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Review of electronic banking in Pakistan

Review of electronic banking in Pakistan

To reap the advantages of technology, most of the banking organizations currently are trying to become automated. Thus eBanking simply refers to offer electronic modes of communications, chiefly the internet. The eBanking concept primarily deals with both telephone as well as computer-based banking. While e-Banking, internet banking, online banking or PC banking terms may be seen or used interchangeable. Electronic banking typically comprises of wire transfer, ATM, phone banking, EFT and credit cards. Because the provision of online financial services is secure, easy to use, cost saving and 24 hrs available to customers.

In Pakistan, e-commerce task force has been formulated and the banks have enlarged their online branch networks. The internet banking is now enhancing with more sophistication and services for corporate banking customer. Because of present technological developments in banking sector, old banking system has been shifted from a product-oriented system to a customer-oriented system as they introduced their new e-banking capacities. For a long time period electronic and telecommunication networks have been utilized to deliver a variety of services. These services have been provided by dial-up connections, local and public networks, and through different instruments. Banking through digital channels has been gaining increasing popularity in the country in recent years. These channels are alternatives for faster delivery of banking services to a wide range of customers as also evident from the figures.

Payment Systems Infrastructure (31s t March, 2019)
Number of Banks (Branches) 45(15,549)
Commercial/ Specialized Banks Branches 14,383
Microfinance (Branches) 1,166
Number of Real Time Online Branches (RTOBs) 15,408
Number of banks having ATM machines 33
Number of banks having POS machines 9
Number of banks providing Internet Banking services 27
Number of Banks providing Mobile Phone Banking services 23
Number of Banks providing Call Center Banking services 22
Total Number of PRISM System Participants 45
Total number of ATMs Interoperable Switches 1
Total number of Cash Deposits Machines (CDMs) 49

The official report of the State Bank of Pakistan (SBP) revealed that Pakistan Real Time Interbank Settlement Mechanism (PRISM) is the only large value payment system being operated in Pakistan. It enables the transfer and settlement of high value interbank funds and enhances the overall efficiency of the large value payment system. On retail payment side, there are various e-Banking channels like Real time online Branches (RTOBs), ATMs, POS, internet banking, mobile phone banking, call centers/IVR banking and e-commerce that facilitate retail value payments.



During January-March, 2019, total 27 banks in the country are offering internet banking service and there are 3.1 million internet banking users registered with banks. During the quarter under review, 8.6 million transactions of value Rs. 362.3 billion were processed by internet banking. Furthermore, under the guidance of SBP, commercial banks are enlarging their infrastructure for supporting e-Payments. During the quarter-end January-March, 2019, e-Banking channels i.e. RTOBs, ATM, POS, mobile phone, internet and call centers banking as well as e-commerce altogether processed 217.7 million transactions of value Rs.14.8 trillion. In the total e-Banking transactions, RTOBs has the highest share i.e. 84.2 percent in value of transactions whereas, the highest share of the volume 59.9 percent goes to transactions processed through ATMs. During the period under review, there are 15,549 bank branches reported through the Banks/MFBs, out of which 114 are overseas branches. All branches, except 27, are providing online banking services to their customers. There are 14,575 ATMs and 55,240 POS machines in Pakistan. Besides, banks are also offering internet, mobile and call center banking facilities to their customers. The report also recorded that PRISM has 45 direct participants, which include commercial banks, microfinance banks, development finance institutions and central depository company (CDC).

During the quarter under review, PRISM processed 599 thousands transactions of value Rs.107.1 trillion. These transactions explained a quarterly fall of 10.3 percent, however explained a rise of 8.9 percent in terms of value. In addition to Inter-participants funds transfer, PRISM also facilitates customers by customers’ transfers’ facility which has the largest share of 83.1 percent in the total volume of PRISM transactions whereas the government securities transfers’ facility has the largest share of 69.0 percent in value of transactions. The customers’ transfer transactions include 158.3 thousands transactions of value Rs.100.9 billion of home remittances delivered through PRISM system across beneficiaries accounts.

As on quarter-end, the number of e-Commerce Merchants were registered with banks stood to 1,398. These merchants processed 1.3 million transactions valuing Rs.5.6 billion during the period. The average ticket size for ecommerce transactions being processed by domestic acquiring is Rs.4,260, as against to Rs.4,778 in the preceding quarter. As on 31st March, 2019, the total number of payment cards issued in the country has stood to 42.2 million. In the total number of reported cards, the number of Debit Cards is 23.9 million (56.8%), proprietary ATM cards is 8.6 million (20.6%), credit cards 1.6 million (3.7%), pre-paid cards is 0.2 million (0.5%) and social welfare cards is 7.7 million (18.4%).

During the quarter under review, 148.9 million transactions of valuing Rs.1.68 trillion were processed by these cards, of which transactions processed by debit cards has the highest share of 82.1 percent in volume and 86.2 percent in value of transactions. During the quarter under review, 117.2 million transactions of value Rs.35.4 trillion were processed by branch banking and paper-based instruments. These transactions explained a quarterly fall of 2.9 percent in volume of transactions and a fall of 3.1 percent in value of truncations as against to last quarter.

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