Shaking off the fatigue of the pandemic year, the country’s digital financial services (DFS) segment is making good progress. As per the latest quarterly statistics on branchless banking (BB) released by the State Bank of Pakistan (SBP), the total number of mobile wallets had reached almost 67 million by the end of March 2021, showing a growth of 38 percent compared to the end of March last year.
More importantly, the number of ‘active’ mobile wallet accounts had reached almost 43 million by the end of March 2021, resulting in a growth of 54 percent on a year-on-year basis. The growth rate in active wallets (active wallets are either opened in the past 180 days or have performed at least one transaction in the past 180 days) is much higher than that in total wallets – this suggests users who had previously registered on the platform but had soon gotten inactive may be coming back to their wallets.
Between March 2020 and March 2021, the time period that was marked by the lows and ultra-lows of Covid-19, the number of active m-wallets had increased by 15 million, as per the SBP data. That’s a big number. Moreover, the ratio of active m-wallets has also improved in this period. Back in March 2020, 58 percent of m-wallets were classified as ‘active’– by March 2021, the activity ratio had improved to 64 percent.
The yearly growth in active m-wallets has also had a notable impact on transactions. In the Jan-Mar 2021 period, the volume of transactions had reached 550 million, showing a growth of 53 percent over the same period last year. As for the value of transactions, Rs1.33 trillion worth of funds made their way into or through the m-wallets for different kinds of transactions during 1QCY21, a yearly growth of 65 percent.
Among the top-five transactions by volume are mobile top-ups, inter-wallet fund transfer, and cash deposit in wallet, utility bill payment, and wallet to bank account fund transfer. The top-five transactions in terms of value are inter-wallet fund transfer, cash deposit in wallet, wallet to bank account fund transfer, cash withdrawal from wallet, and bank account to wallet transfer.
While wallet growth is galloping, how is the erstwhile-dominant channel, Over-the-Counter (OTC), doing? The SBP data shows that OTC volume came in at 39 million transactions worth Rs98 billion in the Jan-Mar 2021 period, a yearly decline of 13 percent and 26 percent, respectively. This has come even though the number of active agents has increased in the same period by 15 percent to reach 0.22 million. This provides one more clue that wallets are on the march.
Historical data shows that in just two years since March 2019, the active m-wallets have more than doubled in number. The current tally needs to double once more and sustain itself, before a victory can be declared by service providers in a largely-untapped market for mobile wallets. Over 100 million adults in the country form the addressable market for this DFS product. But how soon can coverage go from 43 million to 100 million? Another challenge is to improve gender and regional inclusion in the account mix.
