Islamic Republic of Pakistan as
we all know comes in the procession of under developed countries where most of
the people don’t get basic living necessities. How can we expect comfort living
in this country? Yes technology is doing its part and giving people the feeling
of ease and contentment in many ways.
Technology, and in particular the spread of real-time mobile communications
networks, permits financial service providers to delegate cash management and
customer servicing functions to third-party retail outlets. By making basic
deposit, withdrawal, and payment functions available securely through retail
shops that exist in every village and neighborhood, there is an opportunity to
dramatically increase the physical footprint of financial service providers and
to transform the basic economics of low-balance savings. These are basic
functions which should be performing to do it in a better way.
First, retail outlets acting as cash merchants on behalf of banks need not
create financial risk for either the customer or the bank as long as the system
operates on a purely prepaid basis, i.e. if all customer transactions are
undertaken against the store's own account and transactions are authorized in
real time by the bank. In this case there is not much reason for regulators to
have to prescribe which stores can and cannot be cash merchants, much less to
authorize them individually.
Second, there need to be tiered know you customer (KYC) requirements, which
allow for immediate opening of small-sized, entry-level accounts at authorized
retail (non-bank) outlets. Let's not put up all the barriers upfront for
customers who are new to banking. As customers develop bigger and broader
financial needs, they can be asked to perform progressively tougher KYC tests.
Third, there should be a class of e-money or 'narrow bank' licenses that allows
non-banks (such as mobile operators) to operate money transfer and
store-of-value services, under strict investment and capital structure rules.
All public monies they raise would need to be backed 100% by assets in
prudentially regulated bank, so in effect all schemes must be ultimately
bank-based.
One final thought: despite the 'branchless banking' label, regulations still
need to be friendly towards continued penetration of branches in the territory.
While retail outlets may handle the bulk of cash transactions on behalf of the
bank's poorer customers, these outlets will still need somewhere to go to in
order to deposit excess cash and access liquidity.' Bank branches will thus
retain a role as cash distribution nerve centers in support of the bank's
non-bank retail outlets located in their catchment.