Page 336 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

The Pakistan numbers are interesting not only for the steady growth they have shown in branchless banking
account registrations since 2011, but also for the last quarter results, where providers showed a marked
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increase in account registrations, particularly riding on the back of SIM registration drives underway to use SIM
KYC to open accounts. MobiCash also issued a press release in December 2015 noting a 20-fold increase in
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active mobile money accounts on a 30-day basis, growing from 25,000 in April 2015 to 500,000 in December
2015, incentivising mobile money users by giving free airtime on every cash-in. 31

A similar trend is also seen in Bangladesh, where account registrations have significantly increased (see Figure
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2). However, these wallets are not being used: Active accounts appear to have grown more slowly.

Figure 2 – Account registration in Bangladesh (Jan-2014 to Oct-2015)
35
30
25
Millions 20
15
10
5
0

No. of registered clients (Mn.) No. of active accounts (Mn.)

Source: Mobile Financial Services (MFS) comparative summary statement, Bangladesh Bank Available at: https:// www. bb. org. bd/ fnansys/
paymentsys/ mfsdata. php

These account registration numbers in Pakistan and Bangladesh (which are primarily OTC markets) are
impressive and illustrate that while OTC is the main method in both of these countries, it does not prevent
growth in account registrations.

Registration is important for product evolution, building an ecosystem, and achieving full financial inclusion
as previously discussed, but registration campaigns may be most optimally sequenced after launch. This
would allow providers to target specific user segments with tailored value added services via the mobile money
account, which may well result in much higher levels of revenue-generating use.

3.4 Problem 4: OTC reduce provider’s profitability

GSMA has pointed out that some revenue streams can decrease with OTC however, a comprehensive analysis
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on the impact of OTC on total revenue and profit is currently missing from the industry discussion. Two
important factors impact the profitability of an OTC deployment: 1) Increased costs of operation, including
agent commissions in competitive markets like Pakistan, where the OTC methodology has given the agents
extraordinary power over the providers and has led to providers having to pay higher commissions than
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29 The State Bank of Pakistan only reports figures back until Q4 2011, so that is as far as our analysis goes, even though EasyPaisa
and Omni both launched their services the year before.
30 The impetus for this was a government mandated SIM registration which providers used to their advantage to register people for
branchless banking accounts.
31 see the press release here. These numbers and the definition used for “Active” were confirmed to the authors by MobiCash staff.
http:// propakistani. pk/ 2015/ 12/ 11/ mobicashs- active- mobile- wallet- customers- grow- to- over- 500000/
32 Mobile Financial Services data sourced from Bangladesh Bank
33 GSMA. Mobile money profitability: A digital ecosystem to drive healthy margins, 2014. http:// www. gsma. com/
mobilefordevelopment/ programme/ mobile- money- programme/ mobile- money- profitability- a- digital- ecosystem- to- drive- healthy-
margins/
34 Maha Khan and Mike McCaffrey. The Powerful Agents & Fractured Markets of Pakistan, June 2015. http:// www. helix- institute.
com/ blog/ powerful- agents- fractured- markets- pakistan- 0

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