ISLAMABAD ( MEDIA REPORT )
The State Bank of Pakistan (SBP) is looking at the options to introduce mobile phone based cashless finance system, however significant investments would be required by the banking sector in their IT networks.
Seminar titled, ‘Financial and Social Inclusion through Mobile Money and M-commerce,’ was held on Wednesday by the SBP in collaboration with the Embassy of Sweden.
The speakers highlighted that around 50 per cent of retail banking in Sweden has become cashless, and was based on the mobile phones.Professor Niklas Arvidsson of Royal Institute of Technology, Stockholm in his presentation via link from Sweden highlighted that cashless finance system also helps the central bank to reduce issuing fresh notes and coins — which was a saving.
“The other advantages of cashless finance system was reduced crimes such as robberies, besides the linking of all the citizens enables the authorities including the tax agencies to have a realistic database,” Prof Arvidsson added.
He added that the three links between the cashless finance system are private sector, government/regulator and the trust of the consumers.
He highlighted that the banking sector has seen several innovations in the recent past from internet banking to extensive usage of plastic cards such as the credit cards and the debit cards in the 1990s.
The latest concept has been replaced by ‘m-finance’ and ‘m-commerce’ that is also called the ‘m-wallet’ which allows all payments through mobile based banking.
However, to make the concept of m-wallet a success almost all the segments of society needed to be electronic and connected with the internet.
In his presentation Syed Irfan Ali, Executive Director State Bank of Pakistan, highlighted the advantages and challenges of m-wallet.
He said that the branchless banking was gaining popularity in the country and financial inclusion leads to reduction in poverty.
The main advantages of m-wallet concept was increased financial inclusion, higher outreach, faster economic growth as more people would have access to finance.
“The spread of mobile telephony has proved that literacy was not a serious issue in the usage of technology,” Mr Ali said.
The concepts of mobile finance would also promote biometric verifications, but the key challenge would be to ensure the safety from cyber crimes.
The other challenge for branchless banking in the country was size of the informal economy and the issues related to networking and power infrastructure, while there is trend to save money as cash, jewellery etc.
Published in Dawn, August 11th, 2016