Branchless Banking in Pakistan: A Laboratory for Innovation

October, 2011     Chris Bold

Pakistan is one of the fastest developing markets for branchless banking in the world. Clear regulations and a regulator that is willing to both listen to the private sector and provide incentives for innovation have promoted a dynamic branchless banking sector. Two players
have already launched services, and others are waiting in the wings. This Brief highlights
both existing and anticipated businesses and outlines the key challenges and opportunities
that are likely to shape the market over the next 12 months.

Branchless banking regulation was first introduced in Pakistan in April 2008. From the beginning, the State Bank of Pakistan (SBP) has taken a constructive regulatory approach by providing clear guidance and being willing to listen to businesses and adjust regulation where necessary. A variety of business models is emerging that involves a wide range of players, including mobile network operators (MNOs), technology companies, and even a courier business.(Notably, a bank remains ultimately liable to SBP in all the models.) The government is further encouraging innovation by piloting the use of branchless banking to distribute government payments. Taken together, these factors make Pakistan a unique laboratory for innovation.

SBP has issued four branchless banking licenses and is considering several others.