UBL Omni (UBL’s branchless banking service) recently launched a new advertising campaign demonstrating how people can instantly open an Omni mobile banking account at any dukaan (shops and small stores that act as Omni’s branchless banking agents) by simply presenting a copy of their CNIC. UBL also offers account holders the option of instantly obtaining an ATM card as soon as they open their account.

Omnis level 0 head start

The ease of opening branchless banking accounts is a result of revisions to the Branchless Banking Regulations announced by the State Bank of Pakistan (SBP) in June 2011. The revised Regulations introduced a Level ‘0’ branchless banking account to bring the low income segment into the financial services loop. The SBP has simplified procedures for the opening of these Level 0 accounts so that instead of sending a physical account opening form along with a CNIC to the bank for further processing, branchless banking agents can now send a digital account opening form with a digital photo and image of the customer’s CNIC to the bank electronically (via mobile phone).

As one of the two major providers of branchless banking services in Pakistan, UBL Omni was the first to introduce Level 0 accounts. (Telenor EasyPaisa is currently in the preparatory phase of launching these accounts.) According to the latest edition of the SBP’s Branchless Banking Newsletter (April-June 2012), UBL Omni’s Level 0 accounts have been so popular that the branchless banking segment experienced a record growth of 37% in the second quarter of 2012 in terms of the number of mobile banking accounts opened. The Newsletter says that “the growth is attributable to a notable increase of 370% in Level 0 accounts opened entirely by UBL Omni.”

The change in the SBP’s regulations and the introduction of Level 0 accounts is exactly why UBL Omni (first introduced in April 2010) chose to launch a new campaign at this point in time, says Abrar Mir, EVP and Group Head, Branchless and E-Banking, UBL.

“There is no paperwork involved in the account opening, and transaction limits for these [Level 0] accounts have been enhanced [the SBP has allowed a daily transaction limit of Rs 15,000; a monthly limit of Rs 25,000 and an annual limit of Rs 120,000]. We are also the only branchless banking service offering an instant ATM card and according to a recent dipstick survey, people have found this service very appealing.”

Apart from the Level 0 accounts and ATM card, UBL Omni has achieved a great deal more in the last two years giving the new campaign stronger legs to stand on. Starting with 300 agents in 2010, Omni now has close to 9,000 agents in over 650 cities, towns and villages, and according to Mir, “More than five to six million users have experienced Omni’s services in the last two years.”

Therefore, whether it is utility bill payment, domestic remittances, mobile voucher purchases, mobile top-ups and post paid bill payments, cash collections or disbursements for corporate clients, it is not entirely unrealistic (or too over the top) for UBL Omni to use the brand name as a verb and tell people to ‘Omni karein’ in the new campaign, given that the service now has the coverage, reach and credibility to handle these transactions.

While Omni’s main target market is the unbanked population, and among them the low income group of urban and rural mobile phone users between the ages of 22 and 40, Mir is adamant that because of the convenience in bill payments and remittances, Omni offers “an equally compelling value proposition to the banked customers.”

Omni of course faces tough competition from Telenor Easypaisa which has the first mover advantage. With a network of over 18,000 shops across Pakistan, Easypaisa is generally thought of as the market leader in branchless banking. Mir, however, calls this is a misconception.

“UBL Omni is the biggest service provider of government to people (G2P) disbursements, having been part of programmes such as the Watan Card, the Pakistan Card and recently the polio card (for WHO). We are also the leaders in terms of allowing microfinance institutions to use our network to offer cash management solutions to corporates (B2B). Easypaisa, however, has a much bigger share of the over the counter money transfer market.”

Mir says Omni’s real challenge is similar to any new business, i.e. sustainable adoption levels of services and price pressures, especially as new players enter the market because “this is not a business with huge margins and the product menu does not lend itself to great differentiation at the moment especially since the category is at a very early stage.”

Based on these factors, it makes sense for Omni to shore up customers and accounts as quickly as possible as according to the SBP’s Branchless Banking Newsletter, five other services are already in the pilot phase (Askari Commercial Bank with Zong, Dubai Islamic Bank, HBL, MCB and Waseela Microfinance Bank with Mobilink). Thus the competition is all set to heat up in the branchless banking sector.

Branchless banking key indicators 

Total number of agents: 29,525

Total number of mobile banking accounts: 1.45 million

Number of transactions (April-June 2012): 28 million

Value of transactions (April-June 2012): Rs 115.3 billion

Average number of transactions per day: 315,178

Average size of transactions: Rs 4,065