BRANCHLESS BANKING

Presented By
Zuhaib Ali
Hakeem Jan

Introduction
Branchless banking or BB means conduct of banking activities by Authorized Financial Institutions for customers having a branchless banking account. ESSENTIALY COMPRISE OF: Technology Third party outlet Backing of govt recognized f institutin

History
First Direct in the United Kingdom are an early pioneer of this class of service. Launched by the then-Midland Bank (now part of HSBC) in 1989, Branchless banking regulation was first introduced in Pakistan in April 2008. 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.

History 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.) l

Model of B-Banking
BANK LINKED MODEL

BANK REAIL AGENT CUSTOME

BANK IS RESPONSIBLE FOR OPENNIG AND HOLDING ACCOUNTS

verifying customers ID, performing face to face transactions, processing applications, forming groups, disbursing small values to the bank , collecting loans and small deposits, vending insurance products, and dealing with small remittances.

USE SERVICES BY RETAIL AGENT

Model of B-Banking
NON-BANK BASE MODEL

BANK
NBFI RETAIL AGENT

NOT MAIN PLAYER ONLY HOLD ACCOUNT OF NBFI

MAIN PLAYER IN THIS MODEL HOLD E MONY ACCOUNT IN SERVER

agent checks customer's ID and transact on behalf of the nonbank using either mobile phone or smart card reader.

Permissible Models for Branchless Banking

Classification of B-Banking Model One-to-one (1-1) Model: In this model one bank offers mobile phone banking services in collaboration with a specific Telco. One-to-many (1-) Model: In this model a bank offers mobile phone banking services to customers using mobile connection of any Telcos. Many-to-many (-) Model: In this model many banks and many telcos join hands to offer services to virtually all bankable customers.

Facilities offered by Branchless Banking System

Opening and maintaining a BB Account
A BB account can be opened and operated by a customer with a bank through use of BB channels. Banks may associate such account to a particular branch or to a centralized branchless banking unit.

Account-to-account Fund transfer:

Customers may transfer funds to/from their BB account from/to their other pre-registered accounts (current/saving bank accounts, loan limit accounts, credit card accounts etc.)

Facilities offered by Branchless Banking System

Person-to-person Fund Transfers:
Customer can transfer funds from their BB or regular account to BB or regular accounts of same or some other bank of other customers.

Cash-in and Cash-out:

Customers may deposit and withdraw funds from their BB account using a variety of options including bank-branch counters, ATM machines and authorized agent locations.

Facilities offered by Branchless Banking System

Bill Payments:
A BB account can also be used to pay utility bills (e.g. Gas, Electricity, Phone etc.)

Merchant Payments:
Customers can use a BB account to make payments for purchases of goods and services.

Loan Disbursement/Repayment:
FIs, particularly MFBs may use BB accounts as a means to disburse small loan amounts to their borrowers having BB accounts. The same accounts may be used by customers to repay their loan installments.

Remittances:
BB accounts may be used to send / receive remittances subject to existing regulations.

Risk-Based Customer Due Diligence

To maximize the share of branchless banking and to reach those area where conventional banking is not available, a riskbased approach to customer due diligence is mentioned here. This approach is specific to the BB accounts and does not apply to the regular full service banking accounts.

Risk-Based Customer Due Diligence

Account Level Description

Level 1
Entry Level account sufficient for most low income individuals

Level 2
Top level account offering all BB facilities and subject to full KYC requirements as applicable to a full-service banking account.

Level 3
Account specific for merchants, businesses, banking agents or third-party service providers.

KYC Requirements

1. Filling and signing an account opening application form. 2. Photocopy of computerized National Identity Card. 3. Verification of CNIC by NADRA 4. At least one personal face-toface contact with a designated employee of the FI or a biometric fingerprint scan and a digital photo taken by a BB agent must reach the FI
Rs. 60,000

1. Filling and signing an account application 2. Fulfillment of all KYC requirements specified under Prudential Regulations issued by SBP as amended from time to time. (Presently given under regulation M1 of the PRs). 3. Verification of CNIC by NADRA
FI must set limits commensurate with each customers profile.

1. Fulfillment of all requirements of level 3 account. 2. Fulfillment of additional requirements as specified by the FI.

Maximum Balance Limits (debit/credit) Maximum Throughput Limits (debit/credit)

FI must set limits commensurate with each customers profile.

Rs. 10,000 per day Rs. 20,000 per month Rs. 120,000 per year

Agent Structure
Super Agents:
These may be organizations having well-established owned or franchised retail outlets, or a distribution setup. These will be responsible for managing and controlling subagents. These may include fuel distribution companies, Pakistan Post, courier companies, chain stores etc.

Direct Agents:
These may include large to medium sized stores etc., which have a separate agency/service level agreement with the FI.

Role of Agents
Sub Agents:
These are the branches/outlets or franchised locations managed by a super agent and not directly controlled by the FI on a day-to-day basis. However, in case of franchised locations, these must have a similar service level agreement with the super agent as the super agent will have with the FI.

Role of Agents
Agents may perform any or all of the following functions depending on the agency agreement and agent type as detailed in the following sections; Opening of BB Accounts (Level 1 accounts only).

Cash in / Cash out for BB accounts.

Bills Payments (Both from registered BB customers as well as from walk-in customers (through cash) of any utility company). Loan disbursement / Repayment Collection (Without involving into loan marketing/approval functions).

Branchless Banking Procedures

1) Banks wishing to provide branchless banking services or to bring in substantial changes in underlying technological infrastructure shall submit to the State Bank, an application describing the services to be offered, infrastructure modifications and how these services fit in the banks overall strategy. SBP shall pre-screen the overall financial condition of the FI as well as the compliance with the SBP rules and regulations based on the latest available onsite and offsite reports Based on the review, a principle approval of the application will be granted.

2)

3)

4)

After getting this principle approval the FI shall, in turn notify the SBP on the actual date of launching/ enhancement of its BB services.

Branchless Banking Procedures

5) Within thirty (30) days from such launching/enhancement, banks shall submit to the SBP, the following documentary requirements
Business objectives Description of Banks electronic system List of Software and hardware components Contingency and Disaster recovery plan Copy of Contracts with service provider

6)

Upon completion of evaluation, the Authorization will be granted.

Major Branchless Banking Service Providers in Pakistan

Market Leaders in Branchless Banking:

1.

Easy Paisa (Telenor in collaboration with Tameer Microfinance bank)

2.

Omni Shop (UBL)

Easy Paisa
Tameer Microfinance Bank and its parent company Telenor Pakistan, a major MNO, launched easypaisa in October 2009. The largest branchless banking service in Pakistan which offers the most convenient access to Financial Services for all Pakistanis.

Easy Paisa
Easypaisa offers two kind of services : 1.Over-the-counter (OTC) products:
where the customer can go up to any of the 12000 plus certified merchants for financial transactions

500,000 account holder (2011) 23 million transactions had been processed by the end of July 2011, with a total throughput of Rs 43 billion (US$500 million)
Easypaisa,

2.Mobile products:
where the customer can use their mobile handset for financial transactions.

Products and services

Money Transfer:
Using Money Transfer from easy paisa, you can send and receive money to and from anyone from any easy paisa shop in the most efficient, secure and convenient way.

Features:
Any person with a valid Nadra CNIC can send money or receive money
This service is not limited to Telenor subscribers; other mobile network subscribers can also use this service

Sending/Receiving can be done from more than 12000 easypaisa shops all over Pakistan

Service charges for money transfer

Transaction Amount Rs. 1-1000 Rs. 1001-2500 Fee Rs. 50 Rs. 100 Tax on Fee* Rs. 8 Rs. 16 Total Charges Rs. 58 Rs. 116

Rs. 2501-4000
Rs. 4001-6000 Rs. 6001-8000 Rs. 8001-10000

Rs. 150
Rs. 200 Rs. 250 Rs. 300

Rs. 24
Rs. 32 Rs. 40 Rs. 48

Rs. 174
Rs. 232 Rs. 290 Rs. 348

All fees are subject to 16% FED as per Government Regulations

Bill Payment
Easypaisa bill payment service brings you a hassle free yet secure solution to pay your Electricity, Gas and Telephone (PTCL) bills:
Utility Companies On Board
PTCL (Pakistan Telecommunication Company Limited) SSGC (Sui Southern Gas Company) SNGPL (Sui Northern Gas Pipelines Ltd) KESC (Karachi Electric Supply Company) HESCO (Hyderabad Electric Supply Company) MEPCO (Multan Electric Power Company)

Bill Payment
Charges on payment of bills:
Rs. 10 to be charged from the customer for any Utility Bill Paid of any denomination
No FED is applicable here

Mobile Account
Telenor subscribers will now be able to pay bills, transfer money and use many more services from their own mobile phones Mobile Accounts are actual bank accounts and work just like a normal bank account Can be opened through:
Telenor Sales and Service Centers, Telenor Franchise Tameer Bank branch

Mobile Account
Features
Any Telenor current or new subscriber can open a Mobile Account. No prior Bank Account is needed; Anyone with a Telenor SIM can avail and use this service Send money to any person with a valid NADRA CNIC or to any other easypaisa Mobile Account. Utility bills can also be paid instantly from an easypaisa Mobile Account Cash Deposit into a Mobile Account or Cash Withdrawal from any Mobile Account can be done at more than 12000 easypaisa merchants in more than 450 cities in Pakistan

How to open a Mobile Account

Easy Paisa Mobile Account is offered to only Telenor customers. Steps to open an account are: 1) Go to any Telenor Service Center, Franchise or Tameer Bank 2) You should have a Telenor SIM (registered in your name) 3) You should carry original CNIC 4) Fill in a form plus photograph (will be taken by Telenor Staff in real time) 5) Sign the form plus thumb impression 6) Get the receipt and you are done

Account Number
You will be provided an account number, exactly same as your mobile number plus an additional number at the end of your Telenor number.

Transaction limits for Bank Account

The following transactional limits apply to all easypaisa Mobile Account, as regulated by the State Bank of Pakistan.
Rs. 10,000 per day, Rs. 20,000 per month and Rs. 120,000 per year.
These limits apply on both credits and debits in a Mobile Account

A customer can only keep a maximum of Rs. 60,000 in his easypaisa Mobile Account at any time

Money Transfer
(from an easypaisa Mobile Account to another easypaisa Mobile Account) Slab Start 1 Slab End 1000 Charges 20 FED* 3.20 Total Charges 23.20

1001
2501 4001 6001 8001

2500
4000 6000 8000 10000

40
60 80 100 120

6.40
9.60 12.80 16.00 19.20

46.40
69.60 92.80 116.00 139.20

16% FED is applicable on banking services charges

Money Transfer
(from a CNIC to an easypaisa Mobile Account)
Slab Start 1 1001 2501 4001 6001 8001 Slab End 1000 2500 4000 6000 8000 10000 Total Charges 34.80 69.60 104.40 139.20 174.00 208.80 Charges 30 60 90 120 150 180 FED* 4.80 9.60 14.40 19.20 24.00 28.80

16% FED is applicable on banking services charges

Money Transfer
(from an easypaisa Mobile account to a CNIC)

Slab Start 1 1001 2501 4001 6001 8001

Slab End 1000 2500 4000 6000 8000 10000

Charges

FED*

Total Charges 46.40 92.80 139.20 185.60 232.00 278.40

40 80 120 160 200 240

6.40 12.80 19.20 25.60 32.00 38.40

16% FED is applicable on banking services charges

Security Concerns
To ensure that all transactions made through easypaisa are secure, important security needs have been addressed: The security of all customer information is through documentation that is based on State Bank of Pakistans guidelines. Account opening involves verification of CNIC through NADRA.

Security of all transactions will be ensured using Unstructured Supplementary Service Data (USSD) protocol. USSD is a lot safer as compared to SMS

UBL Omni
Launched in April 2010 by commercial bank UBL Make over-the-counter bill payments and send money to friends and family in Pakistan via a network of agents known as Omni Dukans.

Account accessible from mobile phones via SMS or WAP and cards (both generic and Visa cards are available)
UBL has won several contracts to disburse payments for nongovernment organizations and government schemes Benazir Income Support Program (BISP) the governments flood relief program the World Food Programme

UBL Omni
Customers across Pakistan can open a UBL Omni bank account at any UBL Omni Dukaan of their choice, whether close to their home or place of work, by using their CNIC number and mobile phone number
UBL Omni account holder will subsequently be able to deposit and withdraw cash, make utility bill payments, send or receive money, purchase mobile card vouchers, make postpaid mobile bill payment. People without a UBL Omni bank account will also be entertained at a UBL Omni Dukaan.

Omni Services
For Walk In Customers
1. Account Opening 2. money Transfer 3. Mobile Voucher Purchase 4. Utility Bill Payments

For Account holders

1.
2.

Omni Dukaan
Internet Banking

Charges
Service Fee at UBL Omni Dukaan:
Utility Bill Payment Mobile postpaid Bill Payment Omni money Transfer Cash Withdrawal Free Free 3.35% of the transaction amount (Min. transfer amount Rs. 500) 1.5% of the withdrawal amount

Account opening:
Initial deposit requirement Minimum balance requirement Minimum balance charges Rs. 500 Rs. 500 Rs. 25 per month

Fact and Development of BB in Pakistan

Grouth rate NETWORK ACCOUNT DEPOSITS 16 % 40 % 169 % Quantity 22512 OUTLET 929184 Rs 503 MILLION QUARTER OCT- DEC 2011 OCT- DEC 2011 OCT- DEC 2011

TRANSACTI ON
TRAN AMOUNT

30 %
35 %

80 MILLION
Rs 300 BILLION

OCT- DEC 2011

OCT- DEC 2011

Additional data
Average number of transactions per day 228855 Percentage of bill payment is 53% Percentage of Fund transfer 39 % Government revenue generate are U$$ 2 billion Helping GDP by 3 %

Suggestion
At the end we must suggest the stack holder of BB industry that increase the level of information about BB of the target market by launching different type of campaign and make understand the system to the target market.

Conclusin
In short BB is the most convenient and affordable banking industry which is attracting low and middle class as well as the upper class of the society by offering financial services with the help of new technology.

Thank You
Dont Bother to Ask Questions
ANSWERS ARE NOT THERE!!:P