.

During the year, RTGS processed 4.9m transactions amounting to Rs640.4 trillion, while 155m transactions were processed on Raast amounting to Rs3.2 trillion during this fiscal year.

The review also noted that financial institutions are strengthening their e-banking infrastructure by expanding Point-of-Sale (POS) terminals, Automated Teller Machines (ATMs), Cash/Cheque Deposit Machines (CDMs), e-commerce merchants and agents’ network to meet customers’ needs.

As of June 30, 2023, there were 115,288 POS terminals, 17,808 ATMs, 520 CDMs, and 6,889 e-commerce merchants for providing payment services to customers.

During the fiscal year, the number of transactions through POS (199.3m) and ATMs (809.7m) grew annually by 45% and 17% respectively.

Domestic e-commerce transactions using payment cards were 31.8m which amounted to Rs142 billion during the year.

During the same review period, there were 58.1m payment cards in circulation of which 44.5m were issued by banks and MFBs, 10.8m by branchless banks, and 2.8m by EMIs.

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