Saturday, April 23, 2011

A Case Study of Pakistan: Part 1

Pakistan has a population of more than 180 million in which at least a quarter of it live in extreme poverty. Promoting financial inclusion in this country is a challenging task, because approximately 120 million people live in rural areas that range from arid deserts to mountainous villages.

The United Bank Limited (UBL) is one of the biggest commercial banks in Pakistan. It is also in the forefront of Pakistani Government's financial inclusion efforts. UBL has successfully launched innovative programs to include people in the bottom of the pyramid as their clientele. This post will present two of UBL's innovations that utilize information and communications technology to achieve financial inclusion.

1. OMNI - Branchless Banking
OMNI allows potential customers to open a UBL account by visiting UBL branches or banking agents at assigned locations. By late 2010, there were over 2,000 active agents in more than 350 cities and towns throughout Pakistan. To open an account, potential customers must bring their mobile phone number, initial deposit and their original identity card, known as CNIC (Computerized National Identity Card). Their mobile phone number will then function as their bank account number. The bank account can be operated through agents, UBL branches, mobile phone, internet or UBL call centre. Other than conventional bank transactions, OMNI account holders can also pay utility bills and purchase mobile phone vouchers. The State Bank of Pakistan estimates that banking agents will soon outnumber bank branches.

The intense conflict between Pakistan's army and Taliban's militant in 2009 caused millions of Swat valley residents being displaced. UBL partnered with WFP to disburse aid money to a defined group of internally displaced people (IDP). UBL issued a magnetic stripe VISA card and PIN for approximately 12,000 identified displaced people, then they could withdraw their money by presenting their card and PIN to an OMNI agent.
After the pilot became a success, UBL and WFP developed a new cash transfer program to disburse aid money for 5,000 new beneficiaries with a method similar to the pilot. The difference is that UBL issued cards with a unique 16 digit number and no magnetic stripes that function as an identification. OMNI agents will enter the unique 16 digit number and PIN issued to each card recipient to the agents' mobile phone in order to effect payment.

WFP OMNI card

Even though the WFP card pilot's main objective is not for financial inclusion, people who were unbanked became familiar with banking products and the service that UBL delivers. Therefore, there is high potential to attract new customers and have more people in the bottom of the pyramid to be included in financial activities.

I will present two other financial inclusion programs by UBL in my next post. Stay Tuned!


References:
2. Bankable Frontier Associates. 2011. Case Study: United Bank Limited Supports Cash Transfer Payments.

No comments:

Post a Comment