In the lockdown and social isolation of Covid-19, the latest developments in the IT and telecommunications industries not only benefited the microfinance sector by improving loans but also opened up new income-generating opportunities.
In the past, JazzCash and Easypaisa have become very important in financial transactions, and even former microfinance banks like Khushaali and First Microfinance Bank have now created small digital entities to facilitate the customer experience and reduce loan processing costs.
In addition, Gazanfar Azzam, President, and CEO of Mobilink Microfinance Bank stated that most wallets are one-click solutions that reduce cash handling for customers and recovery personnel.
He said: “There are three wallets in the country: JazzCash, Easypaisa, and Upasia. They are similar to online banking, but the majority of them are in rural areas.
“There are no formal bank accounts in mobile areas,” he added. “These cash wallets will become the future of microfinance and financial technology”.
With the rise of telephone technology and the advent of digital lifestyles, not only urban residents, but also citizens and small businesses in remote areas are starting to shift towards digital mode.
For those with minimal education, It’s also easy to open a mobile wallet account on a smartphone. This saves a lot of paperwork and multiple visits to bank branches, making it convenient for females.
In terms of a network of agents across the country, it also creates a huge Job market. Mudassar Akil, CEO of Easypaisa and Telenor Microfinance Bank said: “Digital platforms play a proactive role in increasing the number of microfinance customers across the country”.
Easypaisa was launched in 2009. It was Pakistan’s first mobile banking platform and was initially introduced as a remittance service. Upaisa and JazzCash came later.
However, through active marketing and being the largest telecommunications platform, JazzCash has surpassed Easypaisa to become a mobile communication platform for branchless banking.
Approximately 30 million people use JazzCash mobile accounts. Easypaisa has approximately 9 million active mobile wallet users every month, an increase of 28% over 2019, mainly due to Covid-19 blocking and social distancing.
“For most of 2020, travel and communication between people were difficult. Wallets reduce the interpersonal interaction between loan officers and customers. They also reduce the time and time associated with repayment and installment payments. Other expenses,” Azam said.
He also said that microfinance is an expensive and labor-intensive business, so large banks have very little business in this area.
The CEO of Mobilink Microfinance Bank pointed out that with With the growth of sales business, the number of loan applications for motorcycles and small commercial vehicles has increased significantly, and the use of this technology has made it easier to handle cases.
An important product recently launched by JazzCash is the increase in jobs due to global travel restrictions, which facilitates the recommendation of freelancers (mainly IT professionals). With this product, you can get cash equivalent to 10 US dollars in rupees in your JazzCash account without any restrictions.
As of May 2021, more than 110,000 such accounts have been linked to JazzCash, and approximately Rs 4 billion has been transferred.
When people are unable to access services, digital assistance enables the microfinance sector to deepen the economy and increase penetration.
Whether it is banks in remote areas or poor urban areas, microfinance has always been facing the challenge of increasing the customer base while maintaining the competitiveness of borrowing costs.
However, the legislators’ efforts to develop specialized microfinance institutions are also limited, and traditional banks are often subject to external pressures status. The banks are increasing their business in this area. There are going to be more branchless banking platforms in the region.
image credit: Dawn news
In the lockdown and social isolation of Covid-19, the latest developments in the IT and telecommunications industries not only benefited the microfinance sector by improving loans but also opened up new income-generating opportunities. In the past, JazzCash and Easypaisa have become very important in financial transactions.
These cash wallets will become the future of microfinance and financial technology.