Adeel Azhar: Assalam-o-alaikum and welcome to yet another episode of SBP podcast. I am your host Adeel Azhar. I hope that this podcast series will be adding to your knowledge because we bring you the people who are right behind the action, who are taking important decisions sitting at the Central Bank and are developing wonderful products for you. This entire series will prove very useful for you. Now let us talk in today’s episode about opening a bank account. Whoever you ask in Pakistan, who has had to visit a branch for opening a bank account, you will hear from them interesting stories about the number of documents required, the signatures, forms etc.Who would have thought a while ago that you would be able to open a bank account in 2 minutes with your mobile handset. That is the power of technology.
Well, we will talk about technology, but if we talk about difficulties related to opening a bank account in Pakistan, women are the most affected entity. Generally, women’s participation in the overall economy has been low and documentation has been lower. However, as I mentioned, technology is there now. Because of technology, things are changing. The State Bank has recently launched a product called Asaan Mobile Account (AMA), the concept of AMA is that you are a Pakistani resident, you have a valid CNIC, and a mobile phone which does not even have to be a smartphone. You have to press some codes and Voila, your mobile account will be opened. You can use it for transactions, bill payments and what not.
In today’s program, we will talk about Asaan Mobile Account. I have introduced AMA to you but I will not go into further details as the topic of our podcast today is Asaan Mobile Account. To talk about this, our guest on our podcast from the State Bank is Mr. Noor Ahmed, who is the Director Agriculture Credit and Microfinance Department. Noor has had an important role in the Financial Inclusion part, because at the end of the day, the facilitation and ease which is being provided to make it easier to open bank accounts for people; the purpose of it all is Financial Inclusion. We will get to learn a lot from Mr. Noor today. Assalam-o-Alaikum Noor Sahib, and welcome to State Bank podcast.
Noor Ahmed, Director, AC&MFD, SBP: Wa-Alaikum-Salam. How are you?
Adeel Azhar: I am good. I have given a brief introduction of Asaan Mobile Account with your permission. We will talk about AMA in detail but first tell us about the importance of having a bank account. There are so many people out there who are under a certain income bracket who say that we don’t need a bank account. So, what is the importance of having a bank account?
Noor Ahmed: it is a very pertinent question that you have asked. We can determine the importance of bank accounts if we think what would be the situation if there were no bank accounts. Your life savings would be in the form of cash, of course – there would be a risk of loss or theft involved. There have been some unfortunate events in the country recently, and many people have faced losses due to that. The second important use of having a bank account is that you can use so many different services on a daily basis, for which you will have to go to a branch otherwise, stand in a queue which will be time consuming. Thirdly, if you travel somewhere without having a bank account, you will have to carry cash, which is risky.
Money transfers can be done to your loved ones, many people work in distant areas away from home for which a bank account is useful. Fourth important use of a bank account is that it creates a relationship with a financial institution through which you get many value-added financial services. It can fulfil your savings requirement; everyone wishes to go for Hajj or Umrah, save for children’s marriages and education, and you can save in such plans as provided by the banks. Apart from this, if you are an entrepreneur, and if you have a business, you can benefit from loans provided by the banks. So, there are many services, and I think having a bank account is important for every Pakistani.
Adeel Azhar: Yes, and it also has an impact on the country’s economy. As we have recently witnessed in the flood situation, the cash transfers that we are doing to help people, bank accounts have been very useful. If there were no bank accounts, it would have been extremely difficult to manage that.
Noor Ahmed: Absolutely true.
Adeel Azhar: Whenever we are talking about Pakistan’s economy, it is often said that Pakistan has a very low rate of financial inclusion. We often get examples of some African countries and are told that such percentage of people have bank accounts while Pakistan is still lagging behind. How critical is the situation, and what is the situation of bank accounts penetration in Pakistan?
Noor Ahmed: This is a very important question. Before taking any initiative, we have to check the baseline. Our focus on that baseline is necessary, but like you said, bank account ownership in advanced countries is close to 90 or 100 percent. In emerging market economies it’s over 90 percent. In our neighboring countries, it’s between 80 to 90 percent. In Pakistan, according to an estimate the adult population is 128 million, if we look at that segment, 75 million people have bank accounts, which tells us that around 58% of the population has bank accounts. 50 million out of these are owned by men and 24 million are owned by women. We can clearly see where the gaps exist. Some of the male population’s accounts which are the last mile customers in villages, but there are many women who stay at home and do not get out of their houses. To provide access to banking for those women is very important, and therefore, Asaan Mobile Account has been designed in that context, and we will talk in detail about it.
Adeel Azhar: You came to the next question yourself and you have made things easier for me. We talked about the importance of having bank accounts, about women’s inclusion in the financial net, but Asaan Mobile Account is obviously for every gender, and every Pakistani. When you conceived the idea of this and started designing the product, what were the areas you had in mind, that we have to eliminate certain elements to open a bank account, and highlight the challenges that were out there.
Noor Ahmed: The biggest opportunity is that in Pakistan there are about 200 million mobile SIMs. It is not necessary that they are all unique. There are many people who own simple feature phones, and because of this their access to an account has not been possible. There were many branchless banking options present before AMA too, but they were unable to do that. So, the industry combined forces – the State Bank of Pakistan (SBP), the Pakistan Telecommunication Authority (PTA), 13 branchless banking providers, mobile operators which we call CMOs, partnering with them and with NADRA, we sat down and figured out how we can provide banking access to those people. The product should be one for which a feature phone should be adequate, it could have the SIM of any mobile network, internet connectivity should not be needed, and the process should be simplified to make it as simple as making a call. So, we envisioned a code *2262# through which you can not only open an account but also avail financial services. You will not have to remember too many codes on an ongoing basis, just one through which you can use it repeatedly.
Beyond this, opening an account is an important step but usage is the main purpose. The industry together made a mass media campaign for this. It has three components, simplification of the process, utility and ease of the customer, and third is the mass media campaign. AMA, if you ask me, is the abbreviation of these three components.
Adeel Azhar: If I am sitting here and the viewers watching the podcast, if they open their mobile phone and dial the USSD code that you just mentioned, *2262#, if I dial it right now, my account can be opened right now? In under 2 minutes?
Noor Ahmed, Director, AC&MFD, SBP: Definitely.
Adeel Azhar: OK, the account has been opened. After that, do we have to pay a visit to the bank because although the situation has been made easier through mobile banking, but account opening has been a cumbersome process. So, after opening the account, is there anything else that we have to do? Or it’s open now and we can use the service?
Noor Ahmed: You have asked an important question. See, its simplicity does not mean that it does not have any requirements. But special care has been taken about the requirements. For the audience, I would like to convey that you will dial the code, you will get a menu where you can link your existing account or open a new account. If you open a new account, you will have to type your CNIC number, and its date of issuance, you will be asked a couple of questions about your nationality and the terms and conditions of using the product, when you accept, you will choose a PIN and reconfirm it, and it’s done. The second question is about the type of services which can be availed. If I tell you that the services included in this, we have 88 million branchless banking accounts which are not unique, because nearly 75 million accounts are unique. 5 use cases which have been added to this, they drive 90 percent of the volume of transactions and 90 percent in terms of value. The present universe that is there, we have almost covered it, but going forward, we will bring further ease into this. This is an ongoing project with the collaboration of the complete industry and its end goal is transfer of behavior from cash to digital money, e-money, because we want to digitize the economy completely, it is sort of a campaign for a cash light future of Pakistan.
Adeel Azhar: I have a question regarding this. In the market, mobile financial services such as Easypaisa, Jazzcash, they have been around for almost a decade or more now. These products are already existing in the market. With AMA account, is it not that we are trying to reinvent the wheel? Is the only difference that it is being launched with the patronage of the State Bank or are there other differences compared to Jazzcash and Easypaisa?
Noor Ahmed: It is a very pertinent question and many listeners would also have it in mind. Like I mentioned, there are many products in the industry, I also shared a number with you earlier, that 53 million people are still unbanked. 88 million branchless banking accounts that are there, which must include AMA accounts too, which are more than 5 million, and we can discuss the composition too. In these accounts, the activity is very low, the reasons can be multiple as a siloed approach has been taken, network benefits of collaboration have not been achieved. What AMA is doing now is that these 13 providers have decided that some services which fulfill the requirement of the day-to-day life of a common man, a viral product can be brought, it can be converged on a single code. It will be their product, but the customer will go on a single interface. Like I said, when you go to open an account, you are offered 13 banks which include major banks, microfinance banks and Islamic banks. So, you have the option to open an account wherever you want to. And when you come back again, it will take you to the wallet of the bank that you opened an account with; you will not have to repeat the process.
Adeel Azhar: Instead of one bank, I will have services of 13 banks there?
Noor Ahmed: Yes, 13 banks’ services will be available. And there is a very important thing, this is the initial set of common products that we have provided. Going further, there will be two more features. One, shared use cases – if you go to one bank’s wallet you will get different services, in one bank you can pay passport fee, buy railway tickets, pay excise tokens. Different products are available and they are locked in specific wallets, but gradually AMA services will have these shared cases of course, subject to revenue sharing. Secondly, there are 600,000 plus agents for branchless banking, they are not interoperable, through AMA we have achieved interoperability on two levels.
Adeel Azhar: Interoperability means interaction and coordination between them does not exist?
Noor Ahmed: Let me explain, like I mentioned it used to be a siloed approach. If you had the SIM of a certain mobile operator, you could open a bank account in a certain bank. Now we are past that. Second interoperability is that now if you have wallet of any bank, you can transfer that money to any wallet. So, these systems are interacting with each other. Thirdly, there are 600,000 agents. Out of the 13 providers currently, 5-6 have the most agents, they are now collaborating and all 13 will be offered the services. In future, when the customer goes to any agent, he will be able to get cash-in cash-out biometric services which are an important need for a bank account.
Adeel Azhar: You said that you will require a SIM and a feature mobile will also work, another problem is that generally in a family, SIMs are issued in the name of single individual. Now there is some restriction. I am trying to point out towards women, women who do not have SIMs registered in their names, they wouldn’t be able to open an account in their name.
Noor Ahmed: This is a very good question. I mentioned it earlier to you that in our unbanked population, a bigger percentage is of women who stay at home and have issues related to mobility. This aspect has been taken care of. There is no condition that the SIM has to be in their name, but we have kept a check on it. We would ask them to get their biometric done so that their account is safe. All customers have to get their biometric done in 60 days through the nearest agent or bank branches, and the account will be confirmed. We call it level zero, or basic account, which is confirmed after that. If you want to graduate to Level 1, which has more limits, while getting your biometric done you can ask them and they will graduate you. I would say that women have been provided access. Like I said, about 5 million accounts have been opened. Of the 88 million branchless banking accounts, only 28 percent are owned by women. But in AMA, women own 46 percent of the accounts. Hence, it can be clearly seen that we have an edge through AMA.
Adeel Azhar: So, this part is covered now, the offtake that has happened. By the way, are you satisfied with the numbers of accounts, because you must have had certain projection about the goals which will be achieved. Is the State Bank team satisfied with the progress that it is making?
Noor Ahmed: Yes, firstly we are monitoring its run rate on a daily basis, so initially it was a slow pick up, but now it goes up to lacs of accounts in a single day. Going forward, our commercial campaign is in the market now. You must be seeing its ads on TV, newspapers, radio and digital channels. But having said that, what will happen afterwards. After this campaign ends, we anticipate a lot of pickup with those on the ground promotion activities where people will be able to see how this product can be taken up. In financial services, a take up will be seen.
Adeel Azhar: The transaction limit like the typical mobile financial services will be in parallel like the existing Easypaisa, Jazzcash ones, that you will undergo the biometrics, and the limit will increase? Is it true.
Noor Ahmed: Yes, it is
Adeel Azhar: Now these accounts are also offering debit cards as well. Can a debit card be issued against this account as well?
Noor Ahmed: Definitely, it can be issued. Individual banks are offering and the customer will have to approach the bank on their helpline and request for a card.
Adeel Azhar: Let us also talk about charges. We should talk about the charges because it is an issue. If I compare it to a normal account then what are the charges? Is it done through IBFT? If I want to send money in another wallet on another platform then what isthe difference in charges here?
Noor Ahmed: Before coming to this question, Adeel, if I ask you, if a customer who doesn’t own a bank account, but does bill payments, how many charges does he have to incur? If we look at it then this question can be better understood by the audience. You will have to go somewhere, using transport and will have to spend your precious time in a bank branch standing in a queue. This is a kind of product that by a simple code, by using your airtime, you can access your account.The other cost is, when a customer is onboarded then nothing is charged from them. Providers provide the takeoff. Because it has digital access, so cost is very minimal. Of course, the long-term sustainability of providers is also a question. They also have to make this product sustainable, so we have to take care of it. But there are not many charges on it, maybe you have a specific question you can ask me?
Adeel Azhar: Actually, I am thinking that recently the State Bank has launched ‘Raast’ which is a successful product of the State Bank, a lot of investment was done on it on the advertisement side, and I have realized that a lot of people have switched to Raast. The main feature of Raast is the elimination of the interbank transactional charges, so I want to know if I want to transfer money in someone’s AMA then will the charges be applied or not? By the way, can this account be automatically registered on Raast or it will be required to be done separately?
Noor Ahmed: Let me answer the previous question first, then I will come to Raast. The transactions that are currently occurring, through 1Link, IBFT up to 25,000 Rupees is free of cost. The daily limit is 25,000. There is no cost. If any customer has incurred such a cost, they can call their bank’s call center and ask them. This is an important aspect. Going further, when the enablement of Raast is done, you will be able to also register on Raast and avail all utilities of Raast.
Adeel Azhar: This can be done, just a suggestion. I am sure it will be a part of your roadmap that every account that is opened will automatically be registered on Raast as well.
Very good discussion, Sir. Something that I have in my mind, people who are watching our podcast must have many people around who think that they do not need a bank account. We can be the ambassadors of this account because financial inclusion is very important. Unfortunately, we are very cash driven. Target market aside, but we can also play a very important role in communicating the message about this product to common people, people who are helpers in our houses, drivers etc.
Noor Ahmed: See, this is a viral product. There is a viral campaign associated with it. I would like to request everyone watching this podcast that you become part of that campaign, that mission. If you do not have a bank account, you can pick up your phone and dial *2262# and open your account. If you do have a bank account, you should endorse this to people with the salary of up to 50,000 Rupees if they are in your network. If we all become a part of this campaign, if we are a part of an organization which has people in this salary bracket, or in our individual capacity we know people who are providing services, we can disburse their salaries through this. As soon as we do this, there will be a pick up. When there are transactions in bulk, that is when this will become a financially viable product. To endorse this, we have made a very good slogan, you might have seen it but I would like to repeat it with your permission, Aap ka Account, Aap ka Ikhtiaar. It is basically empowerment, empowerment of rural, low-income and women segments of the population. We would want that as many people who can join this must join, and we will be adding many value-added services to this.
Adeel Azhar: Thank you for your time, and best wishes for your initiative.
Noor Ahmed: Many thanks Adeel sb, it was a pleasure to be on this podcast with you.
Adeel Azhar: Yes indeed. From the State Bank of Pakistan, you can see that many products are being introduced, we talked about RDA, Mera Pakistan Mera Ghar, and now Asaan Mobile Account is the new kid on the block and like we heard, its offtake has been brilliant; 5.5 million accounts already. There is still a long journey ahead for Pakistan towards the mission for financial inclusion.
I hope that you liked today’s podcast. Give your feedback in the comments. I am your host Adeel Azhar, I will be back with another podcast for you soon. Until then, Allah hafiz.
