Despite all its shortcomings, the e-banking ecosystem in Pakistan has made leaps and bounds over the past couple of years, thanks in part to Covid-19. Since March 31, 2020, internet and mobile banking users have increased from 3.81 million and 8.19 million to reach 7.83 million and 11.98 million respectively in the third quarter of 2021-22 (Q3FY22). In terms of transactions, the growth curve has been even steeper.
The value of internet and mobile banking transactions increased from Rs748.1 billion and Rs467.5 billion at the end of March 31, 2020 to Rs2.91 trillion and Rs3.09tr respectively in the previous quarter. Similarly, their volumes increased from 14.1 million and 21.2 million to 38.3 million and 101.5 million respectively over the same period.
However, all of this digitalization has largely been concentrated in retail banking. On the corporate and business side, processes are still very traditional and cash (or checks) is cash. This is despite the segment being much larger thanks to higher turnover and bundled payments.
Although exact numbers to their scale are not available, real-time paper-based online banking (RTOB) transactions can serve as a good indicator of the segment’s money flow. The former recorded a value of Rs46.4tr and a volume of 96.m in Q3FY22 – meaning the average transaction was worth almost Rs481,000. Meanwhile, the latter saw a debit of Rs26.8tr with volume at 52.3m and an average of around Rs512,000.
While online banking has grown by leaps and bounds to reach billions of rupees, businesses continue to use traditional payment methods in the absence of suitable options.
Yet despite all this massive scale, the segment is severely underserved in terms of online offerings. Only two banks – Alfalah and Allied Bank Limited – currently have a mobile business app, although many others offer internet banking. But the experience is far from digital. For example, if you have a corporate account with one of the major banks, the web portal dashboard is literally a blank page. It doesn’t even show the existing balance and to check it you will need to generate a statement for a specific period. And it can sometimes take hours, according to a source who uses the product.
“The web portal only works on Internet Explorer (IE), which is not supported by Windows 11, so to access it, I have to open Edge first and then enable IE mode. UI/UX, it’s a parody with no consistency between button locations, for example, and it takes hours to figure out how to check the balance,” he adds.
Sufian Asif from Dustiyaab Tech, a start-up company, shared a similar experience with another leading bank. “While their customer service is commendable, online banking functionality for LLC accounts is limited to one thing: checking the balance,” he said.
Primarily, it should be bankers asking this question, but what do companies, especially smaller ones, even expect from their banks? Not much, honestly. “To begin with, access to online banking services should be easier, whether through a mobile app or a web-based version,” says Hammad Khan, CEO of Alpha Venture, a Karachi-based digital agency.
“The payroll management system should also be smarter because it is very time consuming at the moment. Likewise, the approval mechanism is super basic right now and needs more layers. For example, I might want to give read-only access to my accountant without including him in the approval system. This could be done by leveraging WhatsApp, possibly where many business decisions ultimately take place, especially in small businesses,” he adds.
“There is also a lot of room for improvement in the transaction management system, such as better tagging and faceted search,” Khan continues. It also highlights the need for integrations with other third-party software, which are widely used, especially in the tech industry. “Let’s say you can sync bank transactions with Quickbooks or your CRM tool. This record keeping can make your life 100 times easier.
The problem is not only with online banking products, but also with card-based ones. For example, only Bank Alfalah and Standard Chartered currently offer corporate credit cards, which means that no player has entered this line for years. And even the existing options are essentially makeshift arrangements, according to people who have used them.
Two years ago, a founder told Dawn how his company’s corporate credit card was linked to his personal online bank account, while issuing it took three months, multiple forms, a stamped paper guarantee, and a privilege.
For cards, bankers attribute the lack of products to a tiny market, but the same is not true for digital products. The growth of consumer internet and mobile banking has already given a good glimpse of online potential, and the only thing holding back a similar trajectory for the business segments is the banks’ own laziness.
Posted in Dawn, The Business and Finance Weekly, July 18, 2022